Gartner: Spending, consumerization, and business goals should dominate CIO thinking
As expected, Gartner Managing VP and Fellow Daryl Plummer took the stage this morning with a message that the more than 6,000 IT managers in attendance here at Gartner Symposium/ITxpo need to figure out a way to allocate more of their budgets to projects that deliver business value and growth than to "keeping the lights on." According to Plummer (pictured left), many organizations are spending as much as 90 percent of their IT budgets on "standing still.
As expected, Gartner Managing VP and Fellow Daryl Plummer took the stage this morning with a message that the more than 6,000 IT managers in attendance here at Gartner Symposium/ITxpo need to figure out a way to allocate more of their budgets to projects that deliver business value and growth than to "keeping the lights on." According to Plummer (pictured left), many organizations are spending as much as 90 percent of their IT budgets on "standing still."
Prior to Plummer's keynote presentation, Gartner CEO Gene Hall briefly addressed the audience with some key statistics that set the stage for what Plummer and other analysts had to say. According to Hall, from a survey of more than 1400 CIOs that was conducted by Gartner, the number one priority is clearly delivering project that enable business growth. According to Hall, 45 percent of organizations whose IT managers have established business growth as a priority are in what he calls the breakaway category: growing much more significantly than their competitors. But many CEOs, according to Hall, lack confidence in their CIOs saying that they are too cost focused and not as capable of contributing to business growth as they should be.
Hall then rattled off some other statistics aimed at sizing up the challenges to addressing those priorities. For example, of the IT executives interviewed, 28 percent said there was a breakdown in accurate communications between business executives and IT. As such, CIOs are also making it a priority to build business skills in the IT organization itself. There was one exceedingly grim statistic from Hall: Compared to last year, the number of CIOs leaving their jobs has doubled in 2006.
With the stage set for a discussion of how IT can be more directly aligned with an organization's goals for growth, Hall ceded the stage to Gartner's director of global research Peter Sondergaard who warned conference attendees that the impact of consumerization is the single most significant trend that will impact IT over the next 10 years. In a presentation that I've covered with a separate blog post, Sondergaard proclaimed that "We stand at the foot of a new high tide....There is a shift in technology ownership."
But it wasn't until Plummer came on stage that Gartner delivered a reality check that most attendees probably didn't want to hear:
Eight out of every ten dollars you spend on IT is dead money. It's not contributing to growth of your business or enhancing competitive advantage..... it's just there to keeps the lights on.. and any corporate function not contirbuting to business growth is expendable.
Attaching IT initiatives to business growth was clearly the main thrust of Plummers' treatise as he issued some sage forest and trees-esque advice to stop getting uselessly bogged down with details like when are we going to upgrade to Vista, whether or not to use open source solutions, or "to Linux or not to Linux" (which drew a big round of laughter from the attendees). Said Plummer:
IT organizations obsess about details that matter to them but not to the business... You will be locked in a tech upgrade loop for the rest of your life. Get over it. Stop obsessing over these details... think about your approach to delivering more growth and value to the business.
Plummer went onto say that the main question for IT executives now is how to cut the number of dollars being spent to keep the lights on from eight out of ever ten dollars to six (a tangible goal that everyone can sink their teeth into). So, for you out there in IT-land, can you identify which dollars are simply being spent to keep the lights on and can you figure out how to trim that back by 25 percent? The idea is that you can used the recovered funds to allocate to investments that are directly connected to business growth and that take advantage of radicalizing trends like the consumerization of IT that Sondergaard spoke of.
What are some approaches to consider? Plummer said to reduce the spend on physical assets. At the very least, I took that to mean "outsource more." One by one, Plummer then marched three of Gartner's top analysts -- Audrey Apfel, Richard Hunter, and Mark Raskino -- on stage to provide some more of the research outfit's insight into how to get IT spending in line and realigned with business goals. For example, Apfel recommended "intelligent reinvestment" saying "When you save real money, tag it for reinvestment in a particular area or against a particular business goal" (again, that language of business goals coming up). Apfel said to emphasize reusable Web services development warning that "You can't do it on a one project basis" and to "clean up your application portfolio." Apfel also said to use VoIP technology to "decimate your telecommunications budget."
One reason for the disconnect between IT and business objectives (gosh, it seems like we've been reporting on this for 15 years) is that IT personnel may not be taking the lead on what would otherwise be described as a business initiative. Apfel clearly believes this must change saying:
Position yourselves through partcipation, nominating, volunteering and stepping up to take bigger roles.... run the emerging innovation projects and task forces...IT organizations have [the business] skills in these areas. Don't wait for tomorrow.
Dovetailing Plummer's comment about reducing capital spending, Apfel went onto say "depitialize big areas of cost" (can this mean anything else but outsource?) and repeatedly said "Don't measure value where you can count it. Measure it where it counts." Her examples for attaching IT initiatives to real business goals, using business language though were what resonated with me. For example, if you're a casino operator, you should be able to measure the effect of your network on slot machine returns. Or, what's the connection between some new IT and the goal of trimming seconds of the drive-thru experience (if you're a fast food operator).
Presentations from Gartner's Hunter and Raskino further emphasized issues such as discipline and breaking out of old ways of thinking (in order to embrace newer technological opportunities). Showing a picture of seven-time Tour De France champion Lance Armstrong grimacing as he suffered one of the many enduring climbs where he punished his competitors, Hunter asked rhetorically if it looked like Armstrong was having fun at that moment. Obviously, he didn't: the moral being that discipline (and Armstrong is very disciplined) isn't fun but that you have to do it. "Without discipline, you will lose" said Hunter.
Amongst other things, Raskino gave examples of what he called "idea killers" and said that such talk has to be eliminated from IT conversations. Asking the audience whether they've heard these things said before, the laughter clearly indicated yes:
We tried that it didn't work
So long as it's not bleeding edge
That sounds like consultant speak to me
I could have done that in COBOL
The bleeding edge comment is an interesting one since Gartner, almost by design, discourages the adoption of bleeding edge technologies. Gartner typically plots any technology to come on its radar on something it calls the "hype cycle"... the early part of which includes a stage called the "trough of disillusionment" when just about everybody realizes that the technology in question needs to mature before it will be ready for primetime.
So, at the very least, it looks like Gartner itself is going through some of the very same transition that its analysts are out there talking about.