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| COGNIZANT BUSINSS CONSULTING

Next-Generation CIOs:Change Agents for theGlobal Virtual Workplace



COGNIZANT October 2010 2

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Contents

1 Executive Summary5 Introduction

7 Reorganizing Work: A New Hierarchy

10 A New Leadership Role for CIOs

11 Cultural Changes can Empower Teams,Ensure Security

13 The Elusive ROI

15 Conclusion16 Appendix: Survey Results

Preace

Next-generation CIOs: change agents for the global virtual workplace is a Cognizant

Business Consulting research report, written in cooperation with the Economist

Intelligence Unit. The Economist Intelligence Unit conducted the survey and analysis

and wrote the report.

The report was based on a survey of senior executives in North America and Western

Europe, in-depth interviews with nine senior executives and experts in the industry

and other research. The author was Jim Nash and the editors were Katherine Dorr

Abreu and Debra D’Agostino.

The Economist Intelligence Unit would like to thank all those who contributed their

time and insight to this project.



October 2010 NT-GNATION CIOs

xecutive Summary

For several years, chief information ofcers (CIOs) have

championed business efciency. Their focus has been largely

on operational goals, such as keeping IT and operationsrunning smoothly and reducing related costs, while enabling

business processes to support their companies’ strategies for

growth and protability. But the convergence of globalization,

technologies that enable virtual work, collaborative methods

and techniques, and a new tech-savvy generation

(Millennials) of employees is changing how

business is conducted and structured across

the organization (within teams, departments,

etc.) and how the corporation interacts withcustomers and partners.

This report examines the role of CIOs in

restructuring how work is conducted throughout

the organization. It nds that companies leading the movement

toward virtual and collaborative teams — often spurred by

the CIO — are garnering results, particularly with respect to

innovation, talent recruitment and retention, and productivity.

Key ndings include:

l Some companies are changing their operations to support

new structures based on virtual teams that do not rely

on traditional hierarchies and communication channels.

These teams can be powerful operational resources,

particularly when it comes to knowledge-based work. Unlike

more traditional structures, these specialty teams reach

across geographic, cultural and organizational barriers

to nd the needed resources. While not appropriate forall types of operations, collaborative virtual teams, when

used effectively, combine diverse skills to quickly carry

out complex tasks and address novel market challenges.

They also have the potential to foster more productive

relationships with internal and external partners.

… collaborative virtual teams,

when used effectively, combine

diverse skills to quickly carryout complex tasks and address

novel market challenges.



4 COGNIZANT October 2010

l Organizations that have embraced virtual teams garner

benefts such as increased innovation and competitiveness,

but lack appropriate valuation methods to measure the

quantitative impact o these structures on the bottom

line. Still, it is possible to quantify such things as delays

resulting from redundant decision reviews prevalent in moreconventional work structures. It is also possible to measure

time lost when clients or suppliers spot problems that would

have been avoidable had these stakeholders been involved

earlier in the project through virtual collaborative teams.

To gain support for their companies’ transition to the new

approach, executives need to develop ways to measure

return on investment.

l CIOs are in a unique position to inuence the adoption andeectiveness o virtual teams. CIOs are familiar with the

people, tools, technologies and techniques needed to create

a corporate culture of virtual teams. Particularly within

knowledge-based enterprises, they know the processes and

policies employed at all levels of the company and the tools

that can support them. And as members of the C-suite, CIOs

are familiar with long-term strategic goals, which is essential

in crafting an enduring new structure. This perspective

positions them as change agents.




Introduction

A conuence of forces, some old, some new, is pushing companies to change how

they work. Globalization, powered by new communications tools, has broadened

their reach. Technologies such as cloud computing are allowing organizations to

restructure operations. At the same time, a new generation of technically savvyworkers is working its way up the ranks, further exposing companies to transformative

technologies like social media. For some rms, particularly those that operate in

many locations, new ways of organizing work that take advantage of knowledge

sharing can be an effective response to these business shifts.

CIOs who combine technological expertise with a broad, strategic view of the business

have an opportunity to lead their organizations’ adoption of new work approaches.

They bring technological clout to what is fundamentally a cultural

transformation of the company. They can do so because they are

intimately involved in corporate strategy, which gives them a rare

top-to-bottom perspective.

Collaborative and virtual teams — more complex, dynamic and

autonomous than traditional corporate team structures — can makeit possible for companies to take advantage of human, physical and

technological resources regardless of where they are located.

A global survey of executives in Europe and North America,

conducted by the Economist Intelligence Unit in May 2010 in cooperation with

Cognizant Business Consulting, suggests that companies that are at the forefront

of the transition stand out from their peers in many respects. Companies that are

already seeing the benets of this transformation, dened as “leaders” in this report,

say they outperform other organizations in innovation, recruitment and retention

of talent, and productivity. They tend to be less hierarchical, provide more exible

work arrangements, and have established policies and practices that support the

Collaborative Virtual Work Structures: A New Way to do Business

Collaborative teamwork is certainly not a new thing in the

business world, but how teams are used and how they function

is changing. In this report, the term incorporates a number of

characteristics. Interviewees often use the term “virtual teams”

in describing them, although they involve more than mere

physical dispersion.

In this new organization, teams break down rigid structures,

creating environments in which people work in role-based,

cross-departmental, cross-functional and international groups.

Knowledge sharing is fundamental to how these teams operate,and their success hinges on effectively using the expertise of each

member. Teams are by their nature exible and open to change.

While there will always be standard operating procedures, and

the need to show results will always be preeminent, teams must

have a degree of self-management to be successful.

