META Report: Prerequisites to IT and Business Transformation

By Meta Group Staff

News Item: At the annual CIO Forum hosted by META Group’s Executive Directions advisory service, held December 3-4 in Scottsdale, Arizona, CIOs from leading Global 2000 enterprises discussed priorities for improving the performance of their IT organizations as well as enabling enterprise profitability and competitive advantage.

Situation Analysis: During the past two decades, IT has become inextricably woven into the fabric of business. However, even though IT is now one of the key enablers and drivers of business change, CIOs are often not involved in business planning. A recent META Group survey found that only 5% of enterprise IT organizations were fully integrated into the business planning cycle.

To move beyond a purely reactive status and become proactive in business transformation, CIOs must develop CEO competencies, and they must participate in developing the corporate vision of the enterprise’s future. Once that vision is defined, CIOs must empower the IT organization to transform itself and enable the transformation of the overall enterprise.

“‘Transforming while performing’ means turning the future vision into a reality while maintaining strong day-to-day performance,” says Karen Rubenstrunk, who heads META Group’s Executive Directions advisory service. The CIO must educate the IT staff on company vision, where their pieces fit into the overall strategy, and how the corporate vision and mission – as stated by the CEO – translate into actionable IT projects and tasks.

Just back from the annual META Group Executive Directions CIO Forum, Rubenstrunk and her team report that CIOs still have a long way to go to achieve these key goals. However, META Group analyst and IT measurement expert Donn DiNunno notes that the enterprise CIOs attending this “vision”-oriented conference are more aware of CIO leadership imperatives than the average CIO.

“In my conversations at the conference, CIOs ranged from those looking for a simple solution to those who recognized that a systemic problem demands systemic correction,” says DiNunno. This more strategic approach to IT leadership is what META Group is developing in its focus on portfolio management, DiNunno adds.

When the enterprise vision is defined, CIOs need to envision the specific ways in which the IT department will be transformed when it achieves that vision. Those specific changes then become the keys to measuring progress toward the envisioned goals.

Effective human capital management is a frequently neglected prerequisite to IT transformation. If the organization is to transform, people must change. That means the organization must encourage change and experimentation, and must tolerate failure on the road to success. It must train people for the future rather than the past, capturing key operations excellence disciplines that exist now only in the mainframe world and bringing them forward into expanding client/server and Web environments. To achieve this, the CIO must send consistent, repeated messages to the IT organization that define the important goals and actions – and these messages must be expressed through actions as well as words.

Measurement is becoming increasingly important to reinforce the IT organization’s efforts to transform itself and enable the transformation of the enterprise. Although traditional measurement focus on technical issues, such as the level of use on the server farm, retain some internal importance, says DiNunno, “CIOs must learn to measure for insight rather than only oversight. They must measure how well their organization empowers transformation and is moving toward its vision, rather than just documenting something it did right in the past, such as high availability levels.”

For instance, fewer than 10% of the organizations represented at this year’s conference had ever conducted an IT employee satisfaction survey. Those that did conduct such a survey did so from the belief that an increase in IT employee satisfaction would result in an increase in efficiency. Only one company focused on IT employee satisfaction as a key to increasing business customer satisfaction with IT. That CIO has been following her unique strategy for two years and has ample statistical evidence of its success, yet she remains the lone standout in the field.

Although the minority of IT groups that focused first on being close to their (internal) business customers (vs. focusing on cost control or “product” offerings) rated themselves lower on efficiency than the majority in the survey META Group conducted of its conference attendees, they proved to be the best at participating in business planning. Simply by drawing closer to the business, they had developed a much deeper understanding of business methods and concerns at all levels of their IT organizations.

User Action: While DiNunno has a list of metrics that IT organizations can and should measure, he says that at the start of a measurement effort, what is measured is not as important as how measurements are used to build an effective IT organization/line-of-business relationship and IT manager/employee team.

“IT organizations should start small,” advises Rubenstrunk. “They should pick a few key groups that face the greatest transformations and measure them, rather than trying to measure the entire organization. Most of all, they should resist being pulled in different directions. It is important to focus on a few key measurements and maintain that central message.”

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Furthermore, CIOs must balance their focus in measurement and management between efficiency and effectiveness. “Too often, we trip over anthills while striving to scale the peaks of performance,” says DiNunno. “We must determine which are the anthills and avoid letting them dominate our discussions.”

META Group analysts Karen Rubenstrunk, Donn DiNunno, Marnie Ross, Louis Boyle, Hollis Bischoff, Tim Westbrock, David Folger, David Cearley, Val Sribar, and William Zachmann contributed to this article.