The State of IT: 2010

What will the corporate IT organization look like in a decade? Diverse and fast-changing technologies will cause it to look very different from the one you're working in today.

A new report from Forrester Research Inc. paints a grim picture of the future for the corporate information technology organization that we know today.

"Externalization," it says, "will eliminate IT as we know it."

And that's the watered-down version. Bobby Cameron, an analyst at Cambridge, Mass.-based Forrester and primary author of the report, laughs and says he wanted to call it "The Death of IT." But Milquetoast prevailed, and it's titled "Driving IT's Externalization."

Of course, you can read "as we know it" as an escape hatch. Did MIS kill data processing as we knew it? Did the IT department in turn kill MIS? Would the predicted rise of "external information technology" (Forrester calls it "eT") mark the death of IT, or simply its logical evolution?

We looked ahead 10 years and asked: Will corporate IT be dead in 2010? Will organizations have a contract "IT guy" sitting around making sure the servers are up and the network's not on the fritz, just as they have a "maintenance guy" or a "landscaping guy" today?

Most experts say no. IT is simply too important, and the potential competitive edge it presents too vital, to be outsourced entirely. But they agree that the 2010 version of IT will look far different than today's.

This is how the Forrester scenario goes:

E-commerce has opened the floodgates by spurring businesses to open their systems to customers and partners. CIOs have underestimated the impact of this change; e-commerce, the report says, will "cause processes to diffuse both across the enterprise and among customers and business partners, challenging internal IT to keep up." This approach will eventually "hit a brick wall."

"CIOs want to keep the status quo," says Dudley Cooke, CEO of consultancy Liberty Business Strategies Ltd. and former CIO at what is now Sunoco Inc. "So many CIOs are introverted, in both [personal] behavior and in looking at the IT function as an end-all. That's not going to make the cut."

Forrester agrees in its report, which says, "IT must radically redeploy ... to effectively support dispersed business operations."

In this new world, technologies will be diverse and fast-changing; layered architectures will rule. Interfaces will continue to get friendlier. Coupled with increased standardization, these changes will speed the trend toward do-it-yourself technology, cutting the IT department out of the loop. The organization will use a hodgepodge of thin clients, ubiquitous networks and outsourced services and applications to keep internal and external users happy.

In 2010, "we'll all use wireless handhelds," says Len Tenner, CIO at Hewitt Associates LLC, a consultancy in Lincolnshire, Ill. What operating system?

"Doesn't matter," Tenner says. Others agree that the ascendancy of the network will render the operating system less significant. "But I don't see Microsoft going away," Tenner says. "They understand XML. They can't afford to be seen as the curmudgeon of the industry."

Microsoft's embrace of XML is seen by many experts as tacit agreement that Windows won't dominate the industry in 10 years. As the heir apparent to HTML, the XML standard is poised to become the underlying language of e-commerce.

Where Microsoft did its level best to smother Java - the last major threat to Windows - while heartily praising it, its enthusiasm for XML appears to be genuine.

Technology predictions are, of course, especially difficult in light of the decade that just passed. Web inventor Tim Berners-Lee's spiritual children are surely brewing up technologies that will change everything.

In the future, Cameron says, "the CIO goes away. Becomes a COO [chief operating officer]. Technologist is a small part of the job. In five years, you'll be hard-pressed to find CIOs" in any industry in which multitiered companies sell configurable products and services, he says. Mature industries with longer product cycles will see slower change, Forrester reports, but the writing's on the wall.

Despite the push among IT leaders to increase their business savvy, "the CIO is now a high-class technician" in the minds of many top executives, Cooke says.

"In the future, he'll really focus on IT strategy."

"The CIO/CTO will be in direct conversations with the board about business issues," agrees John C. Henderson, a professor at Boston University's Systems Research department. He points out that in the next economic downturn - which will be the first downturn of the Internet Age - "the focus will be on efficiency and creating new value propositions. The CIO then would have the same crunch any other manager has: Where do I cut back? How do I simultaneously reduce my budget while focusing innovation on areas most likely to have impact?"

Thus, the next recession may be the transition point at which the CIO becomes a full-fledged business executive.

