Ah, finally figured I should steal a few minutes from my schedule to discuss how my panel on “Virtual Organizations” went at the MIT CIO Conference. You can read a review about the panel and the conference in general on Dr. Irving Wladawsky’s blog but here is my take on it. Some of you must have read my previous blog post titled “From machines to humans – How virtual are we getting?“, a preview post for the panel where I talked about the role of  Virtual Organizations, how its role is expanding to connect everything from supply chains to end-customers and the myriad opportunities that it can enable if deployed properly.

While that is all very relevant, as I sat through the panel at the CIO conference, I realized why this topic is so encompassing from every angle, why it is so complex and why it requires a deep strategic analysis by CIOs. Simply speaking we can broadly analyze this topic from technology, business and cultural perspectives.

From a technology perspective, “virtual organizations” is the mother of all buzz words that you will ever hear in the IT world. CIOs will have to think about every small detail and every technology out there to  efficiently deploy it in an organization. Lets take it step by step… First is the Cloud strategy, where CIOs have to think about how their infrastructure is set up to support a distributed work force. What is the right mix and which applications should be moved into the cloud. For example, for Startups, Cloud might be the best option since it allows easy scaling. Second is the virtualization strategy, especially for server infrastructure hosted within the corporation (for large corporations) and for delivery of services. Simon Crosby, CTO of Citrix,  brought up several interesting points in regards to this which not only include server side virtualization aspects but more importantly the delivery of services to the end users (employees in this case). Although companies like google are popularizing web-based delivery of applications, many companies may still be running legacy application suites which may not be viable for browser based delivery. As Simon was mentioning, some airlines still run software based on Windows 3.1 (surprising isn’t it?). Security may also be a criteria that determines how applications are delivered. The delivery of services in turn will also determine the CIO’s strategy on employee infrastructure. Most employees own personal computers, so how about delivering applications into a dedicated secure virtual client on their desktop. Doing so can not only save companies costs on hardware (because the computing and hosting is done remotely) but will also save lot of money in maintenance (upgrade of central hardware & software and not worry about employee infrastructure).  Third is Enterprise 2.0, i.e. leveraging collaboration and communication technologies that enable employees to work with each other seamlessly and efficiently. Lorie Buckingham, CIO from Avaya touched upon their recent technologies such as Aura which is enabling unified communications and collaboration in different companies. In addition to the network setup, CIOs will also have to think about deploying other tools as I mentioned in my article on Enterprise 2.0.

From a Business perspective, “virtual organizations” basically gives companies competitive edge on so many fronts. John Stone, President of Cross Tech Partners, talked about an interesting case study that BT published where  considerable ROI was obtained after implementing the virtual organization strategy in their company. From infrastructure costs to improved employee productivity to accommodation costs (since most employees work from home), efficiency was achieved everywhere. (On that note you should know that BT also implements the communication technology strategy at Analog Devices and the case study is here). More than just the ROI or rather the financial perspective, the advantages gained by implementing a virtual organization strategy can be analyzed better using the Kaplan Strategy Map. Benefits can be realized on all fronts – financial perspective as we already talked about, customer perspective because the organization becomes so agile and responsive to their needs, internal process perspective because virtual organizations become so efficient in communication and collaboration between all departments (cross-functional, multi-site etc) and lastly the learning and growth perspective because of the easy access to and alignment of  human and information capital.

From a Culture perspective in “virtual organizations” we can probably look at the organization capital in the Kaplan Strategy Map especially from the teamwork angle. Virtual teams provide companies the ability to leverage talent from anywhere in the world anytime. Teams can be formed on the fly without considerations of physical location thus allowing employees to work on many interesting projects and know pretty much everyone in the company virtually. However, on the other hand, culture also becomes an important factor in determining the success of virtual organizations. Employees may not be comfortable working with someone remotely and the human social element of working with people physically around you isn’t there anymore. But the pros may outweigh the cons. Moreover, as Bilal Hussain, Fmr Director of E-Services of Saudi Govt,  pointed out, culture is an extremely difficult problem to work on in public/Govt entities. First, Govt. employees may not be as tech savvy as employees in technology companies. Second, it literally eliminates corruption and third there is always this perception in Govt offices that if an employee does not show up in office, he/she is not working.  I’ll probably talk in detail about the challenges of deploying technology in Govt in a future post but all in all it is a very tough hurdle. But once these cultural hurdles are overcome the benefits are tremendous. Its just that you need to get the commitment from employees (buy-in) and not compliance (does not work long-term).

All in all, this is a strategy that companies cannot deploy overnight but something that every company should start thinking about and start working on. Open source development (which is so popular now) is perhaps the best example of how world-class technologies can be developed with distributed talent and so is building the Airbus 380. Lastly, as Dr. Irving Wladawsky also rightly pointed out, the next generation that will come into the workforce is the facebook, and twitter generation and for whom the virtual world is something thats built into their DNA unlike us who are starting to figure out how to take advantage of it. Therefore companies should be equipped to attract that future talent and succeed from it.