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Next-Generation CIOs: Change Agents for the Global Virtual Workplace
| COGNIZANT BUSINESS CONSULTING
COGNIZANT October 2010 2
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Contents
1 Executive Summary
5 Introduction
7 Reorganizing Work: A New Hierarchy
10 A New Leadership Role for CIOs
11 Cultural Changes can Empower Teams, Ensure Security
13 The Elusive ROI
15 Conclusion
16 Appendix: Survey Results
Preface
Next-generation CIOs: change agents for the global virtual workplace is a Cognizant Business Consulting research report, written in cooperation with the Economist Intelligence Unit. The Economist Intelligence Unit conducted the survey and analysis and wrote the report.
The report was based on a survey of senior executives in North America and Western Europe, in-depth interviews with nine senior executives and experts in the industry and other research. The author was Jim Nash and the editors were Katherine Dorr Abreu and Debra D’Agostino.
The Economist Intelligence Unit would like to thank all those who contributed their time and insight to this project.
3 October 2010 NEXT-GENERATION CIOs
Executive Summary
For several years, chief information offi cers (CIOs) have
championed business effi ciency. Their focus has been largely
on operational goals, such as keeping IT and operations
running smoothly and reducing related costs, while enabling
business processes to support their companies’ strategies for
growth and profi tability. But the convergence of globalization,
technologies that enable virtual work, collaborative methods
and techniques, and a new tech-savvy generation
(Millennials) of employees is changing how
business is conducted and structured across
the organization (within teams, departments,
etc.) and how the corporation interacts with
customers and partners.
This report examines the role of CIOs in
restructuring how work is conducted throughout
the organization. It fi nds that companies leading the movement
toward virtual and collaborative teams — often spurred by
the CIO — are garnering results, particularly with respect to
innovation, talent recruitment and retention, and productivity.
Key fi ndings include:
● Some companies are changing their operations to support
new structures based on virtual teams that do not rely
on traditional hierarchies and communication channels.
These teams can be powerful operational resources,
particularly when it comes to knowledge-based work. Unlike
more traditional structures, these specialty teams reach
across geographic, cultural and organizational barriers
to fi nd the needed resources. While not appropriate for
all types of operations, collaborative virtual teams, when
used effectively, combine diverse skills to quickly carry
out complex tasks and address novel market challenges.
They also have the potential to foster more productive
relationships with internal and external partners.
… collaborative virtual teams, when used effectively, combine diverse skills to quickly carry out complex tasks and address novel market challenges.
4 COGNIZANT October 2010
● Organizations that have embraced virtual teams garner
benefi ts such as increased innovation and competitiveness,
but lack appropriate valuation methods to measure the
quantitative impact of these structures on the bottom
line. Still, it is possible to quantify such things as delays
resulting from redundant decision reviews prevalent in more
conventional work structures. It is also possible to measure
time lost when clients or suppliers spot problems that would
have been avoidable had these stakeholders been involved
earlier in the project through virtual collaborative teams.
To gain support for their companies’ transition to the new
approach, executives need to develop ways to measure
return on investment.
● CIOs are in a unique position to infl uence the adoption and
effectiveness of virtual teams. CIOs are familiar with the
people, tools, technologies and techniques needed to create
a corporate culture of virtual teams. Particularly within
knowledge-based enterprises, they know the processes and
policies employed at all levels of the company and the tools
that can support them. And as members of the C-suite, CIOs
are familiar with long-term strategic goals, which is essential
in crafting an enduring new structure. This perspective
positions them as change agents.
5 October 2010 NEXT-GENERATION CIOs
Introduction
A confl uence of forces, some old, some new, is pushing companies to change how they work. Globalization, powered by new communications tools, has broadened their reach. Technologies such as cloud computing are allowing organizations to restructure operations. At the same time, a new generation of technically savvy workers is working its way up the ranks, further exposing companies to transformative technologies like social media. For some fi rms, particularly those that operate in many locations, new ways of organizing work that take advantage of knowledge sharing can be an effective response to these business shifts.
CIOs who combine technological expertise with a broad, strategic view of the business have an opportunity to lead their organizations’ adoption of new work approaches. They bring technological clout to what is fundamentally a cultural transformation of the company. They can do so because they are intimately involved in corporate strategy, which gives them a rare top-to-bottom perspective.
Collaborative and virtual teams — more complex, dynamic and auton omous than traditional corporate team structures — can make it possible for companies to take advantage of human, physical and technological resources regardless of where they are located.
A global survey of executives in Europe and North America, conducted by the Economist Intelligence Unit in May 2010 in cooperation with Cognizant Business Consulting, suggests that companies that are at the forefront of the transition stand out from their peers in many respects. Companies that are already seeing the benefi ts of this transformation, defi ned as “leaders” in this report, say they outperform other organizations in innovation, recruitment and retention of talent, and productivity. They tend to be less hierarchical, provide more fl exible work arrangements, and have established policies and practices that support the
Collaborative Virtual Work Structures: A New Way to do Business
Collaborative teamwork is certainly not a new thing in the business world, but how teams are used and how they function is changing. In this report, the term incorporates a number of characteristics. Interviewees often use the term “virtual teams” in describing them, although they involve more than mere physical dispersion.
In this new organization, teams break down rigid structures, creating environments in which people work in role-based, cross-departmental, cross-functional and international groups. Knowledge sharing is fundamental to how these teams operate, and their success hinges on effectively using the expertise of each member. Teams are by their nature fl exible and open to change. While there will always be standard operating procedures, and the need to show results will always be preeminent, teams must have a degree of self-management to be successful.
This autonomy means organizations can put more energy into innovation and less into bureaucracy. As a result, less – but more
relevant – communication is shared. Executives who have played midwife to this change say it boosts productivity, reduces errors and helps retain high-quality talent at all levels.