This autonomy means organizations can put more energy into

innovation and less into bureaucracy. As a result, less – but more

relevant – communication is shared. Executives who have playe

midwife to this change say it boosts productivity, reduces error

and helps retain high-quality talent at all levels.

When successfully deployed, these teams combine the strength

of small start-ups and of large, mature organizations: nimbl

entrepreneurially minded teams are sheltered in the midst o

big, stable companies. They can spot and respond to marke

developments more rapidly than can conventional larg

organizations, and they are able to throw more resources a

opportunities and errors than small outts can.These teams have elements of social networking. Both involv

self-organization and groups that are focused on shared interest

and both depend on frictionless, informal communication

Custom-made analogues of Facebook, Wikipedia and Twitter, a

well as high-denition, high-bandwidth telepresence system

which allow people in different locations to feel as if they are i

the same room, weave teams together.

CIOs who combine technological

expertise with a broad, strategic view

of the business have an opportunity to

lead their organization’s adoption ofnew work approaches.




formation of more virtual and collaborative teams. Throughout the report these

leaders are compared with companies that expect to garner benets from new work

structures either within a year or more, or not at all. Those rms are classied as “all

others” in the charts throughout the report.

The research also shows, however, that there is no single model for such teams, nor

a single best path to implement them. How they are deployed reects a company’s

tolerance for decentralization, shared decision-making, collaborative innovation and

change itself. Some rms create teams at strategic points, straddling marketing andproduction or research and development and legal, for example. Others integrate

them deeply into the organization’s fabric.

While one might think that the digital generation – the Millennials – would be the

main driver for this sort of change in companies, the research shows that they are

not playing that role. This may reect the current economic environment, in which

labor is abundant. What matters more than age is mindset: Companies are adopting

a variety of tools and collaborative methods because they increase competitiveness,

not necessarily to attract or retain a specic employee demographic. Nevertheless,

organizations that are at the forefront of this transition may be better positioned to

attract new workers when economic growth tightens labor markets.

To implement collaborative virtual teams, organizations must overcome several

hurdles, including resistance to change and the risks born of greater openness.Executives must be sure that the teams are well coordinated and do not work at cross-

purposes. And although companies that have embraced these teams say they are

integral to their organizations’ operations, they do not have quantiable measures

of their impact. Developing a set of metrics to prove the value of collaborative virtual

teams is among the main challenges to their widespread adoption. Executives who are

able to quantify results will gain credibility to lead their companies’ transformation.

About the Survey

A total of 402 respondents in Europe (52% of respondents)

and North America (48%) participated in the survey, whichwas conducted by the Economist Intelligence Unit in May 2010.

The panel is mainly senior: 45% of respondents hold C-suite

or equivalent positions, and another 29% are senior vice-

presidents, vice-presidents or directors.

Respondents represent a wide range of company size. Thirty-

eight percent are from small to medium-sized companies,

with less than $500 million in annual revenues. Another 19%

represent companies with $500 million to $5 billion in revenues

per year, and the remaining 33% come from companies with

revenues of more than $5 billion.

Forty-six percent of respondents have IT functions. The survey

sought to explore differences in perspectives between these

and non-IT functions, but found considerable alignment

between the two groups. Strategy and business development,

and general management were the other main functional

categories, with 13% in each. The remaining 28% fulll a range

of functions.

Most of the organizations surveyed have global operations.

Respondents’ descriptions of their organizations appear in

chart 2.

Chart 2 Survey respondents represent global

organizationsHow would you describe your organization’s structure and

operations? For each pair, choose the one most applicable.

(% respondents)

Source: Economist Intelligence Unit survey, May 2010.

Operates globally

Operates only in its home country

Partners with companies in several countries

Partners only with companies in the country in whichit is headquartered

Sells on the global market

Sells only in the market in which it is headquartered

Has a global supply chain

Has a domestic supply chain

72

28

81

19

75

25

72

28


Has a hierarchical organizational structure

Has a flat organizational structure

Chart 1 Leaders are more likely to have

flat structures

How would you describe your organization’s structure and

operations? For each pair, choose the one most applicable.

Leaders are those that are already reporting ROI from

collaborative virtual teams.

(% respondents) Leaders

All others

51

71

49

29




eorganizing Work: A NewHierarchy

Survey results show that new ways of organizing work are gaining traction. About

one in six respondents says their organization already has seen positive results

from more virtual and collaborative teams, and another one-fth expects to garnerbenets within a year. Executives interviewed for this report are strong advocates

of these work structures. Leslie Jones, CIO of communications giant Motorola, for

example, says collaborative virtual teams are part of the company’s DNA.

The practices are particularly appropriate for knowledge-based work. Some

companies have implemented them enterprise-wide, sometimes as a result of a major

strategic decision. In many cases, however, they are applied in an opportunistic way,

and gain ground gradually within companies. Other organizations are not adopting

these work structures.

Those already beneting from such practices — our “leaders” group in the survey —

have some attributes in common not shared by the remaining respondents. The

former are more likely to see innovation and collaboration as important competencies

for their organization. They say their company is at the forefront in testing newcollaboration and remote-work technologies. And they report that the benets of

greater collaboration — including increased

innovation, improved productivity and greater

competitiveness — outweigh the risks, such as

reduced governance and potential security lapses.

(See chart 3 on this page and chart 5 on page 9.)

Companies in which top executives demonstrate

strong support for the transition to a new work

structure are more likely to outperform their peers

in such areas as innovation and productivity, the

survey shows. The CIO in particular is seen as a

potentially galvanizing force: The research suggests

that collaborative virtual teams are more likely to

take hold where the CIO is engaged in the process

and involved in broader strategic concerns.

