2003 -- a CIO's guide

So what should you be trying to make happen this year? Peter Judge has some suggestions

The next year will be a tough one for the chief information officer (CIO), or the IT manager as he or she used to be known. You knew that already, but you probably didn't know exactly how tough or in what ways.

According to analyst firm Gartner Group, IT expenditure is expected to remain flat, or go up very slightly during 2003, with most CIOs having the same amount of money to spend this year as last year.

Those in the UK can take some comfort from the fact that their situation is a little better than elsewhere. "The UK is among the least weak of the IT economies," says John Mahoney, vice president and research director at Gartner.

Unfortunately, CIOs everywhere will be expected to continue doing more with that money. And, while resources like processing power, storage and network bandwidth are continuing to get cheaper, the job is made more complicated by the installed base of working (or mostly working) IT that all CIOs have to work with .

To make the whole thing more concrete, Gartner has produced a list of ten things that CIOs should be trying to get done this year. It is an impressive set of tasks, especially as they come on top of just "doing the job", dealing with the everyday issues and crises that crop up.

During 2002, according to Gartner, CIOs, have been concerned with three things:

  • Vigorously manage costs
  • Focus on the core business and work with partners for the rest, and
  • Make sure there is a bit of resource "spare" for future planning

But in 2003, these concerns have to change. From now, they will have to:

  • Reduce IT costs
  • Demonstrate the business value of technology
  • Provide leadership and guidance to the board

The big difference here is that, as the downturn bites, IT has to justify itself alongside other departments. If the CIO can't justify his or her place in the business, that place will be eroded.

Of course, the best way to do this, is to do the job well, so even though they have to keep an eye on their colleague's perceptions of them, CIOs have to give most of their attention to actually doing the job. This means making tactical and strategic decisions, fixing things and making long term plans.

Let's look at some of the headlines in Gartner's suggestions. Before we do so, let's remind ourselves of some of the things that are too obvious to mention. The following are simply part of the IT atmosphere.

Security Every CIO has to be continually aware of this and that will not change. There will still be plenty of security scares on widely used products (both opensource and proprietary), and virus attacks.

Wireless and mobility Every business will look more and more at providing mobile resources to its employees. If nothing else, this is because they are likely to be making moves in that direction if nothing is provided. Again, every CIO should have some projects in this area.

Open source versus Microsoft You know the arguments. You are already making the decisions whether to direct resources to licence fees, support or development. This will continue to be an issue for you.

Read on for the interesting stuff.

During 2003, Gartner believes businesses should turn off at least ten percent of their legacy systems. These are not necessarily systems running on old hardware or software, but systems that do business in an obsolete way. The downturn is a good time to win the battle to remove them.

"Most organisations still have a very large portfolio of legacy systems," says Mahoney. He believes that switching them off is a very good thing to do in a recession, because it saves money and time, and produces a result on the bottom line.

This gives the CIO some clout over the business managers who are dragging their feet and demanding that old systems are kept going, simply because they do not want to update their own working methods.

"Companies have projects that haven't rolled out completely, because twenty percent of the management is still wedded to the old system," says Mahoney. "In a downturn, the CIO can over-ride their protests. The easy stuff has been transitioned, but not it is political. It is time to take away their teddy bears."

Even with this sort of argument, it will be tough going. Ten percent is a realistic target, says Mahoney, but one which will begin to create real paybacks which the CIO can show to the board.

Watch for suppliers to consolidate

During 2003, more suppliers will disappear through merger or bankruptcy. By now this has happened already to key suppliers for many -- or most -- enterprises, so the experience is nothing new. But it is worth underlining the need for contingency plans.

"Uncertainty is not a good reason not to be making buying decisions," says Mahoney. You need to get good value, and desperate suppliers can be persuaded to make good offers. If you are worried about the long term future, you need to have backup options for services (such as spare capacity or another service provider) or "escrow" for products, to guarantee that you will have access to them in the event of your supplier disappearing.

There is another option besides screwing good cash deals out of suppliers, and that is to go into partnership with them, as BT has done with its suppliers. This is an option for large organisations only.

Suppliers have been promising return on investment from their products for years, but all too often, the promise is never checked on. A year or two from the installation, the IT staff have changed, and the strategy is different.

BT is inviting suppliers to enter contracts where what they are paid depends partly on BT making demonstrable savings as a result of their products. In essence, the telco is offering to pay them extra, from the money it saves by using their products, but at a later date when the savings have actually come through. "We could knock another two percent off this year," says Paul Reynolds, chief executive of BT Wholesale, "but there are better gains to be made this way."

Internal marketing and the real time enterprise To many, the most unpalatable suggestion from Gartner may well be the idea of marketing the IT department to the rest of the company. If you wanted to be in marketing you'd be in marketing, not a CIO! However, IT departments have had a bad reputation since the Year 2000 panic and the dotcom boom, and vultures may be gathering. Disturbingly, according to Gartner, other management's attitudes to IT departments are languishing in the lower half of its credibility range, between "scepticism" and "acceptance", still some way short of "trust" or the ultimate level "respect". The problem, is that telling the other departments how good IT is, could be counterproductive. Part of the answer may be that the "next step" for IT is one which will automatically impinge on the other department heads. What Gartner refers to as the "real time enterprise" (others have different names) is one which has to affect senior management. Gartner's promotion of the "real-time enterprise" sounds a lot like its "zero latency enterprise" concept of a few years back, but the difference is that this time the concept must be applied to management itself, says Mahoney. Technology (or at least the magic "e-" prefix) has been applied to all aspects of the business to make them faster and more efficient. Now the only thing left to "e-" is management, according to Gartner. It is time to replace the messy email "adhocracy", they say. Decision times should be reduced, year on year, says Mahoney. Banks that once took a month to assess a mortgate application should aim to do it in a week, then a year later do it in a day. Real-time enterprise technologies to watch for include
  • Tagging Identifying objects on the production line and even after sale, to improve processes
  • Business Activity Modelling (BAM) The new name for EAI and enterprise dashboard, that give executives a view of what is important in the company
  • Instant Messaging (IM) This gets a swift reaction from people, because it provides "presence" and "dialogue"
  • Web services By allowing systems to be linked, these can underly many other real time enterprise technologies.
Try out IM and web services Gartner believes the next two things to try out are instant messaging and web services. Both are at an early stage of use in business, but are ready for pilots. IM is perhaps the most interesting, because it is already widespread amongst consumers, and may appear "virally" in the company without the IT manager putting it in. "In some call centres, were desktops are not locked down, intelligent staff are putting in IM in order to do their jobs properly," says Mahoney. IM has taken off faster in US for business than in Europe, but Gartner reckons that European businesses should be trying it out now. Conclusion: results will show There are organisations that show what can be done with efficient IT, says Mahoney. "The low cost European air carriers are showing the way," he said. They have much less than the IT spend of the traditional airlines -- around one percent of their revenue compared with four percent by the competition. The low cost carriers are making more efficient use of their technology, he says. Selling online means the company gets hold of the money (from the credit card companies) quicker than it would otherwise do, so the new service offered by the IT is well aligned with the business need. Of course, they had the benefit of starting from scratch, so they don't have to bother with turning off legacy systems. Whatever situation you are in, Tech Update wishes you the best for 2003. We will continue to inform you throughout the year.
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