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By Franco Castaldini
CIOs need to deliver more IT capabilities and enable their companies to capitalize on new market opportunities - and to do it faster than ever before.
For too many CIOs, system maintenance is the proverbial ball and chain, requiring 80 percent of IT's time and consuming 60 percent of their IT budget. Even though they are under increasing pressure to deliver more capabilities to the business in shorter development timeframes, CIOs are often shackled by legacy application portfolios characterized by inflexibility and inefficiency.
As a result, IT simply has too little time to spend on delivering solutions that foster innovation. Business becomes frustrated with IT, and understandably so. Given this reality, it's no surprise that the top priority of CIOs continues to be aligning IT and business goals, followed by increasing business value from IT investment.
In effect, CIOs want IT to be able to:
- "Contribute and lead," not "respond and lag,"
- Extricate itself from the 80/20 maintenance and 60/40 budget mire,
- Deliver value, not just "cost reduction,"
- Regain control of systems locked in to vendors, and
- Manage information, not applications.
This is not only a business imperative: it is a matter of CIO self-preservation. As AMR Research points out, gone are the days when companies needed an internal IT organization just to make technology work, and IT teams that are viewed as expensive technical support are prime targets for outsourcing.
Today's CIO - Under the Gun
No business operates in a vacuum. Markets are crowded, margins are tight, and new challenges pop up seemingly overnight on all fronts. Five key market forces have converged to create the perfect storm and put pressure on CIOs and their IT organizations to be fast, responsive, and efficient.
Increased competition. Every day new products and services are introduced that take market share from established firms. Competitive pressures are forcing businesses to innovate and to shrink the cycle time of innovation. They need visibility into capabilities throughout the enterprise to not just respond to opportunity, but to anticipate it and outflank their competitors. Globalization also leads companies to go further to find advantage, and that requires increased, real-time visibility into a worldwide supply chain.
Regulatory demands. Regulatory and governance requirements are drowning companies in endless bureaucratic cycles. The business needs to conduct its operations in a more transparent manner than ever before, yet simultaneously reduce the overall cost of compliance in order to remain competitive. Automated, well-governed processes and timely, effective reporting are essential in order to achieve these objectives.
Customer power. With the explosion of available information today, customers have more power, and customer acquisition and retention is much greater challenge for companies. Prospective customers come armed with better information and increasingly view service as an inseparable component of the product a company provides. Upset customers have instant and far-reaching outlets to vent their frustration. Companies need better visibility into their own information to respond to customers and better end-to-end process automation to optimize customer service.
Information overload. Businesses create and capture more data that they can ever utilize. Too often, companies have oceans of information, but trickles of real knowledge and insight. Although it's true that business intelligence platforms have delivered a lot of information to the enterprise, IT still struggles with being able to deliver the right information to the right person at the right time to create actionable intelligence.
The changing workforce. Many work environments are now characterized by flex-time, telecommuting, collaboration, social networks, and increasing dependence on information and communications technology. Companies need to provide and embrace tools that the next generation workforce has grown up using. Additionally, they need to find ways to extricate process knowledge that has been hard-coded into legacy applications, or risk losing this knowledge when the generation of workers who created those applications retires. This is a critical task because IT's most important asset is not its applications, but its company and business-process knowledge.
Unfortunately, traditional IT strategies have been anything but responsive to these market forces. Too often, business and IT have struggled to even reach an understanding of the nature of the challenges faced. Furthermore, companies lacked tools that would enable IT and business to communicate and collaborate throughout a product's lifecycle.
Instead, the "solution" to business challenges was runaway application development, with business analysts throwing project requirements over the transom and IT returning 18 months later with a system that might or might not deliver needed capabilities.
In particular, companies have struggled with:
Ineffective communication between business and IT. Business needs to translate its problems into something that IT can fix. However, without a process that provides a common language and a platform that enables collaboration, the solution development process is asynchronous and ineffective. Over time, the business has also experienced a growing frustration that it has given away control of the business to IT or, worse yet, an outside vendor, because it has no direct control over technology change management.
Lack of agility. The natural response of IT to a business problem is to develop or buy applications. However, companies then end up with more applications than they need over time, performing overlapping or redundant functions. They find themselves locked into vendor platforms or relying on middleware that does not truly enable flexibility, let alone support a rapid application development environment.
Inadequate transparency. Lack of transparency is particularly troubling in today's compliance environment, where the need to understand and document system controls is crucial. Additionally, in order to communicate needs and changes to IT, business must know what needs to be changed, based on objective measurement, system transparency, and real-time monitoring.