Perhaps because they have been deeply engaged

in the transformation of their organizations,

interviewees report positive results after adopting the new structure. Indeed, for

U.S.-based consumer products giant Procter & Gamble (P&G), which considers

virtual teams a strategic strength, the structure minimizes delays between discovery,

decision and action. CIO and president of global business services Filippo Passerini

says building such teams is more than a way to delegate tasks: It pushes decision-

making authority from middle managers toward groups of project or topic experts

working together, eliminating bureaucratic delays.

Early adopters of these work structures tend to have atter organizations and less

“siloed” communication channels than more traditional companies, the survey

shows. They typically offer a wider range of collaboration and remote-access tools,

including telepresence, instant messaging, site templates, external or custom social

networking environments and cloud computing. (See chart 4.)

These characteristics support virtual teams, says Chris Satchell, chief technology

ofcer (CTO) at U.S.-based International Game Technology (IGT), a global developer

of electronic gambling systems. (In an unusual setup, the CIO of IGT reports to

Mr. Satchell, who thus combines responsibility for technology innovation and IT.)

Chart 3 Leaders value innovation, talent

and productivity more highly, and say

their organizations outperform their

peers

How important are the following attributes to your

organization, and how does it compare with its peers?

Rate on a scale from 1 to 5 where 1=extremely important

significantly outperform; 3=average; 5=not at all import

or significantly underperform.

Leaders are those that are already reporting ROI from

collaborative virtual teams.


Value

% respondents who said the attribute was“extremely important”

Performance

% respondents who say their organizations

“significantly outperform” their peers

Innovation

Recruitment of high-quality talent

Retention of high-quality talent

Productivity

Innovation



Productivity

Leade

All oth

45

6

38

59

41 18

56

45 11

35

19 16

23

11

19

11 8

22

14 8

… the research

suggests that

collaborative

virtual teams are

more likely to take

hold where the

CIO is engaged in

the process andinvolved in broader

strategic concerns.




Because communications generally are not ltered or relayed through managers,

information can spread more easily. Ideas can be added to, dismissed or simply

absorbed by the group for future use. There are few data-hoarders, and isolated

“gurus” are integrated in teams where they share their specialized knowledge.

Such a team might comprise a factory manager, data engineer, marketer, project

manager and company attorney, all of whom have expertise in the project at hand.

Most or all of them can be in separate locations. Working together, they address

practical issues, eliminate redundancies and catch mistakes more efcientlythan within conventional structures. When they span the globe, these teams can

effectively work on a project around the clock.

In some cases, the benets might not be initially obvious. Collaboration is intrinsic

to the hospitality industry, for example, but it tends to be site-specic. Jeremy Ward,

CIO of global luxury hotelier Kempinski AG, says that the company instituted a

culture of geographically diverse virtual teams two years ago. “We changed the way

we work,” he says.

The Munich-based company, which develops and manages hotels, often in exotic

corners of the globe, learned that employees benet from a robust, shared cache

of experiences and greater autonomy. Operating a hotel in Mongolia is different

from running one in Namibia, but there are similarities in providing luxury in remote

locations, including sourcing materials or training staff in a developing economy.Once the advantages of knowledge sharing were identied, and the case for a new

corporate culture made, the company implemented tools needed to make it possible.

Kempinski’s global virtual teams now use wikis to collect, share and elicit knowledge

about tasks, practices and projects. Virtual shared workspaces enable real-time,

globally dispersed collaboration. And process-automation tools streamline corporate

tasks including training and personnel matters like vacation requests.

Interviews with other executives reveal that Kempinski’s culture-before-technology

approach is a common best practice among companies that have adopted

collaborative virtual teams. Making the transition to this work structure poses

challenges for traditionally organized companies, however. The CIO can provide the

support needed to implement the necessary changes.


Chart 4 Most companies provide support

for virtual teams, but leaders offer more,

and more advanced, choicesIn what ways does your organization support a virtual workenvironment? Select all that apply.

Leaders are those that are already reporting ROI fromcollaborative virtual teams.

(% respondents)

Cloud computing

External social networking access

Presence awareness (Online indication that person isavailable to communicate)

Internal/custom networking applications

Providing remote access to e-mail

Providing employees with mobile equipment(mobile phones, laptops, etc.)

Instant messaging capabilities

Video conferencing

Providing remote access to corporate network and servers

Corporate portal or intranet

Leaders

All others

46

18

44

17

55

30

54

32

9173

91

75

65

49

71

56

84

70

75

61





Chart 5 All organizations face the same challenges, but leaders are

more confident in their abilitiesWhat are the greatest challenges posed by a more virtual work environment? Select all that apply.

Leaders are those that are already reporting ROI from collaborative virtual teams.

(% respondents)

Difficulty in managing diverse tools needed to enable dispersed teams to work together effectively

Risks to governance and control

Data leakage

Erosion of corporate culture

Decreased efficiency

Loss of productivity

Leaders

All others

26

41

42

54

44

55

23

30

6

13

4

25

How to Deploy Collaborative Virtual Teams

“If a global perspective isn’t everywhere in the company, you’re

holding yourself back,” says Chris Satchell, chief technology

ofcer of U.S.-based International Game Technology (IGT).

For IGT, which has $2.1 billion in annual sales and facilities

on every continent but Antarctica, that perspective involvesmore than knowing overseas sales projections.

IGT is turning to global virtual teams in an effort to remain

the world’s biggest maker of casino-based and online

gambling systems. Mr. Satchell was hired in June 2009 by

new CEO Patti Hart to help end the company’s nancial

stagnation. Ms. Hart had already begun efforts to dismantle

what Mr. Satchell says was an outmoded command-and-

control structure.