When successfully deployed, these teams combine the strengths of small start-ups and of large, mature organizations: nimble, entrepreneurially minded teams are sheltered in the midst of big, stable companies. They can spot and respond to market developments more rapidly than can conventional large organizations, and they are able to throw more resources at opportunities and errors than small outfi ts can.
These teams have elements of social networking. Both involve self-organization and groups that are focused on shared interests, and both depend on frictionless, informal communications. Custom-made analogues of Facebook, Wikipedia and Twitter, as well as high-defi nition, high-bandwidth telepresence systems, which allow people in different locations to feel as if they are in the same room, weave teams together.
CIOs who combine technological expertise with a broad, strategic view of the business have an opportunity to lead their organization’s adoption of new work approaches.
6 COGNIZANT October 2010
formation of more virtual and collaborative teams. Throughout the report these leaders are compared with companies that expect to garner benefi ts from new work structures either within a year or more, or not at all. Those fi rms are classifi ed as “all others” in the charts throughout the report.
The research also shows, however, that there is no single model for such teams, nor a single best path to implement them. How they are deployed refl ects a company’s tolerance for decentralization, shared decision-making, collaborative innovation and change itself. Some fi rms create teams at strategic points, straddling marketing and production or research and development and legal, for example. Others integrate them deeply into the organization’s fabric.
While one might think that the digital generation – the Millennials – would be the main driver for this sort of change in companies, the research shows that they are not playing that role. This may refl ect the current economic environment, in which labor is abundant. What matters more than age is mindset: Companies are adopting a variety of tools and collaborative methods because they increase competitiveness, not necessarily to attract or retain a specifi c employee demographic. Nevertheless, organizations that are at the forefront of this transition may be better positioned to attract new workers when economic growth tightens labor markets.
To implement collaborative virtual teams, organizations must overcome several hurdles, including resistance to change and the risks born of greater openness. Executives must be sure that the teams are well coordinated and do not work at cross-purposes. And although companies that have embraced these teams say they are integral to their organizations’ operations, they do not have quantifi able measures of their impact. Developing a set of metrics to prove the value of collaborative virtual teams is among the main challenges to their widespread adoption. Executives who are able to quantify results will gain credibility to lead their companies’ transformation.
About the Survey
A total of 402 respondents in Europe (52% of respondents) and North America (48%) participated in the survey, which was conducted by the Economist Intelligence Unit in May 2010. The panel is mainly senior: 45% of respondents hold C-suite or equivalent positions, and another 29% are senior vice- presidents, vice-presidents or directors.
Respondents represent a wide range of company size. Thirty-eight percent are from small to medium-sized companies, with less than $500 million in annual revenues. Another 19% represent companies with $500 million to $5 billion in revenues per year, and the remaining 33% come from companies with revenues of more than $5 billion.
Forty-six percent of respondents have IT functions. The survey sought to explore differences in perspectives between these and non-IT functions, but found considerable alignment between the two groups. Strategy and business development, and general management were the other main functional categories, with 13% in each. The remaining 28% fulfi ll a range of functions.
Most of the organizations surveyed have global operations. Respondents’ descriptions of their organizations appear in chart 2.
Chart 2 Survey respondents represent global organizations How would you describe your organization’s structure and operations? For each pair, choose the one most applicable.
(% respondents)
Source: Economist Intelligence Unit survey, May 2010.
Operates globally
Operates only in its home country
Partners with companies in several countries
Partners only with companies in the country in which it is headquartered
Sells on the global market
Sells only in the market in which it is headquartered
Has a global supply chain
Has a domestic supply chain
72
28
81
19
75
25
72
28
Source: Economist Intelligence Unit survey, May 2010.
Has a hierarchical organizational structure
Has a flat organizational structure
Chart 1 Leaders are more likely to have flat structures How would you describe your organization’s structure and operations? For each pair, choose the one most applicable.
Leaders are those that are already reporting ROI from collaborative virtual teams.
(% respondents) Leaders
All others
51
71
49
29
7 October 2010 NEXT-GENERATION CIOs
Reorganizing Work: A New Hierarchy Survey results show that new ways of organizing work are gaining traction. About one in six respondents says their organization already has seen positive results from more virtual and collaborative teams, and another one-fi fth expects to garner benefi ts within a year. Executives interviewed for this report are strong advocates of these work structures. Leslie Jones, CIO of communications giant Motorola, for example, says collaborative virtual teams are part of the company’s DNA.
The practices are particularly appropriate for knowledge-based work. Some companies have implemented them enterprise-wide, sometimes as a result of a major strategic decision. In many cases, however, they are applied in an opportunistic way, and gain ground gradually within companies. Other organizations are not adopting these work structures.
Those already benefi ting from such practices — our “leaders” group in the survey — have some attributes in common not shared by the remaining respondents. The former are more likely to see innovation and collaboration as important competencies for their organization. They say their company is at the forefront in testing new collaboration and remote-work technologies. And they report that the benefi ts of
greater collaboration — including increased innovation, improved productivity and greater competitiveness — outweigh the risks, such as reduced governance and potential security lapses. (See chart 3 on this page and chart 5 on page 9.)
Companies in which top executives demonstrate strong support for the transition to a new work structure are more likely to outperform their peers in such areas as innovation and productivity, the survey shows. The CIO in particular is seen as a potentially galvanizing force: The research suggests that collaborative virtual teams are more likely to take hold where the CIO is engaged in the process and involved in broader strategic concerns.
Perhaps because they have been deeply engaged in the transformation of their organizations,
interviewees report positive results after adopting the new structure. Indeed, for U.S.-based consumer products giant Procter & Gamble (P&G), which considers virtual teams a strategic strength, the structure minimizes delays between discovery, decision and action. CIO and president of global business services Filippo Passerini says building such teams is more than a way to delegate tasks: It pushes decision-making authority from middle managers toward groups of project or topic experts working together, eliminating bureaucratic delays.
