Against a background in which IT spending is expected to rise modestly at best and cost reduction is still likely to be the dominant driver of decision-making, there seems to be little space for IT managers to be overly proactive. But the Europe, Middle East, and Africa (EMEA) division of Gartner has offered IT managers some pointers to positive actions that they can take that should not only help alleviate some cost problems but also promote their cause within the enterprise.
In short, the analysts, in the form of EMEA vice president and research director John Mahoney and research director Mark Raskino, have come up with a list of New Year's resolutions for CIOs and IT managers that are intended to help them reduce costs, demonstrate the business value of the technology, and provide important leadership and guidance to the board of an enterprise.
Mahoney and Raskino introduced a total of 10 resolutions, with five of them grouped as the most important. I’ll go through each of these top five in depth, and then list the remaining five at the end of this article.
1. Switch off legacy systems
The first resolution on the list—and the most urgent, though arguably not the most important in the long term—is the need to switch off at least 10 percent of legacy systems during the coming year.
“These are legacy systems in terms of business function rather than specific hardware or software. Most enterprises have a large portfolio of legacy systems that now have little justification for further existence,” Mahoney said. This view was reinforced by Raskino, who highlighted that this was, as much as anything, about getting IT management to fight their political battles more effectively and getting management out of a detrimental safety zone. “This is about getting other business unit managers to let go of some of their favorite teddy bears,” he said.
These legacy systems take up valuable resources, and switching them off would, Mahoney said, free up capacity and time within the organization, which would mean saving money that could be used for other projects or services.
2. Prepare for supplier changes
The second item on the list is an acknowledgement of the inevitable fact that IT management must prepare for takeovers and mergers among its suppliers, as well as for some of the suppliers to cease trading altogether. Gartner is predicting that 50 percent of IT companies with a known brand name are likely to disappear in one way or another by the end of 2004.
“It is therefore important,” Mahoney said, “for management to look at contracts with suppliers so that management knows what would happen if a supplier failed in some way. For example, managers may need to make sure suitable escrow arrangements are in place, and they should consider renegotiating supplier contracts so that they get the best price for products or services and to give them the agility to change or scale the contracts as their circumstances change.”
3. Promote IT
The third resolution is, arguably, the most important for the longer term health of the IT function within enterprises, because it concerns creating an environment where the users of IT’s services have a better understanding of what they’re getting. In short, IT management needs to develop a marketing program through which to promote itself.
“IT credibility has been damaged by a generally poor reputation, as well as what happened on the run-up to Year 2000,” Mahoney said. “But credibility with members of the board is very important. For example, is the CIO even a member of the executive board of a company?”
To facilitate this move, Gartner has developed what it calls the Information Systems Credibility Curve, against which IT managements can plot their perception of the credibility of the IT function within the enterprise. This curve follows along five levels, each offering a company greater potential economic value. The lowest level is ”uncertainty,” where neither the company nor the IT managers are certain what value lies in its operation. The curve then rises through the self-explanatory levels of “skepticism,” ”acceptance,” “trust,” and “respect.”
The company’s research suggests that most CIOs and IT managers feel that they are rated between skepticism and acceptance. “It is important that IT’s credibility is raised,” Mahoney added, “and a marketing initiative will help set appropriate expectations among users on both the services provided and the costs involved.”
4. and 5. Plan and implement RTE technologies
The last two of the dominant five resolutions both concern the coming of the real time enterprise (RTE), an idea in which Gartner places considerable faith. First, and most important, is the setting of objectives within an organization. Now there is, according to Raskino, a strong requirement to create a vision within an organization of what can be achieved using RTE technologies, coupled with a roadmap that sets out the path to be followed. As with the notion of marketing the IT function to the business, it’s equally important that the vision and roadmap are then sold hard to the business leaders.
However, as part of that process (and as the next resolution), IT management should use the coming year to set up pilot projects of the two technologies, Web services and instant messaging, that Gartner feels are key to getting RTE implemented within the enterprise. “The technology for RTE is there and much of it is impressive,” Raskino said, “but the business changes aren’t there to match it.”
The “buy-in” of CEOs is a crucial factor here, Raskino suggested, because if managers decide on changes to the business objectives, then changes to the processes that service those objectives will follow. “A particular area where the technology can be useful in ways that CEOs readily understand is in shortening the process and decision-making cycle times,” he said. “This can have the direct result of shortening the order-to-cash cycle time.”
As an example, he pointed to the successes of European low-cost airlines, most of which deal direct with customers via Web services and telephone selling, compared to the major European airlines, most of which still operate through traditional sales channels.
In a remark aimed more at European IT management, he also suggested that they seriously consider legitimizing instant messaging within their businesses “because it is happening anyway. If IT doesn’t lead the innovation and implementation, it will appear around them and despite them. This is an area where US management is leading the way.”
Gartner predicts that 20 percent of CIOs will cite RTE as a top-five investment area during the coming year.
The final five
The other five resolutions were:
- Set a timetable for renegotiating supplier contracts.
- Establish leadership coaching and mentoring for CIOs and IS leaders.
- Revise recruitment and retention strategies for key skills.
- Understand and prepare for the impact of off-shore sourcing.
- Prepare to implement simultaneous security and transparency across the enterprise.
Gartner will be releasing full coverage of these 10 subjects toward the end of January.