As for the second question, quite simply, business conditions have changed.
IT-MG systems didn’t exist until recently because a pressing need had yet to emerge. Since the beginning of the 21st Century, the convergence of five significant changes within IT has rendered both IT-MG processes and systems essential.
First, external customers and suppliers are now users of business systems, making IT accountable for far more than the needs of an organization’s internal departments and staff. This dramatically raises the level of expectation for system benefits, roll out and usability. For example, on-line reservation systems like Expedia or retail sites such as Amazon.com must be simple and intuitive for anyone to use. In contrast, business systems as recently as the 1990s were used almost exclusively by employees, requiring less customer-centric design and usability.
Before, many in-house developers could simply ride the elevator to get feedback from users and then roll out system improvements. Now that users of mission critical business systems include customers or suppliers, merely “adequate” usability and less rigorous development practices are intolerable.
As a result, world-class IT organizations are raising the development and deployment process maturity; demanding more sophisticated and rigorous IT-MG processes and oversight.
A second event driving IT-MG is the recognition that IT is a critical success factor for virtually every business initiative. Every vice president and general manager knows that if IT doesn’t come through, their business initiative won’t get delivered. This greater level of executive attention raises the bar for IT strategic alignment, governance, and executive-level communication.
Third, today’s CIO needs to understand what parts of the IT portfolio can, should or will be outsourced. While outsourcing highlights one of the more prevalent cost reduction vehicles available to businesses today, once having outsourced, it is the CIO who remains on the hook for satisfactory service delivery, cost-saving targets, and alignment. Thus, IT-MG practices should extend to the outsourced operation as if it were in-house.
Furthermore, IT portfolio management, a process strongly supported by modern IT-MG, enables CIOs to proactively evaluate which parts of the IT operation offer the greatest cost and resource savings in an outsourced setting, and to make decisions accordingly (the same holds true for activities like rationalization and consolidation).
A fourth shift is the need to demonstrate tangible “Return-on-IT.” During the 20th Century, the mystique about IT often eliminated this requirement. Today, the CIO’s current spot at the boardroom table comes with strong expectations regarding financial return, control and predictability.
The fifth event affecting the evolution of IT is that compliance and transparency are now front burner issues given the regulatory responses to the scandals of recent years. 20th Century IT governance procedures now seem outdated given IT’s central role in the expensive and complex processes that are the hallmarks of 21st Century corporate governance.
As IT is both a major spend area and a critical success factor for the rest of the business, serious flaws in IT execution can easily rise to a level that requires external disclosure. IT-MG can serve as a powerful tool enabling organizations to track and document IT spending enterprise-wide, so that when called upon, regulatory demands can be efficiently addressed.
The convergence of these five factors, coupled with the emergence of advanced IT-MG systems and processes, is driving a sea change in CIO priorities. World-class CIOs now make sure their organizations are systemically supported before undertaking significant systemic upgrades for their internal customers. The result is that IT-MG is taking its place alongside ERP, CRM and HR as a set of management practices by which virtually every large enterprise should abide.
David Hurwitz is Vice President of Marketing and Strategy at Niku Corporation, a vendor of IT Management and Governance (IT-MG) solutions. Hurwitz has 20 years of experience in enterprise application management and marketing and can be reached at [email protected]. More information about Niku may be found at www.niku.com.