Early adopters of these work structures tend to have fl atter organizations and less “siloed” communication channels than more traditional companies, the survey shows. They typically offer a wider range of collaboration and remote-access tools, including telepresence, instant messaging, site templates, external or custom social networking environments and cloud computing. (See chart 4.)
These characteristics support virtual teams, says Chris Satchell, chief technology offi cer (CTO) at U.S.-based International Game Technology (IGT), a global developer of electronic gambling systems. (In an unusual setup, the CIO of IGT reports to Mr. Satchell, who thus combines responsibility for technology innovation and IT.)
Chart 3 Leaders value innovation, talent and productivity more highly, and say their organizations outperform their peers How important are the following attributes to your organization, and how does it compare with its peers?
Rate on a scale from 1 to 5 where 1=extremely important or significantly outperform; 3=average; 5=not at all important or significantly underperform.
Leaders are those that are already reporting ROI from collaborative virtual teams.
Source: Economist Intelligence Unit survey, May 2010.
% respondents who said the attribute was “extremely important”
% respondents who say their organizations “significantly outperform” their peers
Innovation
Recruitment of high-quality talent
Retention of high-quality talent
Productivity
Innovation
Recruitment of high-quality talent
Retention of high-quality talent
Productivity
Leaders
All others
68
45 23
68
38 30
59
41 18
56
45 11
35
19 16
23
11 12
19
11 8
22
14 8
… the research suggests that collaborative virtual teams are more likely to take hold where the CIO is engaged in the process and involved in broader strategic concerns.
8 COGNIZANT October 2010
Because communications generally are not fi ltered or relayed through managers, information can spread more easily. Ideas can be added to, dismissed or simply absorbed by the group for future use. There are few data-hoarders, and isolated “gurus” are integrated in teams where they share their specialized knowledge.
Such a team might comprise a factory manager, data engineer, marketer, project manager and company attorney, all of whom have expertise in the project at hand. Most or all of them can be in separate locations. Working together, they address practical issues, eliminate redundancies and catch mistakes more effi ciently than within conventional structures. When they span the globe, these teams can effectively work on a project around the clock.
In some cases, the benefi ts might not be initially obvious. Collaboration is intrinsic to the hospitality industry, for example, but it tends to be site-specifi c. Jeremy Ward, CIO of global luxury hotelier Kempinski AG, says that the company instituted a culture of geographically diverse virtual teams two years ago. “We changed the way we work,” he says.
The Munich-based company, which develops and manages hotels, often in exotic corners of the globe, learned that employees benefi t from a robust, shared cache of experiences and greater autonomy. Operating a hotel in Mongolia is different from running one in Namibia, but there are similarities in providing luxury in remote locations, including sourcing materials or training staff in a developing economy. Once the advantages of knowledge sharing were identifi ed, and the case for a new corporate culture made, the company implemented tools needed to make it possible. Kempinski’s global virtual teams now use wikis to collect, share and elicit knowledge about tasks, practices and projects. Virtual shared workspaces enable real-time, globally dispersed collaboration. And process-automation tools streamline corporate tasks including training and personnel matters like vacation requests.
Interviews with other executives reveal that Kempinski’s culture-before-technology approach is a common best practice among companies that have adopted collaborative virtual teams. Making the transition to this work structure poses challenges for traditionally organized companies, however. The CIO can provide the support needed to implement the necessary changes.
Source: Economist Intelligence Unit survey, May 2010.
Chart 4 Most companies provide support for virtual teams, but leaders offer more, and more advanced, choices In what ways does your organization support a virtual work environment? Select all that apply.
Leaders are those that are already reporting ROI from collaborative virtual teams.
(% respondents)
Cloud computing
External social networking access
Presence awareness (Online indication that person is available to communicate)
Internal/custom networking applications
Providing remote access to e-mail
Providing employees with mobile equipment (mobile phones, laptops, etc.)
Instant messaging capabilities
Video conferencing
Providing remote access to corporate network and servers
Corporate portal or intranet
Leaders
All others
46
18
44
17
55
30
54
32
91
73
91
75
65
49
71
56
84
70
75
61
9 October 2010 NEXT-GENERATION CIOs
Source: Economist Intelligence Unit survey, May 2010.
Chart 5 All organizations face the same challenges, but leaders are more confident in their abilities What are the greatest challenges posed by a more virtual work environment? Select all that apply.
Leaders are those that are already reporting ROI from collaborative virtual teams.
(% respondents)
Difficulty in managing diverse tools needed to enable dispersed teams to work together effectively
Risks to governance and control
Data leakage
Erosion of corporate culture
Decreased efficiency
Loss of productivity
Leaders
All others
26 41
42 54
44 55
23 30
6 13
4 25
How to Deploy Collaborative Virtual Teams
“If a global perspective isn’t everywhere in the company, you’re holding yourself back,” says Chris Satchell, chief technology offi cer of U.S.-based International Game Technology (IGT). For IGT, which has $2.1 billion in annual sales and facilities on every continent but Antarctica, that perspective involves more than knowing overseas sales projections.
IGT is turning to global virtual teams in an effort to remain the world’s biggest maker of casino-based and online gambling systems. Mr. Satchell was hired in June 2009 by new CEO Patti Hart to help end the company’s fi nancial stagnation. Ms. Hart had already begun efforts to dismantle what Mr. Satchell says was an outmoded command-and-control structure.
While IGT is still the dominant player in the market, the global recession has cut its revenue and profi t, and slashed its share price. Seeing an opening, competitors are hungry to overtake the 25-year-old fi rm. As head of product and information technology, it is Mr. Satchell’s job to make sure IGT is not out-innovated. To that end, he is deploying virtual teams throughout the organization.
