Getting Value from Compliance

I read through the draft of the King 3 Corporate Governance code recently to contribute my comments. (See IODSA). What was mentioned (in my own words) was the large cost of "forced" compliance incurred relative to the initial events that triggered it, and I refer here to the Enron/SOX relate issues.

There is little mention of a value added approach to compliance, instead of compliance for the sake of it. I would rather advocate a semi marketing approach to implementation i.e. look for ways of improving competitive advantage for your organisation, making you slicker, more innovative, more responsive and more profitable. I think that it was Sir Adrian Cadbury who intimated that good governance is good business, although I suspect that this had more to do with the higher share premium than the effectiveness of management.

If you follow the apply or explain principle,

• then involve your colleagues in the process
• define what the positive result will be or how it can be achieved
• look for the sweet spots how it can contribute to competitive advantage
• don't do it if there is no real justification for it in terms of the above
• Obviously, don't be stupid and ignore the risks in the process or the spirit of compliance in the first place
• Remember your duty of care as a CIO to sustainability, you shareholders and stakeholders
• Turn compliance into an investment, not a cost

Software Licensing - the death of an era

Software licensing as a viable model for customers should be placed under scrutiny. It's strange that CIO's spend a lot of time and effort in RFQ's, RFP's and ROI's to put software in place without sometimes reviewing the total cost of ownership. It struck me this morning that like an insidious disease, you could inflate your "fixed" overhead IT component over a period of time, and wake up to find that your available spend is being consumed by "maintenance" fees.

Lets assume that 55% of your budget is for maintenance and and infrastructure, less you salary and depreciation, this does not leave much room for any kind of intervention e.g. BPA, process innovation, tweaking etc. It places you as the CIO in a state of maintenance, which is the reverse of where you really want to be - making a strategic difference to business.

In my opinion, CIO's need to question the value add of ongoing license fees. Why pay them at all?

An option is to save the annual fees and plough that back into innovation and leveraging what you have. By the time you have reached the end of life of the software, the latest and greatest release, on another platform, a new set of infrastructure, open source alternatives or even a web2 environment will be available. By then, you may be in a better position to evaluate the next move.

Failing this, at least you would have leveraged your investment and got the value out of your software that was always the "unreachable" promise. The easy route is to muddy the waters and get something "better". Real CIO's make what they have work! after all, they were responsible for the RFP in the first place!"