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 Head to Head
7 November 2008 | IPTV ITSM
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The Role of Technology in an Uncertain Economy
Tony Scott, Microsoft's Chief Information Officer, believes that innovative technology can improve efficiency, reduce costs, and improve business ability during these uncertain times..

During the past few months, astonishing changes have shaken the global economy. The world has witnessed the bankruptcy of financial stalwarts such as Lehman Brothers, and the forced takeover of Washington Mutual in the biggest bank failure in U.S. history. In the midst of all this, stock markets around the world have gyrated wildly and governments have taken unprecedented steps to loosen frozen capital markets. Consumers have taken note of this turmoil, and have reacted by reducing spending on cars, retail items, dining out and more.

Clearly, this is a time when business leaders must demonstrate some caution and savvy business acumen. Yet, it’s also important to maintain business momentum. Microsoft Chief Information Officer Tony Scott believes that innovative technology can improve efficiency, reduce costs, and improve business ability to respond to changing business conditions. Microsoft uses an array of technology tools to achieve those goals, enabling growth even in this challenging economic environment.

In this Microsoft interview, Scott talks about how technology can help companies navigate a stormy economy:

We are clearly in uncertain economic times. What do CIOs say to you about this?

Tony Scott: Most fall into two camps – their glass is half full or half empty. There are those CIOs who are kind of fearful. But the more exciting conversations are with those CIOs and business owners who say, now is the time for us to figure out what it means. The companies that emerge at the end of an economic downturn are those that made great decisions. In good times it can be difficult to get somebody to focus on some of the opportunities that we have. Now, it’s a much easier conversation. Taking money invested in operations and putting into new capabilities. CIOs and companies are using this as a time to make dramatic and focused changes in their businesses.  Some of the best innovations came out of critical thinking during an economic downturn. So for us to be leaders and point the way is really important.

How can technology help businesses weather current conditions?

Scott: It falls in the area of responsiveness and the ability to adapt to business change. For instance, I think we could make IT more dynamic with virtualization technology. In our own space, we've gone from eight percent to 25 percent in terms of virtualization in our data centers in just a year. Next year, we think we plan to achieve 50 percent virtualization.  It has been great for us in terms of agility and flexibility that we have. So far the savings top $10 million. And today it takes only four people to manage the group’s 3,500 servers.

What else can a company do?

Scott:  Take the collaboration space. It’s all about making business decisions faster and more efficiently. In this economic climate in particular, where folks are going to be asked to cut travel budgets using collaborative technologies will enable faster decision making…not waiting for people to go somewhere on a plane.

Here at Microsoft, we’ve deployed unified communications technology that uses software to bring voice, e-mail, instant messaging, and video conferencing together. That allows companies to replace traditional phone and voice mail systems with integrated corporate messaging, calendaring, and directories. Unified messaging is saving us $5 million each year through reduced hardware and maintenance costs. Combining phone and e-mail communications also increases productivity and decreases the administrative workload for our IT professionals.

Today’s communication systems also mean that face-to-face meetings can sometimes be replaced with “virtual” meetings. Sure, getting together with peers and partners is important, and always will be. But sometimes it’s prudent to ask if boarding a jetliner for a half-day meeting is really the best use of a company’s resources. Microsoft Australia, for instance, uses Microsoft Office Live Meeting and Microsoft RoundTable (a collaboration and conferencing device) to conduct a virtual regional meeting. That’s saved the group 160 hours in travel time, and reduced travel expenses by $18,000 AUD.

Can these technologies do more than just save money?

Scott: Without a doubt. Technology helps companies spent more time on their businesses and less on managing basic infrastructure. A good example of how poor IT design can cost money was our own Microsoft Human Resources Web. We had more than 20 highly customized sites and applications. That created extra work managing and understanding the site. We move that content to SharePoint Server 2007, which helped us consolidate all those different sites in a single location that has a common interface. We anticipate a return on investment of more than $10 million over three years. But perhaps more importantly, it’s also easier to train people to use the new system, and they’re more productive more quickly. The site also is much easier to manage and keep current, so the people who rely on it have the most up to date information.

People talk a lot about “business intelligence.” What’s happening on that front?

Scott: There are some really exciting things going on there. Software innovations are providing new ways to track and analyze the key variables in a complex business environment— people, material, and data—and discover hidden relationships, explore new opportunities, and uncover potential problems before they become significant issues.

For example, new analytical technologies make it possible to mine audio and video streams for relevant data that can be used to extend the power of traditional business intelligence tools. Today visualization applications can help users see patterns in complicated environments at a glance. And as computers continue to become more powerful and software more sophisticated, we’re seeing the emergence of affordable simulation solutions that can mimic complex systems—both natural and manmade—enabling companies to test theories and more accurately assess risks and opportunities without committing significant capital and employee resources.

But isn’t this a time to focus on saving cash rather than making new investments?

Scott: Clearly, the current economic climate demands that businesses become more frugal. But there’s a danger in slashing too much from budgets. Technology isn’t only an expense – it also fosters innovation and sharpens competitiveness. Companies that continue to pursue innovation position themselves to survive difficult economic time, and really thrive when the business climate improves. What I believe is this: Companies should work to save money, but not at the expense of the future.

There is another reason why this is a particularly important time to invest in innovation. Right now, technology is revolutionizing the role that computers and computing play in our live. Just look at mobile phone – those little gadgets that fit into our pockets but have the power of a desktop from the 1990s. Just think about the way they help us stay connected and get more out of our days. And that’s just a small example, as really, we’ve barely scratched the surface of what mobile telephones can do. In the years to come technology will open the door to new experiences that connect us to each other and the things we value at work and home much more easily. For those of us in the technology business, these are very exciting times.

It’s easy to think of a slowing economy as uniformly bad. Is that really the case?

Scott: Absolutely not. In any business cycle, up or down, not every business gains or losses ground in the same way. So many businesses still will be moving forward and making good profits.

Also, keep in mind that when times get a little tougher, that’s really an opportunity for business executives to demonstrate real leadership when it comes to improving business processes. So right now is a time when company CIOs can really show the value of technology. They can find quick wins, such as working with business units to standardize they way the execute specific tasks, such as recording sales. The can focus on new technology that delivers real cost savings and improves metrics such as customer satisfaction. And they can use this time to think strategically about the business, so when the economic climate improves their company is ready to leave competitors behind.

A year ago businesses all were taking about “going green.” Now they’re more worried about survival. Is the green business movement dead, at least for now?

Scott: No – not at all. In fact, this is a time when businesses should accelerate any green push the have underway. It’s about being responsible from a sustainable IT perspective. Just from an architectural perspective, how we build applications is one of our big challenges going forward. As an example, we work hard to understand the total cost of applications in an organization – the cost of new development, maintenance, operations, things like. But if you get asked what the carbon footprint for that application is, few of us can accurately answer that. I think we will be asked that going forward, and we will be looking for answers.

You can read about many of our own green initiatives at Microsoft.com/environment. We’re doing everything from composting flatware in our lunchrooms to moving employees around our Redmond campus in Toyota Priuses to slashing energy use in our data centers. It’s what our customers expect of an industry leader.

Any final thoughts?

Scott: Just this: We’re feeling many of the same pressures as our customers. We know what they’re going through, and believe we can offer some relief to cost pressures while still keeping them sharp competitively. We’ve all seen downturns, and all know they don’t last forever. What’s important is to be in the right position when the upturn comes, as it certainly will.


Charles Wilson Email to a colleague | Add to MY ITP

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