Before repeating the practice in the whole company, Mr. Satchell debuted the concept in IT. “I wanted to make sure I had my own house in order.” He started with some small-scale efforts and made sure IT could support the larger move without a hitch that could derail company-wide deployment.
A united C-suite showed everyone the benefi ts of virtual teams. Among them are:
● Faster time to market: Everyone needed for a project is involved from the beginning, which minimizes time spent on briefi ngs at critical decision points.
● Less bureaucratic interference: Teams are semi-autonomous.
● More innovation: If done right, virtual teams concentrate needed expertise in each group.
Relationships are important when building virtual teams. “We’re always pushing employees to understand that people in other groups have different perspectives. They have something you need, and you have something they can use,” says Mr. Satchell.
Even as virtual teams become more entrenched at IGT, travel remains an important relationship-building tool. “It’s a misconception to think that you can do away with your travel budget,” Mr. Satchell says. Even high-frequency virtual meetings need to be supported with occasional face-to-face gatherings (though not necessarily involving whole teams).
Today, Mr. Satchell says, “we’re getting the pace and focus that we need.” He thinks he is two years away from completing IGT’s transition to mature virtual teams.
10 COGNIZANT October 2010
A New Leadership Role for CIOs
In just a few years, most CIOs and their IT departments have grown from asset managers to strategic enablers, ensuring that IT capabilities are aligned with business needs. The next step for CIOs is to become drivers of broad strategic change. If they do not, they risk losing clout in their organization. “How much competitive advantage can there be to running a different network layout or buying a different server?” asks P&G’s Mr. Passerini.
Motorola’s Ms. Jones agrees. Gone are the days when CIOs could prove their strategic value by assembling technology platforms that support business processes. “The minute the CIO talks about ‘alignment’ (of IT with business processes), you’ve declared yourself as something alien” to the revenue-generating portion of the organization,
she says. “We have to be integral to the strategy, not just aligned.”
It is not enough, even, to support a top-down initiative that uses collaborative virtual team tools, because the tools are not the critical component. What matters, says Ms. Jones, is the organization’s ability to perform well in complex markets through a fl exible and adaptive structure that is supported by IT. CIOs interviewed for this report agree that such an approach is crucial. To make it work, tools, processes and policies that support collaborative virtual teams have to be spread throughout the organization.
Can CIOs sell such an idea to the company? They have in the past: At the start of the PC revolution, fi nance staff began taking their personal computers to the offi ce so they could do their job without having to petition for time on the mainframe. Successful CIOs understood what was happening, advocated for policy changes and adapted systems to capitalize on decentralization.
This new change is much bigger in scope, and will require that CIOs tackle cultural issues that have strategic impact. Survey results suggest they have the support to do so: The CIO is broadly viewed by respondents as a champion for collaborative environments, and also is considered the appropriate executive to implement the structures and tools needed to make collaborative virtual teams happen. Only CEOs ranked higher overall (chosen by 47% of all respondents), which is not surprising as they are ultimately responsible for determining corporate strategy. What is unexpected, though, is how high CIOs ranked: They were chosen by 45% of all respondents. (Respondents could choose up to two of nine functions or groups.) CIOs ranked even higher among companies defi ned as leaders in the survey: For those fi rms, the CIO outstripped the CEO 49% to 45%. (See chart 7.)
CIOs looking for an ally when promoting virtual teams should turn to chief marketing offi cers (CMOs), suggests Clay Shirky, who teaches the Interactive Telecommunications program at New York University and has written extensively about communications trends. Traditionally the most outward-focused executive, the CMO has much to gain from greater collaboration with buyers and would-be buyers, and can be a powerful ally in creating collaborative virtual teams. It is axiomatic that the best marketing campaigns are conversations.
Leading such a change could create greater opportunities for CIOs in the long term, suggests P&G’s Mr. Passerini: “The CIO role is beautifully undefi ned. This is a unique opportunity to play a more active role in the business.” Tackling cultural change is one way to expand the CIO’s presence in the organization.
Source: Economist Intelligence Unit survey, May 2010.
Chart 6 Leaders test and adopt technologies that enable virtual teams Which statement best describes your organization’s approach to adopting technologies that enable collaboration and remote work?
Leaders are those that are already reporting ROI from collaborative virtual teams.
(% respondents)
Is at the forefront in testing and adopting new technologies
Only adopts technologies after their effectiveness has been proved in the market
Only supports basic technologies such as email and conferencing capabilities
Don’t know/Not applicable
Leaders
All others
52
15
44
60
3
23
1
3
Source: Economist Intelligence Unit survey, May 2010.
Chart 7 CIO and CEO should lead implementation of virtual teamingIn your opinion, who within the organization should lead the effort to implement the structures and tools necessary for a more virtual work environment? Select up to two.
Leaders are those that are already reporting ROI from collaborative virtual teams.
(% respondents)
An ad-hoc committee involving CIO, COO, others
Chief operations officer (COO)
Chief executive officer (CEO)
Chief information officer (CIO) or equivalent
Leaders
All others
16
23
22
24
45
48
49
44
11 October 2010 NEXT-GENERATION CIOs
Cultural Changes can Empower Teams, Ensure Security
Collaborative virtual teams can alter how work is done. They create benefi ts, but also risks and challenges. They require organizations to evolve, reshaping teams and developing processes to meet the needs of the task at hand. And they require executives to coordinate the teams so that the overall goals of the organization are met.
Security — keeping data and innovations safe – is an important concern. Survey respondents who say their fi rms are already garnering benefi ts from using these new work structures rank security second only to cultural resistance as an obstacle to creating a more virtual environment in their organizations.
Technology in the form of ever evolving applications is not suffi cient to address the issue of security. Companies that deploy collaborative virtual teams must train and continuously communicate with employees the personal stake each has in keeping information safe. CIOs interviewed for this report agree that changing behavior is more important than software.