While IGT is still the dominant player in the market, the

global recession has cut its revenue and prot, and slashed

its share price. Seeing an opening, competitors are hungry

to overtake the 25-year-old rm. As head of product andinformation technology, it is Mr. Satchell’s job to make sure

IGT is not out-innovated. To that end, he is deploying virtual

teams throughout the organization.

Before repeating the practice in the whole company, Mr.

Satchell debuted the concept in IT. “I wanted to make sure

I had my own house in order.” He started with some small-

scale efforts and made sure IT could support the larger move

without a hitch that could derail company-wide deployment.

A united C-suite showed everyone the benets of virtual

teams. Among them are:

l Faster time to market: Everyone needed for a project is

involved from the beginning, which minimizes time spent

on briengs at critical decision points.

l Less bureaucratic intererence: Teams are semi-

autonomous.

lMore innovation: If done right, virtual teams concentrate

needed expertise in each group.

Relationships are important when building virtual teams.

“We’re always pushing employees to understand that people

in other groups have different perspectives. They have

something you need, and you have something they can use,”

says Mr. Satchell.

Even as virtual teams become more entrenched at IGT,

travel remains an important relationship-building tool. “It’s

a misconception to think that you can do away with your

travel budget,” Mr. Satchell says. Even high-frequency virtual

meetings need to be supported with occasional face-to-face

gatherings (though not necessarily involving whole teams).

Today, Mr. Satchell says, “we’re getting the pace and focus

that we need.” He thinks he is two years away from completing

IGT’s transition to mature virtual teams.




A New Leadership ole or CIOs

In just a few years, most CIOs and their IT departments have grown from asset

managers to strategic enablers, ensuring that IT capabilities are aligned with business

needs. The next step for CIOs is to become drivers of broad strategic change. If

they do not, they risk losing clout in their organization. “How much competitiveadvantage can there be to running a different network layout or buying a different

server?” asks P&G’s Mr. Passerini.

Motorola’s Ms. Jones agrees. Gone are the days when CIOs could prove their strategic

value by assembling technology platforms that support business processes. “The

minute the CIO talks about ‘alignment’ (of IT with business processes), you’ve declared

yourself as something alien” to the revenue-generating portion of the organization,

she says. “We have to be integral to the strategy, not just aligned.”

It is not enough, even, to support a top-down initiative that uses collaborative

virtual team tools, because the tools are not the critical component. What

matters, says Ms. Jones, is the organization’s ability to perform well in

complex markets through a exible and adaptive structure that is supported

by IT. CIOs interviewed for this report agree that such an approach is crucial.To make it work, tools, processes and policies that support collaborative

virtual teams have to be spread throughout the organization.

Can CIOs sell such an idea to the company? They have in the past: At the start

of the PC revolution, nance staff began taking their personal computers to

the ofce so they could do their job without having to petition for time on the

mainframe. Successful CIOs understood what was happening, advocated for

policy changes and adapted systems to capitalize on decentralization.

This new change is much bigger in scope, and will require that CIOs tackle

cultural issues that have strategic impact. Survey results suggest they

have the support to do so: The CIO is broadly viewed by respondents as

a champion for collaborative environments, and also is considered the

appropriate executive to implement the structures and tools neededto make collaborative virtual teams happen. Only CEOs ranked higher

overall (chosen by 47% of all respondents), which is not surprising as they

are ultimately responsible for determining corporate strategy. What is

unexpected, though, is how high CIOs ranked: They were chosen by 45%

of all respondents. (Respondents could choose up to two of nine functions

or groups.) CIOs ranked even higher among companies dened as leaders

in the survey: For those rms, the CIO outstripped the CEO 49% to 45%.

(See chart 7.)

CIOs looking for an ally when promoting virtual teams should turn to

chief marketing ofcers (CMOs), suggests Clay Shirky, who teaches the

Interactive Telecommunications program at New York University and

has written extensively about communications trends. Traditionally the

most outward-focused executive, the CMO has much to gain from greater

collaboration with buyers and would-be buyers, and can be a powerful ally in

creating collaborative virtual teams. It is axiomatic that the best marketing

campaigns are conversations.

Leading such a change could create greater opportunities for CIOs in

the long term, suggests P&G’s Mr. Passerini: “The CIO role is beautifully

undened. This is a unique opportunity to play a more active role in the

business.” Tackling cultural change is one way to expand the CIO’s presence

in the organization.


Chart 6 Leaders test and adopt technologies

that enable virtual teamsWhich statement best describes your organization’s approach toadopting technologies that enable collaboration and remote work?

Leaders are those that are already reporting ROI from collaborative

virtual teams.

(% respondents)

Is at the forefront in testing and adopting new technologies

Only adopts technologies after their effectivenesshas been proved in the market

Only supports basic technologies such as email and conferencingcapabilities

Don’t know/Not applicable

Leaders

All others

52

15

44

60

3

23

1

3


Chart 7 CIO and CEO should lead implementation

of virtual teaming

In your opinion, who within the organization should lead the effortto implement the structures and tools necessary for a more virtualwork environment? Select up to two.

Leaders are those that are already reporting ROI from collaborativevirtual teams.

(% respondents)

An ad-hoc committee involving CIO, COO, others

Chief operations officer (COO)

Chief executive officer (CEO)

Chief information officer (CIO) or equivalent

Leaders

All others

16

23

22

24

45

48

49

44




Cultural Changes can mpowerTeams, nsure Security

Collaborative virtual teams can alter how work is done. They create benets, but

also risks and challenges. They require organizations to evolve, reshaping teams

and developing processes to meet the needs of the task at hand. And they require

executives to coordinate the teams so that the overall goals of the organization are

met.

