In an environment of severe cost pressures, IT executives find they must clarify business and technology tradeoffs while ensuring faster innovation, according to a recent Gartner EXP survey.
For the third year in a row, reducing business costs is the No. 1 business demand dominating the CIO's job, the survey stated. Issued in February 2003, "Drive Enterprise Effectiveness: The 2003 CIO Agenda," polled 620 enterprise CIOs worldwide.
As IT executives continue to look for ways to reduce costs, securing data and boosting innovation round out the top three business trends, the report said.
With respondents citing, on average, no growth in the IT budgets for 2003, reducing costs and business risk and increasing innovation are difficult to achieve concurrently, said Ellen Kitzis, vice president for Stamford, Conn.-based Gartner executive programs and co-author of the study. "Businesses have been playing it safe for the past few years. (CIOs) weren't innovating fast enough. That's a criticism of IT's lack of growth. They haven't come out with innovative products and solutions recently."
"Many companies are increasing R&D spending," Kitzis said. "Now the CIO is left at the pivot point in the organization to manage demand for innovation and demand to (respond) to cost pressures. (Often) the opportunity to innovate is recognized by the CIO before the rest of the company."
To achieve these seemingly competing goals, Kitzis added, IT executives are looking at what's left to cut from their budgets and channeling those monies into business risk management and R&D.
In the last two years, IT executives have cut unnecessary maintenance, renegotiated contracts with vendors, and cut staff. "Now they're looking at the hard costs -- where business units have to work with them to understand the tradeoffs between systems that marginally add value to the business, such as those legacy systems with few stakeholders, versus those that add substantial value," Kitzis said.
Bringing in business units to evaluate which systems to cut or keep is reflected in CIO management priorities for 2003, according to the study. Survey respondents cite providing guidance for the board and other executives, demonstrating the business value of IT, and improving IT governance as their top three priorities for this year.
What CIOs and other executives have come to learn over the past few years, Kitzis said, is that companies "can't have IT governance outside the business governance. They have to integrate."
Aligning IT and business governance has and will result in shifts to where the IT function is situated, Kitzis added. "We have seen the creation of corporate and divisional CIOs with divisional CIOs reporting (both) to inside the business unit and to the corporate CIO."
Among CIO members of Gartner's EXP program, Kitzis said, "there is a movement away from technologists to hiring those good at communications, strategic planning, and business relationship planning. This is refreshing for IT executives. It gives them the kind of people they need."