As part of its virtual team strategy, Florence, Italy-based GE Oil & Gas, a unit of U.S.-based General Electric, has created policies that prohibit employees from releasing proprietary information or speaking on the company’s behalf without authorization, says CIO Alan Kocsi. So long as they stick to the policies, GE Oil & Gas’ 13,000 employees, spread over 100 countries, can use social networks including Facebook and YouTube for personal networking. The company has “virtual co-location environments” with similar functionality for business-related networking between employees as well as with customers and suppliers.
Tom Conophy, executive vice president and CIO of UK-based Intercontinental Hotels Group, also emphasizes training. He is building a culture of awareness around intellectual property within the company, and educating employees is part of the process. Sending an email or posting on a social network exposes the company to the risk of data leakage, for example. Employees must be conscious that sending
Chart 8 Cultural resistance tops list of obstacles for all, but second-tier concerns are very different
What are the biggest obstacles to creating a more virtual work environment in your organization? Select up to three.
Leaders are those that are already reporting ROI from collaborative virtual teams.
Rank
Leaders All others
Cultural resistance to changing traditional work methods 1 1
Concern that data security would have to be weakened in order to make collaboration possible
2 4
Perception that it will lead to a loss of intellectual property 3 11
Cost of implementing collaboration technologies 4 2
Existing rules and tools that are designed to prevent data leakage
5 6
Lack of interest at the executive level 9 5
Lack of an effective strategy to support a virtual work environment
10 3
Source: Economist Intelligence Unit survey, May 2010.
Companies that deploy collaborative virtual teams must train and continuously communicate with employees the personal stake each has in keeping information safe.
12 COGNIZANT October 2010
information to a neighboring cubicle could just as easily result in sending it to the rest of the world. “You are publishing when you hit the ‘enter’ key,” says Mr. Conophy.
A cultural change throughout an organization requires new attitudes. It means winning over those who think collaboration is less a business process than strictly a human resources concern. It entails showing that accountability and productivity can be maintained. And it involves convincing people to share information rather than hoard it.
For collaborative virtual teams to be successful, “there has to be a mind-switch throughout the company,” says Mr. Ward. As a result, Kempinski’s training program focuses as much on the benefi ts of the new culture as on the responsibilities and tools.
Collaborative Virtual Teams Evolve at CERN
Some of the world’s largest collaborative virtual teams work at CERN, the European Organization for Nuclear Research, straddling the French-Swiss border. The research groups, involving thousands of scientists and students from dozens of countries, use a massive particle accelerator to look for the components of dark matter.
Two years ago, talk about success with the kind of collaboration that typifi es such teams was “hype,” says Dr. Helge Meinhard, who leads the CERN information technology (IT) staff that supports, among others, an overall team comprised of more than 2,000 physicists, including 500 students, from 150 institutions in 30 countries. This collaboration, known as the Atlas Experiment, is itself a collection of virtual teams. Atlas is closely linked with other similarly large collaborations, and communication and knowledge sharing between them are intense.
CERN has strict rules about what information can be
published or openly discussed, and individual institutions can have their own disclosure protocols. Yet despite the number of people, the complexity of the tasks and the informal nature of scientifi c relationships, Mr. Meinhard says virtual teams keep confusion to a minimum.
Unlike many endeavors in which scientifi c knowledge is compartmentalized, CERN scientists network extensively and manage their own virtual teams locally. This reduces the burden of information overload, says Mr. Meinhard. For the most part, people get only email relevant to them. Team wikis are common and collaboration software is available for groups.
Facebook is also used as a collaboration platform, though unoffi cially. Some CERN teams recently have started using the social network to communicate and organize. That indicates a greater level of collaboration is needed, Mr. Meinhard says, and CERN is looking at how it can provide a similar service
13 October 2010 NEXT-GENERATION CIOs
The Elusive ROI
Transforming an organization’s culture is important, but return on investment (ROI) is ultimately critical. Proving that collaborative virtual teams bring tangible benefi ts is still an elusive task. Even respondents who say their organization has already experienced a measurable return on investment (ROI) from such efforts do not explain how that return is quantifi ed. And while CIOs interviewed for this report say these teams have had a signifi cant impact on their companies, measurable ROI is hard to come by.
The interviewees posed a common rhetorical question when discussing ROI: How does one put a fi gure on a mistake that was caught by a team member who would not have been involved in the process under a traditional structure?
More tangibly, collaborative virtual teams can better distribute workloads among subject-matter experts and maximize knowledge sharing. IGT’s Mr. Satchell says his company would never have the capacity to meet current challenges without virtual teaming. Responding to declining revenues resulting from the economic crisis and competitors avid to grab market share, IGT faces sobering challenges. (See a description of IGT’s challenges in “How to Deploy Collaborative Virtual Teams” on page 9.)
Mr. Satchell does not merely delegate tasks to his teams. Rather, teams are expected to solve complicated problems through critical thinking and analysis of sometimes complex conditions or needs. Teams have the authority to make project-related decisions, while upper management looks after overall strategy. The trust is there, Mr. Satchell says, because team members are experts in the task assigned to them and understand their group’s role. What matters is their expertise.
According to Steve Brewer, applications development director at FONA International, a U.S.-based global maker of fl avors used in foods, medicines and other applications, such teams have made his company “more responsive than our rivals.” Mr. Brewer attributes this responsiveness in part to virtual teams, although similar to his colleagues, he is reluctant to assign all of the success to it.
Chart 9 Leaders are already seeing results When will changes brought on by greater collaboration and a more virtual work environment result in a measurable return on investment?
Leaders are those that are already reporting ROI from collaborative virtual teams.
(% respondents)
Source: Economist Intelligence Unit survey, May 2010.
In 1 year
In 2 to 3 years
In more than 3 years
Never
Don’t know
17
18
38
11
2
12
How does one put a fi gure on a mistake that was caught by a team member who would not have been involved in the process under a traditional structure?