Security — keeping data and innovations safe – is an important concern. Survey

respondents who say their rms are already garnering benets from using these

new work structures rank security second only to cultural resistance as an obstacle

to creating a more virtual environment in their organizations.

Technology in the form of ever evolving applications is not sufcient to address the

issue of security. Companies that deploy collaborative virtual teams must train and

continuously communicate with employees the personal stake each

has in keeping information safe. CIOs interviewed for this report

agree that changing behavior is more important than software.

As part of its virtual team strategy, Florence, Italy-based GE Oil

& Gas, a unit of U.S.-based General Electric, has created policies

that prohibit employees from releasing proprietary information or

speaking on the company’s behalf without authorization, says CIO

Alan Kocsi. So long as they stick to the policies, GE Oil & Gas’ 13,000

employees, spread over 100 countries, can use social networks

including Facebook and YouTube for personal networking. The company has “virtual

co-location environments” with similar functionality for business-related networking

between employees as well as with customers and suppliers.

Tom Conophy, executive vice president and CIO of UK-based Intercontinental Hotels

Group, also emphasizes training. He is building a culture of awareness around

intellectual property within the company, and educating employees is part of the

process. Sending an email or posting on a social network exposes the company tothe risk of data leakage, for example. Employees must be conscious that sending

Chart 8 Cultural resistance tops list o obstacles or all, but second-tierconcerns are very dierent

What are the biggest obstacles to creating a more virtual work environment in yourorganization? Select up to three.


ank

Leaders All others

Cultural resistance to changing traditional work methods 1 1

Concern that data security would have to be weakened in orderto make collaboration possible

2 4

Perception that it will lead to a loss of intellectual property 3 11

Cost of implementing collaboration technologies 4 2

Existing rules and tools that are designed to prevent data

leakage

5 6

Lack of interest at the executive level 9 5

Lack of an effective strategy to support a virtual workenvironment

10 3


Companies that deploy collaborative

virtual teams must train andcontinuously communicate with

employees the personal stake each has

in keeping information safe.




information to a neighboring cubicle could just as easily result in sending it to the rest

of the world. “You are publishing when you hit the ‘enter’ key,” says Mr. Conophy.

A cultural change throughout an organization requires new attitudes. It means

winning over those who think collaboration is less a business process than strictly

a human resources concern. It entails showing that accountability and productivity

can be maintained. And it involves convincing people to share information rather

than hoard it.

For collaborative virtual teams to be successful, “there has to be a mind-switch

throughout the company,” says Mr. Ward. As a result, Kempinski’s training programfocuses as much on the benets of the new culture as on the responsibilities and

tools.

Collaborative Virtual Teams Evolve at CERN

Some of the world’s largest collaborative virtual teams work

at CERN, the European Organization for Nuclear Research,

straddling the French-Swiss border. The research groups,

involving thousands of scientists and students from dozens

of countries, use a massive particle accelerator to look for thecomponents of dark matter.

Two years ago, talk about success with the kind of collaboration

that typies such teams was “hype,” says Dr. Helge Meinhard,

who leads the CERN information technology (IT) staff that

supports, among others, an overall team comprised of more

than 2,000 physicists, including 500 students, from 150

institutions in 30 countries. This collaboration, known as the

Atlas Experiment, is itself a collection of virtual teams. Atlas

is closely linked with other similarly large collaborations, and

communication and knowledge sharing between them are

intense.

CERN has strict rules about what information can be

published or openly discussed, and individual institutions can

have their own disclosure protocols. Yet despite the number

of people, the complexity of the tasks and the informal nature

of scientic relationships, Mr. Meinhard says virtual teams

keep confusion to a minimum.Unlike many endeavors in which scientic knowledge is

compartmentalized, CERN scientists network extensively

and manage their own virtual teams locally. This reduces

the burden of information overload, says Mr. Meinhard. For

the most part, people get only email relevant to them. Team

wikis are common and collaboration software is available for

groups.

Facebook is also used as a collaboration platform, though

unofcially. Some CERN teams recently have started using the

social network to communicate and organize. That indicates

a greater level of collaboration is needed, Mr. Meinhard says,

and CERN is looking at how it can provide a similar service




The lusive OI

Transforming an organization’s culture is important, but return on investment (ROI)

is ultimately critical. Proving that collaborative virtual teams bring tangible benets

is still an elusive task. Even respondents who say their organization has already

experienced a measurable return on investment (ROI) from such efforts do notexplain how that return is quantied. And while CIOs interviewed for this report say

these teams have had a signicant impact on their companies, measurable ROI is

hard to come by.

The interviewees posed a common rhetorical question when discussing ROI: How

does one put a gure on a mistake that was caught by a team member who would

not have been involved in the process under a traditional structure?

More tangibly, collaborative virtual teams can better distribute workloads among

subject-matter experts and maximize knowledge sharing. IGT’s Mr. Satchell says his

company would never have the capacity to meet current challenges without virtual

teaming. Responding to declining revenues resulting from the economic crisis

and competitors avid to grab market share, IGT faces sobering

challenges. (See a description of IGT’s challenges in “How to Deploy

Collaborative Virtual Teams” on page 9.)

Mr. Satchell does not merely delegate tasks to his teams. Rather,

teams are expected to solve complicated problems through critical

thinking and analysis of sometimes complex conditions or needs.

Teams have the authority to make project-related decisions, whileupper management looks after overall strategy. The trust is there, Mr. Satchell says,

because team members are experts in the task assigned to them and understand

their group’s role. What matters is their expertise.

According to Steve Brewer, applications development director at FONA International,

a U.S.-based global maker of avors used in foods, medicines and other applications,

such teams have made his company “more responsive than our rivals.” Mr. Brewer

attributes this responsiveness in part to virtual teams, although similar to his

colleagues, he is reluctant to assign all of the success to it.

