Why the New Normal Could Kill IT
IT has survived seismic shifts before, but the global economic slowdown and resulting business demands have rocked the CIO's kingdom on a new scale. You've spent years trying to be too big to fail the business: Are you now too big to succeed?
Fri, March 12, 2010
CIO — Plenty of seismic shifts have rocked and reshaped IT in the past. Some big rumblings' epicenters had origins in an unstoppable technology shift; other fissures had nothing to do with PCs and servers. Consider the recent shocks: the Internet revolution and dotcom bust; Y2K and 9/11; the consumerization of IT; and the unstoppable broadband and mobile explosion.
However, the latest shock—the global financial meltdown—is like the recent 8.8 earthquake that shook Chile and knocked the earth off its axis. And for IT leaders today, it's important to realize that the aftershocks are still coming.
First off, here's what happened: Things haven't gotten necessarily more technologically complex as of late. Sure, Web-based computing, the "data, data everywhere" phenomenon and IT consumer trends have made IT's life tricky. But they aren't exactly breaking news anymore.
No, this all started on Wall Street, spread across financial markets and propagated pandemic-style to the general public. The subsequent global financial meltdown and Great Recession forced companies to scrutinize and examine factors that once never saw the light of day. For IT, in particular, a harsh light finally glared on unfavorable licensing agreements and much-too-much shelfware; ill-conceived purchasing and integration strategies; and questionable software married to entrenched business processes. And non-IT executives seated at the boardroom table were more than likely horrified by what they found during closer inspection of IT's operations.
In many corners of the corporate HQ, in fact, there are plenty of execs who, from time to time, would probably take pleasure in watching IT fail, a la Lehman Brothers. This most recent inspection of IT's ledgers and strategy probably amplified that feeling.
But those frustrated executives are nearly powerless to do just that—to let IT fail. That's because the modern-day IT shop—a fiefdom that has long wielded influence even though it suffered from a perception of little business competence—has become too big to fail today. Let IT keel over, and watch everything you hold dear go to hell. Just try it.
Why is that? Look at ERP systems, for instance. These are the financial, administrative and procurement backbone of every organization. ERP spend gobbles up huge chunks of the corporate allocation pie.
So how are ERP software suites viewed today? With about as much love as Toyota execs have for "unintended acceleration." In a recent survey, 214 business executives stated the inability to easily modify their ERP system deployments is disrupting their businesses by delaying product launches, slowing decision making, and delaying acquisitions and other activities that ultimately cost some up to $500 million in lost opportunities.
A couple of verbatim responses should make the hairs on the back of your neck stand up: "Capital expenditure priorities are shifted into IT from other high-payback projects" just to perform necessary ERP changes, noted one respondent. Said another: "Change to ERP paralyzes the entire organization in moving forward in other areas that can bring more value."
Stop investing in ERP? OK. Go for it, Mr. CEO. Have fun closing next quarter's books.
It's not solely about Finance and ERP's inextricable bond, though. Go right on down the list of business functions and departments, and you'll soon see that IT has its tentacles firmly affixed: Business Development—BI tools. Operations—Forecasting Software. Customer Service—Call Center Applications. Security—Networking. Sales and Marketing—CRM and Lead Generation. Manufacturing and Shipping—Supply Chain Apps.
Try doing any of those without IT.
Yet instead of galvanizing IT's position inside the enterprise, the opposite has happened in too many enterprises. Decades of business-IT acrimony combined with demand for new consumer-oriented Web-based applications (which IT has been slow to embrace) and layers upon layers of accrued tech legacy have boiled into frustration and anti-IT sentiment.
The global recession's impact on business—what's being called the "New Normal"—made everything that much worse.
This is your wakeup call, big-league IT execs. After nearly five decades of gate-keeping prominence, corporate IT is in trouble and at a crossroads like never before in its mercurial and storied history as a corporate function. "The era of CIO dictatorship ends with 2009," writes Altimeter Group partner for enterprise strategy Ray Wang.
You may be too big to fail, but you're not too big to succeed. What will you do?