14 COGNIZANT October 2010
Ms. Jones of Motorola and Mr. Satchell of IGT say their CEOs were predisposed toward more collaborative corporate environments, but that is far from universal. Conventional hierarchies are familiar to and protective of chief executives. To embrace collaborative virtual teams means addressing attitudes about more open knowledge sharing and cooperation. If implemented with the proper coordination to ensure that company goals are met, collaborative virtual teams can provide signifi cant benefi ts, helping organizations anticipate or respond to novel situations, and thus become more competitive.
Still, gaining support to deploy such teams more broadly throughout the organization will require proving their value. Productivity gains, number of innovations, talent retention and a host of other metrics can be useful tools to evaluate unorthodox techniques in rapidly changing environments. However challenging it is to develop metrics to show the benefi ts of such team structures, CIOs who do so will be better able to sell and then defend the new ways of organizing work.
Holiday Inn’s Image Improves as Teams Overhaul Brand
Intercontinental Hotel Group (IHG), the world’s largest hotelier as ranked by number of rooms, has implemented knowledge sharing by bringing team members together in a dedicated room for the duration of the project – whether three months or one year. Tom Conophy, executive vice-president and CIO, is using these teams to achieve a company goal: making IHG’s technology a key brand differentiator.
IHG currently manages 1,100 live IT-related projects around the world. The potential for duplicate work is enormous, so key projects use Yammer, a private social networking tool for teams. Like many companies deploying collaborative virtual teams, IHG also supports wikis to document projects and share information.
The teams combine IT employees with anyone else in the company who can help complete the project. “Business people sit next to engineers and have real-time interaction,” says Bill Peer, vice president of enterprise architecture and strategy at IHG. Teams have the authority they need to make decisions that will bring the project in on time and on budget.
People can volunteer their services for a team or they can
be chosen by management. The approach is popular, despite the various light-hearted nicknames the dedicated space has gotten: the gulag, the war room, the cave. “I’ve never had anyone say ‘no’ to a second assignment,” says Mr. Peer.
Mr. Conophy says the teams complete tasks faster than if they had to go through traditional channels to communicate with stakeholders and get decisions from executives. He adds that the teams generate more innovation because the principle parties are always together to share and assess ideas.
The approach was used as part of IHG’s yearlong, $1 billion brand overhaul of Holiday Inn, spotlighted by Brandweek.com’s weekly Buzz Report, which measures brand awareness among consumers. The January 2010 report concluded that Holiday Inn’s overall consumer-perception score rose throughout 2009, despite an extremely challenging economic environment. It was only one of two top-10 hotel chains to manage that feat; the overall industry’s score declined over the same period.
A solid strategy for revamping the brand resulted in this success. But teams helped the company achieve its goals, according to Mr. Conophy.
15 October 2010 NEXT-GENERATION CIOs
Conclusion
For most companies, dealing with uncertainty and change is a part of doing business. Today, however, the challenge is harsher. Globalization has moved beyond the search for resources and markets to securing and optimizing the use of talent and skill sets wherever they are found. It depends on collaboration, which now occurs across departments, using communication tools to connect people regardless of their location. Rapid technological change puts pressure on companies to constantly adapt. Organizations that are able to knit their operations into fl exible and semi-autonomous teams that outperform competitors in innovation and responsiveness to market changes will have an advantage. This will require changes to processes, especially with regard to knowledge-based work.
CIOs are strategically positioned for this task because they operate at the intersection of strategic decision-making and tactical practicality. They see how employees work, and are aware of new technologies that can help employees excel at their jobs. And they can take that knowledge to the C-suite, making the case for a structure based on collaborative virtual teams and supported by tools that will penetrate deeply into the business world.
Companies that have not implemented such changes can learn from the experience of those identifi ed as leaders in this report. While the use of collaborative virtual teams is still evolving, some best practices have emerged:
● The change toward virtual collaborative teams should not be viewed simply as a technology effort but as a strategic business initiative. Many of the companies identifi ed as leaders in this research have relied upon partnerships with business heads to champion this approach. For others, the transformation can start within IT, where CIOs can hone a strategy customized for the overall organization. But this should be a launch pad that will enable the CIO to identify the best techniques and tools for the enterprise.
● To be effective change agents, CIOs must be not only leaders, but also enablers and partners. Success is far more likely if CIOs and IT professionals are seen as integral team players whose efforts add real value to the deployment of collaborative team structures within the organization. CIOs can provide the visible corporate leadership and support that is required as traditional hierarchies are challenged and dismantled. They should promote training and robust communication policies that keep enterprise-wide goals and security in sight, yet do not stifl e collaboration and creativity.
● CIOs should spearhead the development of metrics that prove the tangible value of collaborative virtual teams. While survey respondents report improvements, especially with regard to innovation and productivity, proving value is key to securing enterprise-wide support for a shift to this new approach. Metrics strengthen the CIO’s position as an agent of change.
16 COGNIZANT October 2010
How would you describe your organization’s structure and operations? For each pair, choose the one most applicable. (% respondents).
Operates globally
Operates only in its home country
72
28
Has a global supply chain
Has a domestic supply chain
72
28
Sells on the global market
Sells only in the market in which it is headquartered
75
25
Partners with companies in several countries
Partners only with companies in the country in which it is headquartered
81
19
Has a limited portfolio of products/services
Has a highly diversified product/services portfolio
50
50
Has a hierarchical organizational structure
Has a flat organizational structure
68
32
Appendix: Survey ResultsPercentages may not add to 100% due to rounding or the ability of respondents to choose multiple responses.
Appendix
17 October 2010 NEXT-GENERATION CIOs
How important are the following attributes to your organization? Rate on a scale from 1 to 5 where 1=extremely important; 3=average; 5=not at all important. (% respondents).
