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?

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No doubt, most businesses 10 years or older have IT legacy that has led to business complexity. IT's top priority for 2009—for 2009!—was "modernizing key legacy applications," according to a Forrester survey of 2,200 IT executives and decision-makers. Those systems and applications cobbled together over the years are no match for today's push (terabytes of data flooding those systems, which Gartner predicts will grow by 650 percent during the next five years) and pull (users demanding sweeping, individualized access to the data).

Now watch how, using a 2009 survey of 353 software buyers and sellers, that complexity leads to financial duress and ultimately to IT failure:

Complexity Hinders Software Success. "Two-thirds of survey respondents say the enterprise IT environment is more complex than it was five years ago," notes the survey report. "The proliferation of technology combined with intricate organizational dynamics has raised the level of business IT complexity to the point of holding back software success."

"Financial Upside" Is Left on the Table. Fifty-three percent of respondents said that, on average, "fewer than half of users are effectively using installed software in the enterprise," states the report. "That means most companies are leaving benefits such as reduced costs, increased revenues and improved competitive differentiation on the table—benefits that were cited as the rationale behind the software investment in the first place."

IT Still Gets Blamed for Failures. Nearly 60 percent of respondents claim that the CEO still holds IT responsible for a "lack of success."

"CIO's have lost a lot of control in guiding how technology is used in the enterprise," blogs Altimeter Group's Wang, "because the world of consumer tech has out-innovated enterprise-class technologies."

Just before he left Sun Microsystems, Tim Bray, the former director of Web technologies, had this to say (in a blog post) about the current state of enterprise systems: "Doing it wrong. Enterprise systems, I mean. And not just a little bit, either. Orders of magnitude wrong. Billions and billions of dollars worth of wrong. Hang-our-heads-in-shame wrong. It's time to stop the madness."

How to Find Your Way Through the Fire

Here endeth the doom and gloom. What follows are several ideas, constructs and strategies for CIOs and their IT departments.

New Mindset Required.

In his blog post, Wang notes 11 skill shifts that CIOs need to make. For example, engaging with business has to change from an autocratic mindset to a partnership one; traditional business processes resembling "replication and incremental refinement" have to shift to "disruptive and transformative"; infrastructure management moves from "reliable and expensive" to "flexible and cost effective"; and an enterprise apps strategy consisting of "on-premise mega-vendor apps and legacy suites" evolves to "augmentation with best of breed solutions in hybrid deployments." In other words: CIOs and IT need to become fast, flexible partners.

Biz Speak Only.

Nothing new here, but today's harsh business climate necessitates clear and consistent communication. Abbie Lundberg, the former CIO magazine editor in chief who now works with CIOs on executive communication skills, says that even if IT shops are doing a good job, poor communication skills at the top can sink any CIO. "As long as IT is speaking in IT or engineering terms, IT will seem like a dark art—arcane and irrelevant," Lundberg says. "I see a lot of IT organizations doing many of the right things, but without that communication piece, they just aren't getting the traction and acceleration that they need right now." (See Lundberg's insightful interview with Steve Bandrowczak, former CIO at DHL, Lenovo and, most recently, Nortel, who discusses what IT leaders can learn from sales and critical communication strategies.)

Know Internal and External Customers

McKinsey's Chui says that it's imperative that CIOs and IT understand the ever-changing technology wants and needs of not only internal users and managers but their company's external customers. "Some [of this new] demand comes from new hires and more IT-savvy managers," Chui says. "But part of it really comes from the new normal, where you are seeing customers and consumers who have an increasing amount of power and knowledge, partly because the discussion around brand doesn't occur through paid advertisements any more. That makes it incumbent on the business to understand those sorts of technologies and how you interact."

Don't Be Afraid of a Little Failure.

The imperative for CIOs is to explore and experiment with so-called disruptive technologies (Web 2.0, social media, cloud computing) that users and customers have embraced. But IT can't be intimidated by failure, said several leading CIOs at the recent National Retail Federation show. For instance, Neville Roberts from Best Buy said: "CIOs must foster the right culture so [IT staffers] don't have a fear of trying new things. There's always a new shiny toy out there," reported Evan Schuman at Storefront Backtalk. McDonald's CIO David Grooms added: "You should try and fail really small.... You test, take some risks, adjust and go back. But you really can't take that long. You can't take three years to develop an app. You must launch and learn."

Be Ready: More Will Be Asked of You Than Ever Before.

Cut and grow: That's essentially what's being asked of CIOs right now, say Lundberg and Chui. "I call it the 'CIO's Dilemma': How do you create efficiency, on one hand, and help grow the business, on the other," Lundberg says. "It's a business dilemma, too. But it's the CIO's Dilemma because IT is really at the core of how businesses operate." In fact, CEOs are expecting good things from their companies in 2010: 74 percent of executives interviewed for a McKinsey survey expect a rise in profits in 2010, versus only 46 percent in 2009.

Some CIOs have already responded: Capgemini's 2009 Global CIO Study found that 55 percent of the 490 respondents say they are giving priority to projects that contribute more to the business, and 34 percent are prioritizing projects that take advantage of new market conditions.

When asked whether IT today was too big to fail, Chui takes a slightly different tack: "I would say it's too important to fail."

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Copyright © 2010 IDG Communications, Inc.

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