Integration Situation

The Forrester point that really resonates is "integration becomes Job 1." The phrase relationship manager comes up in the report again and again.

"You can't outsource leadership," says Henderson. "Alliances and partnerships will need to be managed."

IT will "manage the partners and alliances," echoes Madeline Weiss, head of the Society for Information Management's Advanced Practices Council in Chicago.

The relationship-management scenario comes up so often that it's worth dwelling on. Here's how it goes: In 2010, most programming work has been pushed back to vendors (which may, in turn, hire offshore code writers on the cheap).

Corporate IT is in charge of buying or renting technology modules, dispersing them to business units where appropriate, integrating them, constantly making sure the company's IT suits its business goals (which will change much faster than they do today due to shrinking product cycles and the inexorable adoption of "Internet time") and keeping other executives up to speed on both the technology itself and the competitive opportunities it presents.

Piece of cake.

IT Triumphant?

"Yes, IT will exist" in 10 years, says Jerry Luftman. "Make that a resounding yes. Of course, it won't be the same as we know it today." Luftman, a professor of information systems at Stevens Institute of Technology in Hoboken, N.J., spent 22 years at IBM as both an IT practitioner and a consultant.

Like other IT veterans interviewed for this story, he chuckles and reminisces when presented with the doomsday scenario.

"I've been a professor for 30 years, and this is the third time I've seen predictions that IT will go away," says Henderson. In the '70s, he says, some predicted that the rise of decision-support systems would render IT obsolete.

The second death of IT was predicted during the heyday of client/server in the early '90s. And yet IT is more important now than ever. "Organizations are now in a position where if their systems fail, the organization fails," Henderson says.

Technology is so tightly woven into some industries, such as financial services, that in some cases the business is IT. Eric Clemons, professor of operations and information management at the University of Pennsylvania's Wharton School in Philadelphia, serves up an example. Capital One Financial Corp. in Falls Church, Va., has quickly become the most profitable credit-card issuer ever, he says. It's certainly one of the largest. Capital One uses IT to identify the most profitable consumers and passes on pecksniffs who pay their balance each month.

"Now they're doing the same thing [identifying and pursuing only the most lucrative customers] in cell phones," Clemons says. "They would say they've got a [data-processing] shop with a couple of vertical industries tacked on." It's quite a turnabout: Use IT to devise a business model first, and then simply add logical verticals almost as afterthoughts. What's to prevent Capital One, or other firms, from applying this model to other businesses, such as auto loans and mortgages?

For the most part, internal IT organizations will be smaller in the future, says Weiss, but she sees financial services companies as an exception. "They are building up their IT staff," she says. "IT is too strategic for them to leave it to partners."

It's fair to ask whether financial services is a bellwether industry. With the rise of application service providers, many businesses today are happy to outsource infrastructure and other non-core-competency IT functions while pouring resources into key systems that can provide competitive advantage. Some analysts see this trend continuing - and sharpening - for the foreseeable future.

Action Plan

Technology discontinuities - the unpredictables, such as the Web - invariably scramble long-range plans. ("Ten years out? Who the hell knows?" laughs Weiss.) But whatever the changes to IT may be, it's safe to predict there will be plenty of them. And that they'll come fast.

To plot your future, then, you must plot your organization's demise. Here, from the Forrester report, are some ways to do that:

-- Get external participation. Use customers and trading partners not merely to define interfaces and processes but "to drive creative ... interactions around shared product development."

-- Prepare for shrinkage. The IT organization will get smaller. The need for technology won't. Look for opportunities to disperse your people into business units. This is vital for your business - and for your workers, who must leave the comfy IT shop if they're to thrive.

-- IT's last project? Treat this migration into business units as you would any major project, with goals and milestones.

-- Ingrain outsourcing. "Make managing outsourcers a core competency," Forrester urges - a thought echoed by several industry experts.

Will the IT organization be dead in 10 years? Depends on how you parse the words. Stone-cold dead? Nah. Dead as we know it? Could be. In the future, "the ‘things' of the IT organization will be substantially diminished," Cooke says.

"And it's the things part that today's CIOs focus on."

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