Innovation
Recruitment of high-quality talent
Retention of high-quality talent
Productivity
1 Extremely important
2 3 Average 4 5 Not at all important
49 31 14 5
43 36 16 4
44 31 19 5 1
47 36 13 4
In your opinion, how well does your organization compare with its peers with respect to the following attributes? Rate on a scale of 1 to 5 where 1=much stronger; 3=about the same; 5=much weaker. (% respondents).
Innovation
Recruitment of high-quality talent
Retention of high-quality talent
Productivity
1. Much stronger
2 3. About the same
4
5. Much weaker
22 35 32 9 2
13 26 43 14 3
12 28 41 15 4
15 34 42 8 2
In your opinion, how well does your organization compare with its peers with respect to the following attributes? Rate on a scale of 1 to 5 where 1=much stronger; 3=about the same; 5=much weaker. (% respondents).
My organization is moving toward a virtual work environment, in which human, physical and technological
resources are located where they contribute most effectively to attaining business objectives.
My organization needs to change business processes to work more effectively with external stakeholders.
In the next 12 months my organization will take steps to improve collaboration among dispersed teams.
Our CIO (or head of IT) is an evangelist for a more collaborative environment within the company and with partners.
My organization needs to adopt a more flexible work environment to attract talented employees.
My organization has policies and practices that facilitate the formation of cross-functional and dispersed teams.
In the next three years, the physical dispersion of our workforce will make it essential to improve
our capabilities for working virtually.
Collaboration’s positive effect on productivity and competitiveness are outweighed by the risks it entails.
Agree Neither agree nor disagree
Disagree
54 27 19
56 35 10
61 29 11
43 40 17
50 33 17
45 36 19
53 37 10
44 36 19
Appendix
COGNIZANT October 2010 18
Which of the following statements do you think best describe changes that will occur in your organization over the next three years? Select up to three. (% respondents).
Cross-functional teams will become more important within the organization.
My organization will use more collaboration technologies.
My organization will structure its operations based on the most efficient use of skill sets and resources, independent of geography.
My organization will outsource more functions.
My organization’s teams will be increasingly dispersed geographically.
My organization’s employees will increasingly work remotely.
My organization’s external partners will be increasingly dispersed geographically.
Younger workers entering the organization will exert pressure for a morecollaborative and flexible work environment.
My organization will offer more flexible work arrangements (such as telecommuting, flexible hours, etc.).
Other
The organization will remain essentially the same as it is today.
Don’t know/Not applicable
45
41
35
26
25
22
21
20
18
1
5
1
What is your organization’s strategy with regard to creating a virtual work environment? Choose the option that best applies. (% respondents).
Has been an early adopter
Is beginning to implement a broad initiative
Is beginning a limited trial
Is analyzing the need and opportunity
Has halted or abandoned efforts
Has neither a strategy nor plans to create one
Don’t know/Not applicable
28
18
20
16
2
13
3
Appendix
19 October 2010 NEXT-GENERATION CIOs
In what ways does your organization support a virtual work environment? Select all that apply. (% respondents).
Providing employees with mobile equipment (mobile phones, laptops, etc.)
Providing remote access to e-mail
Providing remote access to corporate network and servers
Corporate portal or intranet
Video conferencing
Instant messaging capabilities
Internal/custom networking applications
Presence awareness (Online indication that person is available to communicate)
Cloud computing
External social networking access
Other
My company is not supporting a virtual work environment
Don’t know
78
76
72
63
59
52
35
34
23
22
3
5
1
Which statement best describes your organization’s strategy with regard to collaboration? Select only one. (% respondents).
It is a core competency of my organization.
It is an enterprise-wide effort, driven by top leadership.
It occurs within departments, and depends on the initiative of department heads.
It occurs only when necessary.
It is focused mainly on working with external stakeholders (e.g., suppliers or partners).
It does not have a specific strategy with regard to collaboration.
Don’t know/Not applicable
18
28
23
15
3
9
2
Appendix
COGNIZANT October 2010 20
In your opinion, what are the three most important benefits your organization can gain from a more collaborative and virtual work environment? Select up to three. (% respondents).
Better productivity
Increased efficiency
Environment more conducive to innovation and new ideas
Faster response to market events
Lower infrastructure costs through methods such as virtualization and cloud computing
Stronger customer relationships
Increased transparency
Attraction of a more diverse work force
Lower personnel costs by off-shoring
Minimizing employee turnover
Improved risk awareness and management
Recruitment of younger employees
Better brand awareness among customers
Other
Don’t know/Not applicable
51
50
31
28
24
18
14
13
11
10
10
7
5
2
1
Which statement best describes your organization’s approach to adopting technologies that enable collaboration and remote work? Select only one. (% respondents).
Is at the forefront in testing and adopting new technologies such as data sharing applications and social media.
Only adopts technologies after their effectiveness has been proved in the market.
Only supports basic technologies such as email and conferencing capabilities.
Don’t know/Not applicable
21
57
20
3
Appendix
21 October 2010 NEXT-GENERATION CIOs
What are the biggest obstacles to creating a more virtual work environment in your organization? Select up to three. (% respondents).
Cultural resistance to changing traditional work methods
Concern that data security would have to be weakened in order to make collaboration possible
Cost of implementing collaboration technologies
Lack of an effective strategy to support a virtual work environment
Lack of interest at the executive level
Existing rules and tools that are designed to prevent data leakage
A rigid hierarchical structure with walls between departments
Belief that it will require more bureaucracy, monitoring and policing
Our infrastructure is not sufficiently robust to support collaboration
Lack of interest at the department level
Perception that it will lead to a loss of intellectual property
Excessive competition among our departments
Other
Don’t know/Not applicable
45
26
25
24
18
16
14
12
12
11
11
6
5
7
To what extent do Millennial employees—those aged 18 through 35—influence your organization’s culture? (% respondents).
