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.

Vexing Problems

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.

The Solution: Transforming IT to Become Business-Oriented

Before CIOs invest in new applications, they must develop a new strategy. This strategy should be designed to:

• Help govern and rationalize IT infrastructure,
• Fill in the "white space" by extending IT assets for people, for process and for change,
• Provide a common framework and language for business and IT collaboration,
• Develop a measured, performance-driven, and value-driven culture,
• Streamline costs and reduce risks by surfacing common functions as reusable and interchangeable components,
• Optimize operations and automate core processes, and
• Increase competitiveness through agile and responsive infrastructure.

In this paradigm, IT truly understands the business and is not simply a supplier on the other side of the wall. All IT staff understands how they fit into the value chain and how the value they produce benefits the business.

This strategy leads to a solution that:

Is a holistic approach. The solution starts with process design and people workflow before any new technology is ever considered. As AMR Research points out, tools that help an IT organization track performance, create and enforce policies, and prioritize and execute projects are important components of a successful IT transformation; however, the key to successful transformation lies more in the people using the tools than in the tools themselves.

Additionally, technology alone doesn't translate business needs into sustainable business advantage. Companies must plan the architecture of business, processes, and management. They should select a provider that has the proven capability to leverage and extend legacy systems, granularize those systems into flexible components, and understand the skill development and change management that that needs to happen in conjunction with those processes.

Incorporates effective tools. Although a holistic solution begins with people and process, the reality is that new tools will most likely need to be brought into the fold. However, the solution provider chosen to supply those tools should be focused on results, and not just selling new applications.

Too often, solutions provided by traditional application vendors have the consequence of further locking a company into a proprietary architecture, instead of truly enabling agility. An effective solution must incorporate tools and methods for involving both IT and business in the process - while establishing appropriate governance control - in order to improve alignment and eliminate "over the transom" development. Rather than being a set of disparate tools, it should be a unified platform that enables business and IT to collaborate on process design, create a graphical model, and translate that model into executable code.

Delivers new levels of IT and business agility. Any new tools should be proven-integratable out of the box. Additionally, since the development timeframe continues to shrink, the solution must enable reuse of assets and services in order for IT to be productive and establish a rapid development environment. The solution must be based on business rules that are externalized from of the application code and are managed separately, using interfaces that are accessible to business managers.

This accessibly is vital to flexibility. IT alone is not going to solve the agility problem just by having new services and new tools. The most effective way CIOs can extricate themselves from the typical response-time problem paradigm is by putting change management tools in front of the business, and the only way business will use these tools is if they incorporate interfaces that can be easily navigated.

Proven Business Impact

Fortunately for CIOs, this transformation solution is both tested and proven. A full 90% of today's CIOs agree that business process improvement can increase companies' capability to leverage existing investments and drive more business value. Companies that have capitalized on the services of holistic solution providers and enterprise-grade toolsets are able to achieve:

Improved communication and collaboration. Improved communication and collaboration with the business is key to today's process improvements. At the outset, a process-centric management suite helps IT and business collaborate, from assessing problems and designing potential solutions to modeling changes in order to assess impacts on the overall system environment. After deployment, monitoring capabilities allow the business to manage how processes are operating throughout the value chain - to be able to look into what was formerly a "black box" and now understand what changes need to be made.

Increased business agility. Companies cannot afford to spend years in application development when new market opportunities arise. Many solution providers claim to enable agility through middleware solutions, but instead often saddle their clients with proprietary methodologies that further compound the problem. Agility can only be provided through an approach that is both holistic and platform-neutral.

Greater transparency. The solution should incorporate a "measure first" philosophy and then provide visibility that will allow management and monitoring of activities and processes. In turn, this enables the business to make process improvements and identify critical areas for IT to address. It also allows companies to deal effectively with time-consuming compliance requirements regarding system controls.

The CIO's struggles with high maintenance time-costs and inflexible, unresponsive system environments are not new. However, in the past they simply haven't had the right technologies, the right strategies, and the right solution provider to help them overcome those problems. Capabilities are now at the disposal of CIOs that will enable them to make IT a contributor to value creation, not just cost reduction.

CIOs need to assess their companies' current capabilities and uncover the limitations that make IT an inhibitor of innovation and change. They need to unshackle themselves from the limiting strategies of the past, create a platform for sustainable competitive advantage, and realize their potential to lead the business.

This e-mail address is being protected from spam bots, you need JavaScript enabled to view it is Software AG's Director of SOA Products. As one of the company's leading spokespersons on SOA, Franco is committed to providing the market with a vision for SOA that is tightly tied to sound and practical business imperatives.

Comment on this article

Only registered users can write comments.
Please login or register.