Chart 9 Leaders are already seeing resultsWhen will changes brought on by greater collaboration and a more virtual work environment result in a

measurable return on investment?


(% respondents)


Garnering measurable results now

In 1 year

In 2 to 3 years

In more than 3 years

Never

Don’t know

17

18

38

11

2

12

How does one put a gure on a mistake

that was caught by a team member wh

would not have been involved in the

process under a traditional structure?




Ms. Jones of Motorola and Mr. Satchell of IGT say their CEOs were predisposed

toward more collaborative corporate environments, but that is far from universal.

Conventional hierarchies are familiar to and protective of chief executives. To

embrace collaborative virtual teams means addressing attitudes about more open

knowledge sharing and cooperation. If implemented with the proper coordination

to ensure that company goals are met, collaborative virtual teams can provide

signicant benets, helping organizations anticipate or respond to novel situations,

and thus become more competitive.

Still, gaining support to deploy such teams more broadly throughout the organization

will require proving their value. Productivity gains, number of innovations, talent

retention and a host of other metrics can be useful tools to evaluate unorthodox

techniques in rapidly changing environments. However challenging it is to develop

metrics to show the benets of such team structures, CIOs who do so will be better

able to sell and then defend the new ways of organizing work.

Holiday Inn’s Image Improves as Teams Overhaul Brand

Intercontinental Hotel Group (IHG), the world’s largest hotelier

as ranked by number of rooms, has implemented knowledge

sharing by bringing team members together in a dedicated

room for the duration of the project – whether three months

or one year. Tom Conophy, executive vice-president and CIO,is using these teams to achieve a company goal: making IHG’s

technology a key brand differentiator.

IHG currently manages 1,100 live IT-related projects around

the world. The potential for duplicate work is enormous, so

key projects use Yammer, a private social networking tool for

teams. Like many companies deploying collaborative virtual

teams, IHG also supports wikis to document projects and

share information.

The teams combine IT employees with anyone else in the

company who can help complete the project. “Business people

sit next to engineers and have real-time interaction,” says Bill

Peer, vice president of enterprise architecture and strategy atIHG. Teams have the authority they need to make decisions

that will bring the project in on time and on budget.

People can volunteer their services for a team or they can

be chosen by management. The approach is popular, despite

the various light-hearted nicknames the dedicated space has

gotten: the gulag, the war room, the cave. “I’ve never had

anyone say ‘no’ to a second assignment,” says Mr. Peer.

Mr. Conophy says the teams complete tasks faster than if theyhad to go through traditional channels to communicate with

stakeholders and get decisions from executives. He adds that

the teams generate more innovation because the principle

parties are always together to share and assess ideas.

The approach was used as part of IHG’s yearlong, $1 billion

brand overhaul of Holiday Inn, spotlighted by Brandweek.com’s

weekly Buzz Report, which measures brand awareness among

consumers. The January 2010 report concluded that Holiday

Inn’s overall consumer-perception score rose throughout 2009,

despite an extremely challenging economic environment. It

was only one of two top-10 hotel chains to manage that feat;

the overall industry’s score declined over the same period.A solid strategy for revamping the brand resulted in this

success. But teams helped the company achieve its goals,

according to Mr. Conophy.




Conclusion

For most companies, dealing with uncertainty and change is a part of doing business.

Today, however, the challenge is harsher. Globalization has moved beyond the search

for resources and markets to securing and optimizing the use of talent and skill

sets wherever they are found. It depends on collaboration, which now occurs acrossdepartments, using communication tools to connect people regardless of their

location. Rapid technological change puts pressure on companies to constantly

adapt. Organizations that are able to knit their operations into exible and semi-

autonomous teams that outperform competitors in innovation and responsiveness

to market changes will have an advantage. This will require changes to processes,

especially with regard to knowledge-based work.

CIOs are strategically positioned for this task because they operate at the intersection

of strategic decision-making and tactical practicality. They see how employees work,

and are aware of new technologies that can help employees excel at their jobs. And

they can take that knowledge to the C-suite, making the case for a structure based

on collaborative virtual teams and supported by tools that will penetrate deeply into

the business world.

Companies that have not implemented such changes can learn from the experience

of those identied as leaders in this report. While the use of collaborative virtual

teams is still evolving, some best practices have emerged:

l The change toward virtual collaborative teams should not be viewed simply as

a technology eort but as a strategic business initiative. Many of the companies

identied as leaders in this research have relied upon partnerships with business

heads to champion this approach. For others, the transformation can start within

IT, where CIOs can hone a strategy customized for the overall organization. But

this should be a launch pad that will enable the CIO to identify the best techniques

and tools for the enterprise.

l To be eective change agents, CIOs must be not only leaders, but also

enablers and partners. Success is far more likely if CIOs and IT professionals areseen as integral team players whose efforts add real value to the deployment

of collaborative team structures within the organization. CIOs can provide

the visible corporate leadership and support that is required as traditional

hierarchies are challenged and dismantled. They should promote training and

robust communication policies that keep enterprise-wide goals and security in

sight, yet do not stie collaboration and creativity.

l CIOs should spearhead the development o metrics that prove the tangible

value o collaborative virtual teams. While survey respondents report

improvements, especially with regard to innovation and productivity, proving

value is key to securing enterprise-wide support for a shift to this new approach.

Metrics strengthen the CIO’s position as an agent of change.




How would you describe your organization’s structure and operations?

For each pair, choose the one most applicable. (% respondents).

