John Mahoney's presentation this afternoon on "The Scenario for IT Management 2007" actually looked beyond the next 18 months to provide a five-year perspective on the key trends driving the changes impacting IT management. The presentation also focused on how CIOs should respond to these changes and the attendant risks and critical success factors.

A couple of key statements from the presentation:

"How enterprises manage technology will diverge more during the next five years than it has in the past 15."

"Most big IT organizations will divide into at least two pieces: one that provides routine processes and services, and another that focuses on strategic architecture and business change."

Q&A after the presentation:

Q. To what extent are business leaders understanding the "trilemma of change" that is driving the changes in the impact of technology on business strategy?

A. Many business leaders understand the drivers of change, but they find it difficult to deal with the impacts of those drivers. It is a significant value contribution for the IT organization to be able to explain these drivers and a present a model that can be used to talk about them.

Q. You mentioned an agrochemicals company as an example. Do you expect more firms in industries that are not traditionally IT driven to change their business model?

A. We are already seeing that in a number of industries. It is probably true to say that process-oriented industries take more naturally to a business-process-driven technology strategy, compared to industries where the executives' background is typically in sales or finance. Process-driven companies have a natural understanding of the value of business processes.

Q. What is the impact of these trends on the dialogue between business and IT?

A. Dialogue is no longer sufficient. It needs to be a partnership. You need a very close connection to work effectively on these issues. IT and business leaders must move from a discussion of IT performance this week to a focus on where business is moving in the future and how the CIO can contribute to those changes.

Q. What is the biggest obstacle to the IT organization moving where it needs to go?

A. Probably the biggest single obstacle is changing the profile of skills and behavior of IT organizations -- and of businesses as a whole with regard to the contribution of technology to the business.

On Wednesday from 3:15 p.m. to 4:15 p.m., Mahoney will deliver an additional presentation, "Next Steps in the Unavoidable Transition: Critical Decisions in 2007 for Every IT Organization," which will explore further some of the issues that he addressed today.

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Are you getting a different set of vibes from the CFO about 2007? Are you feeling renewed pressure to reduce IT spending next year? If you are, you're not alone. Interviews with leading CIOs across multiple industries share that same feeling. Business executives are turning their attention to IT spending.

Interestingly enough, many of these CIOs are not concerned about this attention. They've already begun to change the language used to assess the IT budget away from issues of spending and toward maximizing the business yield on IT investments.

Now, you’re saying great, but that's all semantics, right? Well, not really. I believe that when the business cannot see the value of IT investments they revert to managing the only thing they know – cost.

At Symposium, Gartner EXP will present the initial results of an ongoing research project aimed at increasing IT yield. The presentation will discuss strategies to decrease IT spending by 20 – 35 percent through a combination of technical, process and contractual changes. These techniques should help CIOs and IT leaders who are looking to reduce their expenditures. However, raising IT yield involves more than just reducing what you spend. It requires raising the business impact of what you do.

Yield is an equation that looks to put value delivered over its cost. The result is a kind of value per dollar, much like a car gets miles per gallon, or MPG. Car companies raise MPG through a combination of weight reduction, engine efficiency and other technologies. These are akin to reducing IT costs. CIOs and IT leaders, however, have more options available and leading CIOs are using the value side of IT yield to keep or even increase IT budgets while increasing value delivered even faster.

Changing the game in how the business views IT is part of the next transformation of the CIO and IT organization. At Symposium, the Increasing IT’s Yield presentation on Tuesday, October 10 at 3:15 p.m. will provide a framework for having that conversation.

What do you think?

• Are you being asked to reduce IT spending in 2007? If so, why?
• Do you believe that IT has done its job if you reduce spending without reducing quality?
• What are the factors that you and the business use to judge IT contribution?
• What approaches do you use to help the business realize the value of IT?

Forgive the barrage of questions - but it’s a complicated issue. Starting the discussion now will prepare all of us as we generate answers together in Orlando.

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How do you measure IT effectiveness? Pose that question to a group of CIOs or Gartner analysts and brace yourself. Financial, strategy, perception, relationship measures have all been used to judge the success of IT. While each of these aspects may tell part of the story, it seems to me that IT effectiveness boils down to a few simple statements such as:

• IS has the organizational and technical flexibility to respond to changing business priorities


• IS service levels meet business expectations (quality and responsiveness)
  
• The CIO is a key player in forming the business strategy
  
• The IS organization has the funding to meet its commitments for 2006 (operations, development, infrastructure)
  
• The IS organization has the right amount of skilled people to meet business needs
  
• The IS organization has the control needed to deliver its contribution (relative to business control of IS decisions)

These statements assume that IT effectiveness is the same as any other business capability. "IT knows what to do, and IT does what it says." Now some believe that this idea is too simple given the intricacies of IT, its unique position in the organization, and other protestations. However, I ask how can IT move into a more sophisticated position if it doen't get recognition for the basics?

These effectiveness measures have led analysts to believe that my thinking is "simple minded." However, how can we credibly move to a more sophisticated set of measures when CIOs on average give themselves a D+ (69) average score according to the 2006 CIO survey?

At the 2006 Gartner Fall Symposium we will be talking about the impact of these measures, to whom the CIO reports, the budget and resources they have, and the priorities they work on.

If IT is a real business capability, then its effectiveness matters and in October at Orlando we will delve into the factors that drive effectiveness and what CIOs and IT leaders should gain from being effective.

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Business expectations for IT are increasing. After more than three years of improving the cost and quality of IT services, successful CIOs are being asked to support enterprise growth and competitive advantage. This connection starts as CIOs and IT leaders stabilize and improve the quality of IT services. With this baseline established, CEO's are more likely to involve the CIO and IT in a context beyond just providing IT services.

Unlike every other leader – with the possible exception of the CEO – CIOs and IT leaders seem to live in two worlds. They work "IN" the business where they focus on running IT to deliver current IT and business services. "IN" the business they improve current processes and systems. CIOs and IT leaders also work "ON" the business where they seek to transform the enterprise, creating something new and different. Working "ON" the business involves transformation, new applications, new technologies and new processes.

The reward for success both "IN" and "ON" the business is clear. CIOs leading the most effective organizations have experienced more than 4 percent growth in their IT budgets versus only 1.2 percent for the least effective organizations. These CIOs use that budget in support of growth and increasing enterprise competitiveness.

CIOs are telling us that there is a connection between IT and enterprise effectiveness. That is a good thing – it means that IT matters. Tell us what you think,: is this connection real or is it just wishful thinking?

• Do you believe that greater business involvement is the reward for effective IT?


• Where are the areas where CIOs should plan to play a leadership role?


• How does the CIO know when the business is expecting more from IT than providing a technology dial tone?

The CIO track at Orlando Symposium this year will focus on these and other issues that shape the CIO and IT leadership agenda. The goal of this track is to power you up with the insight, cases and tools needed to close out 2006 on a high note and position yourself for success in 2007. Growing IT's contribution requires effective IT and this track will help you make it happen.

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