08 Oct Gartner 2007: Abandon "generic IT" and grow the enterprise
Orlando, Fla. – More than 6,000 information technology professionals gathered in Orlando for Gartner Symposium/ITxpo 2007 to be reminded that they must start thinking of themselves as business leaders who use information technology to drive growth, rather than IT leaders who are content with “generic IT.”
The conference theme, “Taking Care of Business,” may produce old memories of American Top 40, but Gartner used it to drive home the point that CIOs will find themselves much more valuable in potentially choppy economic waters if they replace ho-hum IT with a more transformative vision.
Mark McDonald, group vice president and head of research executive programs for Gartner, refers to the new mindset as “leveraging the enterprise” to grow faster than the competition.
“Generic IT is where you purchase a technology solution for a business problem that gets no differentiation,” he explained. “The new way is about how IT contributes to an organization’s competitive advantage.”
As the calendar moves into 2008, he said CIOs will need to evolve IT (and themselves) to meet higher expectations and business demands on IT departments. Those expectations correspond to forecasts of $3 trillion in IT spending this year, a new milestone that represents an eight percent increase over 2006, and a projected 5.5 percent growth rate in 2008.
According to McDonald, that money would be better spent on priorities such as retaining and growing customer relationships, expanding the use of information in products and services, and improving business process transformation. These priorities require a fair degree of business acumen on the part of technology managers, but those who want to stick around will have to be proactive to meet expectations.
The potential for a slow-growth economy gives CIOs a golden opportunity to lead in transformative ways when upper management is more inclined to simply cut costs. Gene Hall, CEO of Gartner, said the downturn in the U.S. mortgage industry has expanded beyond financial markets and affects many organizations. Although the IT sector is faring well, overall economic forecasts are being revised downward, and U.S. gross domestic product growth could slow to just 1.5 percent.
“Effective enterprises are twice as likely to use IT for competitive advantage,” Hall stated.
More importantly, he said effective IT departments are more successful at giving organizations operational information that can be used to move the business forward. Finding this available knowledge entails investment in building analytics capability with software and other tools.
As a further hedge against economic uncertainty, Gartner senior vice president and global head of research Peter Sondergaard suggested creating two IT budgets for 2008 – one that takes into account growth patterns over the past six years, and another that factors in the prospect of troubled times ahead – what he called a “harder soft landing.”
“Fifty-nine percent of CIOs expect to increase IT spending, for now,” he cautioned. “Will that be the case in three months?”
To create that differentiation, the Gartner analysts encouraged CIOs to get over any inhibitions they might have about incorporating social computing components into the enterprise. Sondergaard said the “the digital natives” are driving innovation in technology in a way that impacts society, and corporate IT needs to start exploring and exploiting these changes.
Going green on the environmental front could be another competitive differentiator. Vendors are working to meet increasingly difficult environmental regulations, and not just for energy-consuming data centers. According to one estimate, the IT sector is responsible for two percent of all carbon dioxide emissions, which underscores the need to act before legislation requires it.
Carl Claunch, vice president and a distinguished analyst for Gartner, advised organizations to explore virtualization to create a more agile infrastructure and lower energy costs. “Energy costs can bring unwelcome scrutiny to your firm,” he said. “How many customers will you lose if they believe your business is damaging our world?”
Managing risk does not mean zero risk
Neil MacDonald, vice president of Gartner and a Gartner Fellow, said IT departments should not expect perfection in risk management. Upper management, not the IT department, must assume responsibility for risk, he said, and most haven’t stepped forward to accept it. As a result, IT gets stuck with the responsibility and the blame, when it should simply outline risk profiles and management should determine the acceptable level of risk.
Getting business leaders to assume responsibility for risk requires fundamental change in relationship between business and IT, one that involves loosening the reigns on data. “Data is like inventory,” MacDonald said. “Sitting unused, it’s a wasted asset to the organization. It’s time to rethink how much information we open up and share.”
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