Everything Changes

Critical Actions for the CIOs
by: Jerry Liao

Accepting changes brought about by the development of information technology is not easy, keeping up with the changes is definitely a challenge. And the one man in the corporate structure who will absorb most ofthe challenges is the person incharge of the entirecorporate I.T. infrastructure – the Chief Information Officers (CIOs).

The IT organization is in transition and is seeing its focus shift dramatically from technology to business processes and relationships. By 2010, 50 percent of IT organizations will refocus on brokering services and shaping business demand, rather than on delivering IT services directly. This is up from 5 percent in 2004, according to Gartner. This fundamental change in focus will drive new styles of IT organizations, new roles for IT service businesses and new functions for chief information officers (CIOs). CIOs must take decisions concerning the direction of their organizational change as soon as possible, because they will take at least two years to execute.

By 2012, at least 50 percent of large IT organization will divide into two parts, one focused on technology sourcing and delivery, the other on architecture and change. “CIOs need to lead transformation and to adapt their own roles as they do so. CIOs who master leadership will blend business and technology capabilities in their teams and in themselves,” said John Mahoney, research vice-president and co-chair of the Transformation of IT – CIO Summit, which will happen on 11-12 September 2007, in Barcelona, Spain.

In order to facilitate this transformation, Mr Mahoney said that CIOs will have to take the following five critical actions in the next 18 months.

1- Choose the Main Value Focus of the Department (previously)Known as IT and Rename It

When planning for the future focus of the IT organization, CIOs should not dwell on the existing IT organizational chart and boundaries but rather think in terms of the IT organization’s required capabilities, and consider how they can best be delivered in their company. “The management information system (MIS), information technology (IT), information system (IS) organization of today is no longer a monolithic organization but an organizational unit made up of complementary sets of roles. These roles hinge on creative collaboration between business and traditional IT professionals,” said Mr Mahoney.

2- Implement Policies to Reduce Complexity

Complexity is becoming the chief enemy of effective IT management. It inhibits cost management, transparency and adaptability. “Today, it is not only necessary to rationalise IT environments after the past two years of cost-cutting, but also to think critically about the root causes of technology proliferation and variation,” added Mr Mahoney.

CIOs must establish carefully crafted policies that will, over time, refine their organizations’ IT architecture, rationalise IT suppliers and leverage information. They must ensure that their organizations’ business case processes examine conforming to policies before requesting project approval, and that their organizations’ architecture addresses effectiveness in the actual business context, not just technical elegance.

3- Decide When Your Default Source of IT Infrastructure Should Be External

IT-utility-style computing technologies and the maturing service provider market will drive many organizations to externally source infrastructure services that are not mission-critical, joining established services (such as LAN/WAN provisioning help desk and other functions) that are typically outsourced today.

Although in-house data centre will continue to have an advantage in enterprises whose IT infrastructure is mission-critical, almost all IT organizations will use external providers for non-critical or transitory capacity. The outsourcing of most enterprise data centre infrastructure will grow from a few early adopters now to the mainstream majority by 2015. By 2015, more than 75 percent of IT infrastructure will be purchased as a usage-based service from external and internal providers.

“This will be a long, complex transformation, and advance planning is essential. IT leaders must decide by early 2008 when their default source for base-layer IT infrastructure should be external, and identify the critical architecture and management capabilities that must remain in-house,” said Mr Mahoney.

4- Decide Which Services, Metrics and Incentives Map to Business Outcomes

As businesses take advantage of partnerships to create agility and growth, the importance of managing by business outcomes increases. By 2010, at least 50 percent of new outsourcing deals will use measures based on business outcomes, not IT service levels.

When developing their sourcing strategy, user organizations need to select the style of outcome they intend in relation to the business value of the activity. Once this is decided they can then select appropriate service provider partners.

5- Identify and Start Building Competencies for Your organization’s Future Value Focus

Mr Mahoney concluded by saying that clear guidance for the IT team and the organization is essential for coherence, effectiveness and safety. It also minimises the need for repeated management intervention to solve similar problems. He advised CIOs to focus IT organization competencies on the disciplines of leadership (people management, strategy, sourcing, and service management) and governance (architecture and infrastructure, security, asset management and process management).

The capability requirements for each discipline will vary depending on the nature of the role of IT in the strategy of the business as a whole, however, it will engender an environment where business, technology and business relationships can be successfully fused to deliver real business advantage.

The challenges will continue and everyone within the business ecosystem should adapt and innovate to maintain their current position / status in the workplace.

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