META Group: CIO Priorities Shifting

META Trend: During 2002/03, global competition, IT resource collaborative control, and alternative sources for IT services and roles will place greater emphasis on quantifying and justifying IT value through cultural understanding. By 2004/05, 60% or more of Global 2000 IT executives will evolve IT value management with IT portfolio measurement (e.g., infrastructure, applications, processes, human capital) for planning, monitoring, adjusting, and marketing business-relevant IT products/services and strategic IT initiatives. By 2006/07, 25% of G2000 firms will integrate performance scorecards and workflow databases for comprehensive IT asset life-cycle management.

Our annual survey of more than 700 CIOs globally confirms a change in CIO priorities. With little variance, nearly 66% of surveyed CIOs stated that their top two issues for 2002 are alignment and business value. Continental differences show that U.S. CIOs emphasize human capital management (HCM), British and Australian CIOs attend to infrastructure, Europeans highlight process management, and Asians concentrate on operations excellence.

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Leadership remains the No. 3 top global CIO concern. Last year’s No. 2 issue, HCM, dropped to No. 5 as many CIOs have previously concentrated on HCM, implemented strategic sourcing, or are finding people easier to manage given the current economic slowdowns.

The globalization of IT, media reports, markets, customers, vendors, and peer networks drive CIOs to share many similar concerns. Reflecting the continual changes in customers, markets, and strategies, business/IT alignment remains the No. 1 U.S., European, Australian, Asia Pacific, and global CIO issue.

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Economic pressures and businesses’ habit to cut spending are driving IT value management (creating, capturing, and communicating the value of IT) to globally become the second top CIO issue. Finally, as ambiguity and technical complexity increase, CIOs are focusing on leadership as their third top concern.

For close business/IT alignment, CIOs will focus on agility and business relationship management. By mid-2003, more than 50% of CIOs will have relationship managers co-located with businesses. As this technique for improved two-way communication becomes a best practice, by 2005, 85%+ (vs. 15% currently) of IT organizations (ITOs) will exploit business relationship managers in concert with relationship, project, and value management processes.

By 2008, continued application of dynamic business/IT alignment practices will result in standard, well-documented communication tools, processes, and models for increased ITO agility. Many of these tools, processes, and models will become reusable components within various centers of excellence. Advanced ITOs will incorporate program management, portfolio management, managerial accounting, and team building as key curricula components for IT leaders.

Although our recent global surveys accumulate common CIO issues, the findings assemble proven solutions that raise IT credibility and overall corporate perception of the ITO. For first-rate business/IT alignment, CIOs implement the following best practices, grouped by ITO maturity:

• (Basic) Creating relationship managers and a relationship management process.
  
• (Basic) Producing an IT strategic plan with strategic planning process.
  
• (Basic) Running an IT steering committee, executing governance with LOB participation, and creating appropriate policies.
  
• (Intermediate) Supplementing strategic planning with LOBs quarterly.
  
• (Intermediate) Measuring via balanced scorecards with LOB participation.
  
• (Intermediate) Applying portfolio management techniques into strategic activities.
  
• (Advanced) Receiving 360-degree reviews of CIOs by LOB peers and partners.
  
• (Advanced) Creating communiqués of practice and performance with suppliers and partners.

For ITOs grappling to get the basics right, successful CIOs create an IT marketing function, establish relationship managers to regularly communicate with the LOBs, and start publicizing ITO effectiveness through activities such as strategic, project, and operational planning. Measuring and demonstrating progress on the top-two LOB issues also reinforce closer business/IT alignment.

To perform top-notch IT value management, CIOs implement the following best practices:

• (Basic) Applying baseline assessments to a value management plan.
  
• (Basic) Creating service-level agreements (SLAs) to properly set expectations.
  
• (Intermediate) Performing basic portfolio management to communicate the value of IT projects.
  
• (Intermediate) Developing and refining investment return processes and criteria to manage risks, benefits, and variability.
  
• (Intermediate) Creating communication plans and strategies for nearly identical communiqués.
  
• (Advanced) Applying real options analysis (ROA) valuation techniques.
  
• (Advanced) Creating taxonomies to link strategic, managerial, supervisory, and operational IT activities to ensure consistent IT value at each reporting level.

For ITOs struggling to establish trust, knowledgeable CIOs administer well-understood SLAs, measure what matters to the LOBs, and execute on detailed value management plans to deliver maximum value. To raise ITO performance one level, CIOs increase the businesses’ perceptions of their dependencies on IT operations.

To develop leaders, CIOs implement the following best practices:

• (Basic) Building teams and employing principles-based management.
  
• (Basic) Training in team building and effective communications (writing, public speaking, and running meetings).
  
• (Intermediate) Assigning personal coaches or mentors to high-potential employees.
  
• (Intermediate) Building employees’ experience base, including rotational assignments
  
• (Intermediate) Providing MBA-level classes on strategy, tactics, and entrepreneurship.
  
• (Advanced) Having employees perform assessments on competitors.
  
• (Advanced) Building safety nets for senior IT staff members to recognize, measure, take, and control risks.

To kick-start various initiatives, CIOs with their HR specialists act purposefully to build, train, and motivate high performers into leaders. Because high-performing IT people do not necessarily know how to lead effectively, CIOs train leaders on how to build high-performance teams.

Our latest CIO survey reveals both key issues and best practices. With highly visible budgets, CIOs are globally consistent in dynamically aligning with businesses as conditions change, educating executives on IT investments, and training lieutenants to handle greater ambiguity and technical complexity. To address top issues, CIOs employ various best practices (relationship management, portfolio management, dynamic strategic planning, etc.) based on IT maturity.

Business Impact: Well-aligned, resourced, and managed IT organizations enable corporations to compete more effectively despite greater levels of market, customer, and business uncertainty.

Bottom Line: Although apprehensive about many issues, CIOs focus on one or two strategic initiatives to ensure continued business/IT alignment, delivery of IT value, and top-notch performance. A back-to-basics approach of crafting, categorizing, and conveying progress is tried-and-true best IT practice.

META Group of Stamford, Conn., is a leading research and consulting firm,
focusing on information technology and business transformation strategies.
For more information, visit MetaGroup.com.