From implementing long-overdue projects to learning about new technology to keeping their staff from jumping ship, CIO’s will have their hands full in 2004. But, if the predictions come true, they will also have larger budgets with which to deal with a long list of competing priorities.
Here’s a “Top 10” list of helpful hints from Gartner for CIOs and IT directors looking towards 2004. The resolutions are designed to help CIOs drive IT innovation while maintaining the cost and efficiency savings achieved in 2003.
“In 2004, most enterprises expect modest increases in IT budgets, but there will not be a return to previous growth conditions,” said John Mahoney, research managing vice president at Gartner. “Business re-alignment and competition will intensify, IT vendor consolidation and re-structuring will continue and the credibility of IT will remain fragile among many business executives. CIOs must continue robust management of short-term issues, prepare responses to trend shifts that drive business complexity and uncertainty, and invest for the future. In short, they need to cut costs and innovate simultaneously.”
To achieve this difficult balance, Gartner’s suggests a mix of both proven practices, which have sometimes fallen into disuse, as well as a few new disciplines. Some important actions, such as developing a policy for offshore sourcing, have already been highly visible priorities in 2003 and so are not included here.
Gartner’s Top 10 CIO resolutions are grouped into three strategic themes followed by some rational for each theme:
Maintain cost discipline, rationalize and consolidate further:
1. Refresh hardware bought before 2000 and ageing software
2. Continue consolidating IT infrastructure and applications
3. Plan for new competences and give your most valuable staff an unexpected pay rise
Assess imminent trend shifts in business and technology, prepare to respond
4. Make clear technology choices and set policy for the future
5. Stay in direct touch with key technology developments
6. Anticipate external drivers of uncertainty and complexity
Invest in mid-term opportunities, pull back from short-term expedients
7. Migrate towards real time infrastructure
8. Create a business process skills competency center
9. Build partnership management competences and processes
10. Plan to overspend your budget
Maintain cost discipline, rationalize and consolidate further
Many CIOs have extended the lives of servers, PCs and other equipment as a cost control tactic since 2000. Ageing hardware and licensed software will start to hinder business agility, and any servers or PCs bought in 1999 or earlier must seriously be considered for replacement in 2004.
While refreshing old hardware, it will be important to maintain the momentum of recent asset consolidation and rationalization that will release funds from operating costs to add to IT budgets. It is also vital to keep up the culture of efficiency to control costs and manage project risks.
Vital technology skills will be in short supply as economic growth quickens during 2004. Now is the time to identify and take measures to retain IT staff with business-critical skills that will be restless after the long period of pay restraint. Part of this assessment could include unexpected pay rises to crucial staff. CIOs should ensure they have adequate capabilities in areas of growing importance such as IT business leadership, risk and security management, enterprise architecture and application integration, as well as real-time and mobile technologies.
Assess imminent trend shifts in business and technology and prepare to respond
Most vendors advanced their technologies substantially during the recession. Many IT leaders have had to ignore new technologies over the past 24 months due to budget constraints, in some cases resulting in a knowledge gap concerning new technology and its capabilities. Gartner urges CIOs to ensure they directly experience a range of new technologies and services, and prepare to advise management on the opportunities they pose for their business as conditions improve.
Technologies for ‘hands-on’ review in 2004 include:
– Linux desktop with open source personal productivity applications
– Blade servers
– Systems and devices for handling VoIP
– Instant messaging and similar collaboration tools
– Developing tools for Web services
According to Mark Raskino, research director at Gartner, “The growing maturity of new technologies and development methods is a good reason to end the ‘wait-and-see’ policy towards deploying new IT ideas. Explicit policy will need to be determined in several technical areas to set the precedent for new projects.”
He advised CIOs to get off the fence on issues such as:
– J2EE or .NET
– Linux and open source software
– Wireless applications
– Outsourcing
– Legacy applications
Invest in mid-term opportunities, pull back from short-term expedients
In the recent climate, many CIOs have given approval only to projects that deliver ROI within six months. While this can accelerate short-term progress, enterprises must now return to more strategic investments and decide which few to select that will lead to more substantial returns.
Several resolutions concern the long-term goal of migrating towards a ‘Real Time Infrastructure’. CIOs must plan now for migration of systems away from legacy platforms, to take advantage of server virtualization trends, and to get fully briefed on the realistic timeline for implementing truly self-healing, OS-neutral and smoothly scalable utility computing.
According to a Gartner survey of CIOs, more than a third of IS leaders see business process improvement as a key issue for 2004. Gartner believes that business process fusion, a focus on business processes driven by the emergence of new software platforms and architectures, will be key to becoming a “real-time enterprise.”
However, the survey found at least half of medium to large enterprises lack specialist business process skills. Gartner advises CIOs to re-tool their IT workforce by investing in technology-oriented business process skills development, and setting up business process competency groups to support business initiatives in process change. This will ensure internal IS staff can provide higher-level contributions to the business, as more programming and data center operations work gets outsourced.
Beyond the Firewall
Business strategies are increasingly concerned with partners and stakeholders outside the enterprise. By 2005 more than 25% of IT capital budgets, in at least 70% of large and mid-size enterprises, will be directed to transforming the enterprise through the use of external partners. IT leaders must therefore champion opportunities of business partnership strategies enabled by IT. They must create competences and architecture capabilities aligned with them.
“IT still has the ability to help drive strategic business growth,” said Mahoney. “IT departments in 2004 should be straining at the financial leash, make sure they don’t under spend their budget and lobby for more resources to make bigger contributions to the business.”
“CIO’s should review their plans for the coming year, compare them with these resolutions and ensure that they have sound reasons for any recommendations they omit. These recommendations will help companies achieve the overall objective for the year — to actively manage short-term issues while investing in technology for the long-term security of their business,” said Raskino. “Juggling innovation and budget control is going to be hard but, for the dexterous, it’s going to be worth it as they begin to create a real-time enterprise.”