Operates globally

Operates only in its home country

72

28

Has a global supply chain

Has a domestic supply chain

72

28

Sells on the global market

Sells only in the market in which it is headquartered

75

25

Partners with companies in several countries

Partners only with companies in the country inwhich it is headquartered

81

19

Has a limited portfolio of products/services

Has a highly diversified product/services portfolio

50

50

Has a hierarchical organizational structure

Has a flat organizational structure

68

32

Appendix: Survey esultsPercentages may not add to 100% due to rounding or the ability o respondents

to choose multiple responses.



Append


How important are the following attributes to your organization?Rate on a scale from 1 to 5 where 1=extremely important; 3=average; 5=not at all important.

(% respondents).

,

Innovation



Productivity

1 Extremely

important

2 3 Average 4 5 Not at all

important

49 31 14 5

43 36 16 4

44 31 19 5 1

47 36 13 4

In your opinion, how well does your organization compare with its peers

with respect to the following attributes?Rate on a scale of 1 to 5 where 1=much stronger; 3=about the same; 5=much weaker. (% respondents).

,

Innovation



Productivity

1. Much

stronger

2 3. About the

same

4

5. Much

weaker

22 35 32 9 2

13 26 43 14 3

12 28 41 15 4

15 34 42 8 2

In your opinion, how well does your organization compare with its peers

with respect to the following attributes?Rate on a scale of 1 to 5 where 1=much stronger; 3=about the same; 5=much weaker. (% respondents).

,

My organization is moving toward a virtual work environment, in which human, physical and technological

resources are located where they contribute most effectively to attaining business objectives.

My organization needs to change business processes to work more effectively with external stakeholders.

In the next 12 months my organization will take steps to improve collaboration among dispersed teams.

Our CIO (or head of IT) is an evangelist for a more collaborative environment within the company and with partners.

My organization needs to adopt a more flexible work environment to attract talented employees.

My organization has policies and practices that facilitate the formation of cross-functional and dispersed teams.

In the next three years, the physical dispersion of our workforce will make it essential to improve

our capabilities for working virtually.

Collaboration’s positive effect on productivity and competitiveness are outweighed by the risks it entails.

Agree Neither agree

nor disagree

Disagree

54 27 19

56 35 10

61 29 11

43 40 17

50 33 17

45 36 19

53 37 10

44 36 19



Appendix


Which of the following statements do you think best describe changes that will occur

in your organization over the next three years?Select up to three. (% respondents).

Cross-functional teams will become more important within the organization.

My organization will use more collaboration technologies.

My organization will structure its operations based on the most efficient use of skill setsand resources, independent of geography.

My organization will outsource more functions.

My organization’s teams will be increasingly dispersed geographically.

My organization’s employees will increasingly work remotely.

My organization’s external partners will be increasingly dispersed geographically.

Younger workers entering the organization will exert pressure for a morecollaborative and flexible work environment.

My organization will offer more flexible work arrangements (such as telecommuting, flexible hours, etc.).

Other

The organization will remain essentially the same as it is today.


45

41

35

26

25

22

21

20

18

1

5

1

What is your organization’s strategy with regard to creating a virtual work environment?Choose the option that best applies. (% respondents).

Has been an early adopter

Is beginning to implement a broad initiative

Is beginning a limited trial

Is analyzing the need and opportunity

Has halted or abandoned efforts

Has neither a strategy nor plans to create one


28

18

20

16

2

13

3



Append


In what ways does your organization support a virtual work environment?Select all that apply. (% respondents).

Providing employees with mobile equipment (mobile phones, laptops, etc.)

Providing remote access to e-mail

Providing remote access to corporate network and servers

Corporate portal or intranet

Video conferencing

Instant messaging capabilities

Internal/custom networking applications

Presence awareness (Online indication that person is available to communicate)

Cloud computing

External social networking access

Other

My company is not supporting a virtual work environment

Don’t know

78

76

72

63

59

52

35

34

23

22

3

5

1

Which statement best describes your organization’s strategy with regard to collaboration?Select only one. (% respondents).

It is a core competency of my organization.

It is an enterprise-wide effort, driven by top leadership.

It occurs within departments, and depends on the initiative of department heads.

It occurs only when necessary.

It is focused mainly on working with external stakeholders (e.g., suppliers or partners).

It does not have a specific strategy with regard to collaboration.


18

28

23

15

3

9

2



Appendix


In your opinion, what are the three most important benefits your organization can gain

from a more collaborative and virtual work environment?Select up to three. (% respondents).

Better productivity

Increased efficiency

Environment more conducive to innovation and new ideas

Faster response to market events

Lower infrastructure costs through methods such as virtualization and cloud computing

Stronger customer relationships

Increased transparency

Attraction of a more diverse work force

Lower personnel costs by off-shoring

Minimizing employee turnover

Improved risk awareness and management

Recruitment of younger employees

Better brand awareness among customers

Other


51

50

31

28

24

18

14

13

11

10

10

7

5

2

1

Which statement best describes your organization’s approach to adopting technologies

that enable collaboration and remote work?Select only one. (% respondents).

Is at the forefront in testing and adopting new technologies such asdata sharing applications and social media.

Only adopts technologies after their effectiveness has been proved in the market.

Only supports basic technologies such as email and conferencing capabilities.


21

57

20

3



Append


What are the biggest obstacles to creating a more virtual work environment

in your organization?Select up to three. (% respondents).

Cultural resistance to changing traditional work methods

Concern that data security would have to be weakened in order to make collaboration possible

Cost of implementing collaboration technologies

Lack of an effective strategy to support a virtual work environment

Lack of interest at the executive level

Existing rules and tools that are designed to prevent data leakage

A rigid hierarchical structure with walls between departments

Belief that it will require more bureaucracy, monitoring and policing

Our infrastructure is not sufficiently robust to support collaboration

Lack of interest at the department level

Perception that it will lead to a loss of intellectual property

Excessive competition among our departments

Other


45

26

25

24

18

16

14

12

12

11

11

6

5

7

To what extent do Millennial employees—those aged 18 through 35—influence your

organization’s culture?(% respondents).

