2012 Begins A Pivotal Three Years For IT

Every year is important and pundits, myself included, contribute to the annual strategy and planning cycle that is based on the premise that the coming year must be the most important year. That position makes sense when you consider that without a compelling plan for ‘next year’ the CIOs and IT organisation will not get the attention, participation and resources to continue and create value.

The 2012 planning cycle will be my ninth with Gartner and working with CIOs in Executive Programs. During that time, I have observed that change in IT happens not in annual cycles but in three-year waves. The 2003 planning cycle was my first with Gartner, but I believe as I go back through my notes that there have been three cycles since the turn of the millennium.

2000 – 2003 focused on demonstrating IT’s business relevance as executives scrutinised the business value of IT following the dot.com bust and related recession. CIOs during this period faced the need to prove that IT matters and face of increasing commoditisation of technology products and services. Financial requirements drove the first wave of outsourcing, typified by blockbuster long-term single source providers who would take over and deliver ‘our mess for less’ IT.

2003 – 2006 can be described as the ‘business-ification’ of IT. This was the period when IT was supposed to run more like a business by defining its business in terms of IT services, service levels and new forms of finance and costing models. Functions and services that could be provided better, faster and cheaper externally drove the growth of the multi-sourcing marketplace. This was the heyday of models like ISCO and IS Lite both sought to run IT like a business and eventually generating revenues on its own.

2007 – 2011 cycle, the one we are completing now, could be described by the consolidation of IT cost, as economic, technical and operational realities required CIOs and organisations to cut costs in the face of economic and financial realities.

While we can debate the exact dates, themes and timings the broad trends are reflected in the major books of the time, themes of Gartner’s symposia, etc.

2012 is a pivotal year for CIOs and IT because we are completing a wave of consolidation and cost cutting that raises the question what comes next?

A few thoughts on the pieces that are floating around that will play a role in shaping IT over the next three years.

• Technology becomes important than IT. Technology is inherently externally facing and that will displace the current crop of IT centric internally facing transaction systems. Mobility, social media, analytics, new interfaces are all part of an arc of technology that is much broader than IT.

• Consumer and personal tastes are driving technology and resetting expectations for IT in terms of time to market, complexity and customer experience. IT has been used to running on its own time and it will have to change to run at the customer’s clock speed.

• Competition will centre around an expanding view of the customer experience touching on channels, ease of doing business, internal complexity, cost, marketing and provisioning. Organisations that see a next version of the customer experience as CRM on steroids will experience increasing investment and decreasing returns.

• Increasing IT workforce productivity and throughput will become a requirement with CIOs having to commit, monitor and manage year over year productivity improvements. This will be critical to the future as right now most firms manage ‘productivity’ from the denominator of cost, they will need to raise the numerator (output) in the future.

Individually none of these issues is a ‘show stopper’ leading some to think that they can be addressed through incremental improvements and responses. Taken together and considering implementing them in less than three years, it becomes apparent that incremental responses will not be sufficient to enable IT’s role to expand at the same rate as the expanding role of technology in the enterprise.

That is why I believe that we are leaving the world of the consolidation of IT cost and moving into a phase where technology amplifies the enterprise and the position of IT can no longer be assumed. Why three years? It takes time to re-imagine and re-orient an organisation.

Are these pivotal years for IT? If not, then why not?

The author is a Group Vice President and Head of Research in Gartner Executive Programs.

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