CA Chief Touts Automation, Business Transformation at Interop

The proliferation of technology is presenting great challenges for IT management, said CA President and CEO John Swainson.

The average company spends 9 percent of its budget on IT and nearly 70 percent on operations and maintenance and few have formal processes for managing IT resources, which Swainson is growing in importance with the proliferation of technology. Swainson spoke to more than 500 people during a standing-room-only keynote speech Wednesday at Interop New York.

"Every time we all get together like this, the conversation invariably turns to the obvious question -- the one the columnists and pundits will seize on and talk about for months to come: What's next?" he said. "What's the next big thing?"

Swainson said people have different takes on what will be the next trend in technology but it usually turns out to be a "mirage."

"We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run," he said. "The fact is that it often takes longer than we expect for a technology to have an impact, but when it does, its impact often exceeds our expectations. And the reason is that technology invariably is used in ways we never imagined. The Internet is a perfect example. The truth is that there is no one big thing; there are many big things -- all happening simultaneously. Lots of emerging technologies -- and ways of leveraging technology -- have the potential to make a significant impact on the way we live and work. And all these innovations, changes and trends contribute to the direction the IT industry will take over the next few years."Complexity is one of the major trends in technology right now and that can create bewildering complexity in IT environments, Swainson said.

"I believe that the next big thing in IT will be to manage all the other "big things" -- past, present and future...then integrate, secure and manage them," he said. "If we can simplify the management of IT, we can unleash its value."

As business processes become more automated, productivity and economic growth increase, but so do the layers of the IT environment, he said. New devices and applications must be managed and secured, he said. As the number of devices connecting people rise, the number of security threats and challenges for managing them will also grow, he said.

CIOs must lead the way to simplifying, unifying and securing the computer environment, he said. The biggest challenge for CIOs is to take on a strategic business role and transform IT management, Swainson explained.

He said there are several key trends likely to influence that process: Computers, processors, storage, networks and databases are becoming virtualized. Network speeds are increasing. New standards, such as IPv6, will help enable all forms of data and voice. Distinctions between transports for storage, data and voice devices will disappear. SOA is emerging for more rational compartmentalization, standard interfaces, centralized repositories and standard means for integration, he said. New models are emerging, including hosted network and security offerings for applications, increased outsourcing of IT processes and services and more applications outside of corporate networks.Though the new models can cut spending, CIOs will continue to be accountable for securing and managing all levels of IT services. Hardware vendors are requesting -- and software vendors are supporting -- open standards. Standards are proliferating. As resources are outsourced, security issues are growing. Prices are falling, which means technology purchases will grow, he said.

"We can't keep dealing with these trends the way we have in the past: by throwing human beings at the problem," Swainson said.

The proportion of IT employees rose from about 3.5 percent eight years ago to nearly 6 percent of total employees, while applications development and maintenance support costs rose from $71 billion in 2002 to more than $96 billion last year, he said.

Swainson said that creates an ineffective and inefficient structure with rising labor costs that cannot be sustained in a global economy with 4 percent annual growth. With a decline in IT students in American universities and looming mass retirements of baby boomers, employers cannot continue throwing people at their IT problems, he said. Spending on labor diverts IT from its higher purpose, which is to add value to business by transforming processes, he said.

Yet, companies in the Global 2000 spend nearly 9 percent of their annual budgets on IT, up from 2 percent 30 years ago, and 56 percent of that is for maintenance, Swainson said. With another 24 percent going to business expansion, only 20 percent remains for transformation. Swainson put it another way: 60 percent of IT budgets cover labor.Automated infrastructure can cut those costs, so companies can spend more on improving processes, he said.

"In other words, by managing IT more effectively, a CIO can do what the CIO is supposed to do: deliver profound value to the business," he said.

To that end, CIOs must make sure that IT: is driven by business needs and delivers modern and relevant services, matches spending with the lines of businesses that use resources, meets clear objectives and standards for service, complies with standards and optimizes labor, he said.