21:46 PM

Three funerals and a wedding described mood of Churchill Club CIO panel

by Tom Foremski for SiliconValleyWatcher.com

Analyst Dave Margulius, Enterprise Insight, spends a lot of time talking with CIOs. He picked four of them for the second annual “CIO Agenda” at the Churchill Club Tuesday evening:

“Come hear four leading CIOs talk about what's on their plate for 2005, how they're driving change and what their top priorities are.”

It was an interesting group:

David Bergen, CIO, Levi Strauss and Company

Marty Chuck, CIO, Agilent Technologies

Ron Markezich, CIO, Microsoft

Fred Matteson, CIO, Fireman's Fund

Interesting picks but an awkward mix for several reasons. Having the Microsoft CIO on the panel resulted in NO discussion of Microsoft’s enterprise licensing program. This has been controversial and many corporations have balked at the high price—especially with reduced IT budgets. Also, there was NO discussion of open source software use by the corporations.

Ron Markezich, the Microsoft CIO, was in an ebullient mood, very much at odds with the rest of the panel. He said he had an IT budget so large that he had never been able to spend it all. “My problem is I don’t have enough good people to oversee the investments,” Mr Markezich said. “I under-spend by $20m to $30m every year.”

That must have felt like salt in the wound for the others on the panel.

Each of the CIOs, from Levi, Agilent, Fireman’s Fund, were somber and looked exhausted. They spoke of very tough times for their corporations in recent years. Huge restructurings, outsourcing IT, the tough political fights when making big changes. Fred Matteson, of Fireman’s Fund spoke of “extreme budget pain” for business groups as the most effective and only way to drive solid change. He mentioned a Winston Churchill quote, "if you are going through hell, keep going."

Yet Microsoft grows richer every year, and used what were found to be illegal means, to achieve a dominant market position.

The contrast was stunning. While Markezich was talking about new technologies and systems being implemented within Microsoft, Matteson said he was embarrased to say that he would finally get rid of the last OS/2 PC by the end of this year! For those born in more recent times, OS/2 was IBM’s challenger to Microsoft Windows. It was widely used in the financial services sector but IBM stopped further development in the mid-1990s.

Some quick takes:

No big changes in IT budgets or buying patterns.

-The CIOs like the integration they get by sticking with one large software vendor such as SAP. They will buy some point solutions from smaller companies, preferably if they are partnered with a larger IT vendor to provide financial stability.

-Sarbanes-Oxley compliance is a large line item, especially for Agilent, which is buying a lot of EMC data storage gear to house all the extra governance data.

-Offshore IT development is here to stay and will continue to grow, although Microsoft thinks it will stabilize soon.

-Enterprise software as a service is a long way off (beyond 2010) and it will be a gradual transition. “Salesforce.com cannot handle an enterprise of our size,” said Agilent’s Mr Chuck.

-All are concerned about internal security. They feel that they have good security systems against external threats but not internal. Levi’s and Microsoft CIOs spoke abut their concern about “bad guys” working within their companies.

-The Microsoft CIO said the word “innovation” about fifty times. I’ve no idea what he was referring to except to Microsoft's belief it is an innovative company. The more you say it the more believers I guess. He said it was often difficult to get the message across to customers that there is innovation in products. “We take advantage of innovations in Microsoft products they didn’t realize were there.” Interesting.