Very large influence

Some influence

No influence


13

61

23

3



Appendix


In comparison to more established workers, what areas do you think are most important

for Millennial employees?Select up to two. (% respondents).

Opportunities for faster professional growth

Flexible work environment

Being heard in the organization’s decision making process

Adoption of new communications techniques such as social media

Mentoring

A more non-traditional, decentralized operating structure

Opportunities for relocation

Focus on corporate social responsibility

Other


41

34

23

19

16

14

7

5

0

1

How much influence does the CIO (or head of IT) have in defining

your organization’s strategy?Please rate on a scale from 1 to 5, where 1= strong influence and 5=no influence. (% respondents).

Enterprise strategy globally

Enterprise strategy regionally

Line-of-business strategy

IT strategy

1 Strong

influence

2 3 4 5 No

influence

Don’t know

21 26 22 15 13 4

19 27 28 13 10 4

14 26 27 16 13 3

53 28 9 5 2 2



Append


In your opinion, who within the organization should lead the effort to implement

the structures and tools necessary for a more virtual work environment?Select up to two. (% respondents).

Chief executive officer (CEO). This is an organization-wide challenge.

Chief information officer (CIO) or equivalent. This is primarily a technology-enabled task.

Chief operations officer (COO). This is primarily an operations task.

Chief security officer (CSO). This is a security matter.

Specially created C-level position. Collaboration involves almost all departments andhierarchical levels, so a specific position exists in my organization to implement it.

An ad-hoc committee involving CIO, COO, department heads and/or others.

Department/unit heads. They know best how to accomplish the changes.

An outside consultant. This helps overcome internal politics and resistance.

Other


47

45

23

5

6

21

11

4

1

1

How supportive is your IT team of allowing employees to work virtually?(% respondents).

Very supportive

Somewhat supportive

Not at all supportive


45

47

5

4

What is the relationship between IT and line-of-business executives in your

organization when it comes to changing technology?Select the one that best applies. (% respondents).

IT works closely with line-of-businessexecutives to identify needs and chooseappropriate technologies

IT consults with line-of-business executives toidentify needs but determines which tools toimplement

Changes in technology are imposed on thelines of business by IT

Decisions regarding IT are made by theline-of-business executives and implementedby IT


41

30

14

12

4



Appendix


What do Millennials (employees aged 18 through 35) entering your organization

request from IT?Select up to three. (% respondents).

Support for mobile computing

Unfettered access to the Internet

Less bureaucracy in product development and in communicating ideas

Collaboration and networking apps

Access to new social media and collaboration tools

Easier access to internal data

Telecommuting support

Freedom to choose platform

Video capabilities that enable face-to-face communication between people in dispersed locations

Other


38

35

26

26

25

25

25

15

11

1

11

Which statement best describes how the role of your organization’s IT function would

be affected by a more virtual work environment?Select only one. (% respondents).

IT would have a larger policing role in balancing data security and collaboration/transparency.

IT would be more closely integrated into departments. It would become a partner in decisions at all levels.

IT would have greater strategic responsibilities, including managing the social dimension of information.

No change. IT already supports a virtual work environment.

Other

Don’t know/Not Applicable

33

22

20

18

1

6

When will changes brought on by greater collaboration and a more virtual work

environment result in a measurable return on investment?Select only one. (% respondents).

My organization is already garnering measurable results

1 year

2 to 3 years

More than 3 years

Never


17

18

38

11

2

12



Append


What are the greatest challenges posed by a more virtual work environment?Select all that apply. (% respondents).

Data leakage

Risks to governance and control

Difficulty in managing diverse tools needed to enable dispersed teams to work together effectively

Erosion of corporate culture

Barriers to communication among dispersed teams

Loss of productivity

Decreased efficiency

Other


53

52

38

29

26

21

12

2

4

In which country are you personally located?(% respondents).

United States of America

United Kingdom

Canada, Germany

France, Russia, Spain, Switzerland

Italy, Belgium, Czech Republic

Poland, Denmark, Sweden, Austria, Finland, Hungary, Netherlands, Norway, Estonia, Ireland, Romania

42

12

6

3

2

1

In which region are you personally based?(% respondents).

Europe

North America

52

48



Appendix


What is your primary industry?(% respondents).

Financial services

IT and technology

Professional services

Healthcare, pharmaceuticals and biotechnology

Manufacturing

Consumer goods

Energy and natural resources; Government/Public sector

Construction and real estate

Entertainment, media and publishing; Telecoms;Transportation, travel and tourism; Education; Retailing; Automotive

Agriculture and agribusiness; Chemicals; Logistics and distribution

23

15

10

9

8

5

4

3

2

1

What are your organization's global annual revenues in US dollars?(% respondents).

Less than $500 million

$500 million — $1 billion

$1 billion — $10 billion

$5 billion — $10 billion

$10 billion or more

38

12

17

7

26



Append


Which of the following best describes your title?(% respondents).

Board member

CEO/President/Managing director

CFO/Treasurer/Comptroller

CIO/Technology director

Other C-level executive

SVP/VP/Director

Head of business unit

Head of department

Manager

Other

2

14

4

19

6

29

3

7

12

3

What is your main functional role?(% respondents).

IT

Strategy and business development

General management

Finance

Marketing and sales

Risk

Customer service

Supply-chain management

Operations and production

R&D

Legal

Other

46

13

13

8

5

4

3

2

2

1

1

1



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