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BLOG: The CIO as Supply Chain Manager

Zohar Gilad | Dec. 8, 2011
IT is going through major changes today and the CIO is smack in the middle of it.

The Bean-Counter Mentality

CIOs will have less of the technology burden on their shoulders. Instead, they will have to act like a CFO and quality control manager combined. Consider a large retailer like Macy's. A manufacturer needs to go through a strict process before it is allowed to put a single pair of pants on the shelves. The process includes rigid review and approvals from the design phase through supplier review and quality control tests for each component and the final product. Moreover, even a replacement of a single button supplier requires the manufacturer to go through quality control lab again, before they can make the change to their own supply chain. Retailers have sophisticated information systems to analyze and report on sales, profits, returns, customer service, supply chain processes, product quality, vendors and so on. IT departments will need something similar. Fortunately, cloud providers make IT costs highly transparent so that organizations can see the unit cost of every single IT service consumed.

What's not so transparent is what levers IT can use to change cost/capacity parameters within the application platform. CIOs should understand and track exactly what the business is spending daily or weekly on each activity -- such as e-mail -- and keep a tight rein on those costs. IT managers can help by ensuring that vendors are maintaining contractual commitments for quality, security, performance and functionality. Hiring staff with accounting and analytics backgrounds will become a top priority. IT employees with excellent communications and negotiations skills will also be valued, since so much of the work will be interfacing with vendors.

What About Innovation?

In this metrics-driven, buttoned-up world of IT, does the CIO have much of a role in business innovation any longer? On the one hand, CIOs have to maintain operational discipline. Like a building inspector, they must intrinsically understand the building codes, regulations and constraints of contractors working on the site.

Yet they now have a crystal-clear view of where IT dollars are going, presumably, and can make faster decisions about new technologies. Since IT knows exactly how much it'll cost to roll-out a new app on the cloud and can test it in a few hours, they can respond exponentially faster to a new, urgent business opportunity. The advent of the cloud could make the CIO's job that much more meaningful to the business. Adopting a supply-chain IT approach will be imperative for any midsize to large company on the planet and CIOs will be the ones to make it work.

Zohar Gilad is Executive VP of Precise.


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