Very large influence
Some influence
No influence
Don’t know/Not applicable
13
61
23
3
Appendix
COGNIZANT October 2010 22
In comparison to more established workers, what areas do you think are most important for Millennial employees? Select up to two. (% respondents).
Opportunities for faster professional growth
Flexible work environment
Being heard in the organization’s decision making process
Adoption of new communications techniques such as social media
Mentoring
A more non-traditional, decentralized operating structure
Opportunities for relocation
Focus on corporate social responsibility
Other
Don’t know/Not applicable
41
34
23
19
16
14
7
5
0
1
How much influence does the CIO (or head of IT) have in defining your organization’s strategy? Please rate on a scale from 1 to 5, where 1= strong influence and 5=no influence. (% respondents).
Enterprise strategy globally
Enterprise strategy regionally
Line-of-business strategy
IT strategy
1 Strong influence
2 3 4 5 No influence
Don’t know
21 26 22 15 13 4
19 27 28 13 10 4
14 26 27 16 13 3
53 28 9 5 2 2
Appendix
23 October 2010 NEXT-GENERATION CIOs
In your opinion, who within the organization should lead the effort to implement the structures and tools necessary for a more virtual work environment? Select up to two. (% respondents).
Chief executive officer (CEO). This is an organization-wide challenge.
Chief information officer (CIO) or equivalent. This is primarily a technology-enabled task.
Chief operations officer (COO). This is primarily an operations task.
Chief security officer (CSO). This is a security matter.
Specially created C-level position. Collaboration involves almost all departments and hierarchical levels, so a specific position exists in my organization to implement it.
An ad-hoc committee involving CIO, COO, department heads and/or others.
Department/unit heads. They know best how to accomplish the changes.
An outside consultant. This helps overcome internal politics and resistance.
Other
Don’t know/Not applicable
47
45
23
5
6
21
11
4
1
1
How supportive is your IT team of allowing employees to work virtually? (% respondents).
Very supportive
Somewhat supportive
Not at all supportive
Don’t know/Not applicable
45
47
5
4
What is the relationship between IT and line-of-business executives in your organization when it comes to changing technology? Select the one that best applies. (% respondents).
IT works closely with line-of-business executives to identify needs and choose appropriate technologies
IT consults with line-of-business executives to identify needs but determines which tools to implement
Changes in technology are imposed on the lines of business by IT
Decisions regarding IT are made by the line-of-business executives and implemented by IT
Don’t know/Not applicable
41
30
14
12
4
Appendix
COGNIZANT October 2010 24
What do Millennials (employees aged 18 through 35) entering your organization request from IT? Select up to three. (% respondents).
Support for mobile computing
Unfettered access to the Internet
Less bureaucracy in product development and in communicating ideas
Collaboration and networking apps
Access to new social media and collaboration tools
Easier access to internal data
Telecommuting support
Freedom to choose platform
Video capabilities that enable face-to-face communication between people in dispersed locations
Other
Don’t know/Not applicable
38
35
26
26
25
25
25
15
11
1
11
Which statement best describes how the role of your organization’s IT function would be affected by a more virtual work environment? Select only one. (% respondents).
IT would have a larger policing role in balancing data security and collaboration/transparency.
IT would be more closely integrated into departments. It would become a partner in decisions at all levels.
IT would have greater strategic responsibilities, including managing the social dimension of information.
No change. IT already supports a virtual work environment.
Other
Don’t know/Not Applicable
33
22
20
18
1
6
When will changes brought on by greater collaboration and a more virtual work environment result in a measurable return on investment? Select only one. (% respondents).
My organization is already garnering measurable results
1 year
2 to 3 years
More than 3 years
Never
Don’t know/Not applicable
17
18
38
11
2
12
Appendix
25 October 2010 NEXT-GENERATION CIOs
What are the greatest challenges posed by a more virtual work environment? Select all that apply. (% respondents).
Data leakage
Risks to governance and control
Difficulty in managing diverse tools needed to enable dispersed teams to work together effectively
Erosion of corporate culture
Barriers to communication among dispersed teams
Loss of productivity
Decreased efficiency
Other
Don’t know/Not applicable
53
52
38
29
26
21
12
2
4
In which country are you personally located? (% respondents).
United States of America
United Kingdom
Canada, Germany
France, Russia, Spain, Switzerland
Italy, Belgium, Czech Republic
Poland, Denmark, Sweden, Austria, Finland, Hungary, Netherlands, Norway, Estonia, Ireland, Romania
42
12
6
3
2
1
In which region are you personally based? (% respondents).
Europe
North America
52
48
Appendix
COGNIZANT October 2010 26
What is your primary industry? (% respondents).
Financial services
IT and technology
Professional services
Healthcare, pharmaceuticals and biotechnology
Manufacturing
Consumer goods
Energy and natural resources; Government/Public sector
Construction and real estate
Entertainment, media and publishing; Telecoms; Transportation, travel and tourism; Education; Retailing; Automotive
Agriculture and agribusiness; Chemicals; Logistics and distribution
23
15
10
9
8
5
4
3
2
1
What are your organization's global annual revenues in US dollars? (% respondents).
Less than $500 million
$500 million — $1 billion
$1 billion — $10 billion
$5 billion — $10 billion
$10 billion or more
38
12
17
7
26
Appendix
27 October 2010 NEXT-GENERATION CIOs
Which of the following best describes your title? (% respondents).
Board member
CEO/President/Managing director
CFO/Treasurer/Comptroller
CIO/Technology director
Other C-level executive
SVP/VP/Director
Head of business unit
Head of department
Manager
Other
2
14
4
19
6
29
3
7
12
3
What is your main functional role? (% respondents).
IT
Strategy and business development
General management
Finance
Marketing and sales
Risk
Customer service
Supply-chain management
Operations and production
R&D
Legal
Other
46
13
13
8
5
4
3
2
2
1
1
1
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