Five Critical Actions for CIOs over the Next 18 Months

The Transformation of IT - CIO Summit, 11-12 September 2007, Barcelona, Spain

München, (PresseBox) - The IT organisation is in transition and is seeing its focus shift dramatically from technology to business processes and relationships. By 2010, 50 percent of IT organisations will refocus on brokering services and shaping business demand, rather than on delivering IT services directly. This is up from 5 percent in 2004, according to Gartner. This fundamental change in focus will drive new styles of IT organisations, new roles for IT service businesses and new functions for chief information officers (CIOs). CIOs must take decisions concerning the direction of their organisational change as soon as possible, because they will take at least two years to execute.

By 2012, at least 50 percent of large IT organisation will divide into two parts, one focused on technology sourcing and delivery, the other on architecture and change. "CIOs need to lead transformation and to adapt their own roles as they do so. CIOs who master leadership will blend business and technology capabilities in their teams and in themselves," said John Mahoney, research vice-president and co-chair of the Summit.

In order to facilitate this transformation, Mr Mahoney said that CIOs will have to take the following five critical actions in the next 18 months.

1- Choose the Main Value Focus of the Department (previously) Known as IT and Rename It When planning for the future focus of the IT organisation, CIOs should not dwell on the existing IT organisational chart and boundaries but rather think in terms of the IT organisation's required capabilities, and consider how they can best be delivered in their company. "The management information system (MIS), information technology (IT), information system (IS) organisation of today is no longer a monolithic organisation but an organisational unit made up of complementary sets of roles. These roles hinge on creative collaboration between business and traditional IT professionals," said Mr Mahoney.

2- Implement Policies to Reduce Complexity Complexity is becoming the chief enemy of effective IT management. It inhibits cost management, transparency and adaptability. "Today, it is not only necessary to rationalise IT environments after the past two years of cost-cutting, but also to think critically about the root causes of technology proliferation and variation," added Mr Mahoney.

CIOs must establish carefully crafted policies that will, over time, refine their organisations' IT architecture, rationalise IT suppliers and leverage information. They must ensure that their organisations' business case processes examine conforming to policies before requesting project approval, and that their organisations' architecture addresses effectiveness in the actual business context, not just technical elegance.

3- Decide When Your Default Source of IT Infrastructure Should Be External IT-utility-style computing technologies and the maturing service provider market will drive many organisations to externally source infrastructure services that are not mission-critical, joining established services (such as LAN/WAN provisioning help desk and other functions) that are typically outsourced today.

Although in-house data centre will continue to have an advantage in enterprises whose IT infrastructure is mission-critical, almost all IT organisations will use external providers for non-critical or transitory capacity. The outsourcing of most enterprise data centre infrastructure will grow from a few early adopters now to the mainstream majority by 2015. By 2015, more than 75 percent of IT infrastructure will be purchased as a usage-based service from external and internal providers.

"This will be a long, complex transformation, and advance planning is essential. IT leaders must decide by early 2008 when their default source for base-layer IT infrastructure should be external, and identify the critical architecture and management capabilities that must remain in-house," said Mr Mahoney.

4- Decide Which Services, Metrics and Incentives Map to Business Outcomes As businesses take advantage of partnerships to create agility and growth, the importance of managing by business outcomes increases. By 2010, at least 50 percent of new outsourcing deals will use measures based on business outcomes, not IT service levels.

When developing their sourcing strategy, user organisations need to select the style of outcome they intend in relation to the business value of the activity. Once this is decided they can then select appropriate service provider partners.

5- Identify and Start Building Competencies for Your Organisation's Future Value Focus Mr Mahoney concluded by saying that clear guidance for the IT team and the organisation is essential for coherence, effectiveness and safety. It also minimises the need for repeated management intervention to solve similar problems. He advised CIOs to focus IT organisation competencies on the disciplines of leadership (people management, strategy, sourcing, and service management) and governance (architecture and infrastructure, security, asset management and process management).

The capability requirements for each discipline will vary depending on the nature of the role of IT in the strategy of the business as a whole, however, it will engender an environment where business, technology and business relationships can be successfully fused to deliver real business advantage.

For further information on the Summit please visit http://www.europe.gartner.com/.... Members of the press will be able to attend Gartner presentations and executive keynote sessions, but attendance to peer-exchange workshops will be restricted to CIOs only. To register for the Summit, please contact Carina Forsling, Gartner PR on + 46 8 624 6324 or email her at carina.forsling@gartner.com.

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