Could IT be in deep trouble?

This weeks guest editor is Ephraim Schwartz.

Promising a reporter an exclusive is like dangling a string of sausages in front of your dog. So of course when Gartner Fellow Ken McGee offered me an advance look at Gartner's presentation on the current state of IT -- to be presented at the Gartner Symposium ITxpo (http://www.gartner.com/it/sym/2006_/spg8/spg8_home.jsp) in San Francisco a week later -- I bit.

For the presentation, called the IT Scenario, Gartner gathers together its top analysts to explain where IT is now and where it is going. McGee won the job as the presenter. And despite a fairly robust economic outlook for business, his presentation says that IT is in deep trouble.

McGee pointed to the disconnect between the robustness of the economy and four years of lacklustre growth in IT budgets -- 2.7 percent growth this year. Compare that to a 6 percent increase in media advertising or a 10 percent increase in raw material purchases.

IT is essentially keeping the lights on, but not demonstrating a compelling reason to be a strategic partner. Unless it can contribute, more senior executives will say, "We understand that we need IT, but we don't see the need for you to deliver it."

If this trend continues much longer, "executives will be agnostic as far as where they obtain IT services", McGee says, adding that at the heart of the problem is a lack of innovation. "It is rare to find IT people working on something that has heretofore been untouched by IT."

If you don't believe it, McGee suggests you have a conversation with sales or marketing people. Ask them how much IT has helped them identify and close new business and they will laugh you out of the room.

Gartner's recommendations for change will be specific. Its analysts have identified one task per job function that must be completed by 2009. CIOs, security managers, operations managers -- the list goes on -- all must have established, in that three-year time frame, a track record of creating more value, rather than just saving money.

We ended our sneak peak with a couple of trends that will drive significant IT demand in the future, provided IT can act on, rather than react to, change.

Global micro business was number one on McGee's list, meaning companies that will go after the more than four billion people on earth who make less than $US1500 a year. Their needs are simple and their resources are limited, but reaching them will require a new way of looking at a market, at research and packaging, and delivering to that market. And IT can play a role.

One consumer packaged-goods company, which McGee would not name, has figured it out. McGee says that more than half of this company's revenue comes from consumers in China who make less than $500 a year.

The other trend is the phenomenal growth in health care. Soon, for the first time in human experience, there will be more people 60 years of age or older than those 15 years of age or younger. It has never happened, ever.

Each of these trends presents new opportunities for IT to add value. At ITxpo, McGee will explain it something like this: there are three ways to get more oil: use less oil, try to extract more oil out of existing wells, or drill new wells. If you're in your 40s and you want to be able to retire from IT, you'd better start drilling.

How does your IT shop add value to the business? E-mails to Sandra_Rossi@idg.com.au

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