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Tech Industry

A tech chiefs' consigliere

Accenture's James Hall says CIOs are fed up with overwrought hype. His advice to tech companies: Dump the gee-whiz shtick and prove your product's value.

James Hall speaks with chief information officers for a living. Make that a lot of chief information officers.

As managing partner of Accenture's technology practice, Hall markets his company's expertise to clients who administer large, complicated computer networks. In the course of that work, Hall also gets to hear what's worrying Fortune 1000 CIOs--and these days, it's a common refrain.

"That legacy ball and chain is the major challenge these execs have to deal with, particularly for those who are keen to embrace technology and move on," Hall said.

Hall also said CIOs have become far less interested in tech companies pedaling "gee-whiz" technology than in companies whose products can help them solve the increasingly complex challenges posed by interoperability and legacy integration.

In this post-bubble era of dampened exuberance, there's a keen anxiety among CIOs that when it comes to their next big buying decision, it must be the right one. Just how well the tech industry responds to that challenge may determine how quickly it bounces back from the slump.

CNET News.com recently caught up with Hall to get his take on the state of the CIO crowd and hear what he thinks about the near-term future of the computer industry in the post-bubble era.

Q: A few years ago, you managed a dot-com incubator for Accenture in the United Kingdom. Considering the subsequent bursting of the Internet bubble, do you think there's still a future for these sorts of outfits?
A: What we've learned from the bubble and its aftermath is that while technology is unbelievably powerful--and becoming more powerful each day--you cannot get the technology too divorced from the business context. Plain old-fashioned economics are as important now as they ever were.

And the implications for start-ups?
Of course there will be new business start-ups, and technology will be a critical component at many of those start-ups. But very few of them will be pure tech plays.

So the idea of the incubator will need to be modified as it applies to upstarts?
Yes. I think incubation will be a more gradual process over a longer period of time, rather than a force-fed model where everyone thought speed was the only game in town. Companies will be growing more slowly, more steadily.

Plain old-fashioned economics are as important now as they ever were.In your conversations with CIOs, is there one particular gripe that you hear them express above the others?
If there's one thing that everybody misses when they think about technology--particularly new technology--it's that in adding technologies, the industry sometimes rests on the assumption that it's just about replacing what was there before. Not true. Everything is additive. The major challenge for CIOs is how to take advantage of new technology while recognizing that you still have to manage the system that's been there for 30 years.

Those promoting the latest gee-whiz technology tend to forget that reality. There's a hell of a difference between that and starting with a blank sheet of paper, thinking, How would I build an infrastructure starting from scratch?

What do they want to have happen, more than anything?
Interoperability, openness and the ability to integrate disparate components. As a CIO, you have to make these things happen. We know that productivity is a major driver of economic growth. Everyone wants that. Therefore it's in everyone's interests that the technology take-up is quick and easy. So if there's one thing the technology industry can do, it's to focus more aggressively on these issues of interoperability and legacy integration.

But budgets are still tight. Have customers become skeptical--even cynical--about claims that technology will provide immeasurably good returns on investment?
Whether they are more cynical, I don't know. But they are hugely more focused on what the value proposition is. They are much more determined to see a clear business proposition and clearly delineated benefits before starting to make investments.

In this relationship between customers and suppliers, who is wagging the dog?
There'll be constant tension because underpinning it all is the tension between openness and innovation.

Yet it seems the pressure from vendors to upgrade products is relentless. For instance, a new version of Microsoft Office may include more features and run better with .Net. But many companies would do just fine with the previous version. Yet for Microsoft, a publicly traded company, there's clear incentive to spur faster adoption of new products, regardless of whether the advantages are compelling.
I agree. It's the responsibility of customers to be clear about what they're doing and why. It's right that customers should be resistant to upgrades for an upgrade's sake. It should be for a specific business function...Going back to that other tension, everyone wants standards and everyone wants innovation. There's not one right answer. It's very much a question of customers being increasingly sharp, critical and clear.

In that vein, let me ask you about Linux. What are you hearing about its near-term potential in the enterprise?
Linux is interesting because there's the theme about openness and then there's the theme about freeness, if you like. I have a little more skepticism about that. If you look at a large company's (information-technology) budget, the infrastructure cost, while significant, is a relatively small amount of the total budget. I'm skeptical (about) whether a free operating system is a huge benefit, particularly if you can't tap someone on the shoulder at three in the morning if you have a problem.

Also, Linux does drive up costs in some way. Does the world need another operating system? If I'm a CIO, every time I have to support another operating system...(it's) driving my costs up. Who is going to pay for those costs? In the end, my customers will pay.

But from the point of view of choice, don't CIOs find it desirable to have more than one dominant platform?
Does the world need another operating system? If I'm a CIO, every time I have to support another operating system...(it's) driving my costs up. I think they do want more than one dominant platform. Do they need three? At the moment, we have potentially three: Linux is emerging as a platform, there's the Microsoft enterprise product set, and then we've got J2EE (Java 2 Enterprise Edition). Where is all that going to go? Maybe they will actually align in different parts of (the enterprise).

What needs to happen before Linux becomes ready for mainstream use?
More than anything, applications software take-up. Most infrastructure decisions get driven from business solutions, not the other way around. So if a Siebel were to say that Linux was the way to go, they could drive a lot of Linux through them.

Do you expect something like that will happen anytime soon?
I'm not expecting it anytime soon. Big corporate users would need some sort of support behind it, just as they would expect from commercial software providers.

What about the Macintosh? Many IT managers have told me they'd love to be able to use the systems but that Apple just doesn't go out of its way to make things easy for them.
In corporate environments, you have to ask what problem it is that you want to solve and (whether it's) worth the price of changing. I personally don't see it. Clearly, you see that there are domains--around publishing, music and architectural-related areas--where the Mac has built up enormous strength and capability, but the likelihood of major corporations moving from the Microsoft platform to Mac-Apple is low.

Are investments in IT still viewed within the corporation as strategic investments, reflecting a view held by (former General Electric Chairman) Jack Welch?
I agree with Jack. People went through a series of short-term shocks: the economy, Sept. 11, Enron. But assuming that there are no more of these short-term shocks, people will start to lift their eyes. Because they are in a different economy, they just have to be leaner, sharper and more competitive. This is the time when successful companies carve out more market share so that when the economy does turn around, they will be in more of an unassailable position.

What's different then?
You'll see far less expenditure that's focused on (gimmicks) and what's not essential. You'll have investments in solutions and how to get value from what's already been built. In the run-up to the millennium, there was tremendous (demand). Now a lot of CIOs are going back, asking what can they do to drive real value out of all that. What they realized is they did a minimum amount of integration. Focusing now on the integration aspect, they can drive a lot more value with a relatively minimal investment.

There are lots of rival technologies and rival standards. What's the dumbest idea being promoted these days?
It's not so much that the ideas are dumb as (it is) the extent to which people believe them. The dumbest notion is that there are any solutions, which represent silver bullets to resolutions of problems in IT. Designing, building and maintaining...large, complex IT systems is a difficult and complex business. It's always been difficult and complex and always will be. The idea that with a single leap we'll be free is the dumbest idea. Not to disparage these tools, because they are all incremental tools.