Trendlines from 4/15/08: New, Hot, Unexpected

In this issue: The cap on H-1B visas; Corporate mash-ups; Face-reading computers; The lapsing landline; China and RFID; Banning of social networks; The value of big monitors; Efficiency in IT shops; and By the numbers, including IT modernization.

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Theory of Efficiency

It's not enough that mid-market IT shops have to feel slightly envious of big-company IT departments and their access to seemingly unlimited resources, tools and staff. Now an analysis of recent data trends shows that IT departments in Fortune 1000 enterprises are more productive and effective service providers than mid-market counterparts&mash;and it has nothing to do with the amount of staffers or money spent.

"The staff-versus-budget argument is based on a false assumption—it improperly assumes that resources committed to IT are used efficiently and effectively. However, in the majority of IT organizations, they are not," writes Hank Marquis, director of IT service management consulting at Enterprise Management Associates, in the report "Are IT Budgets Too Big?"

Conventional wisdom holds that large companies' IT shops are more effective since these companies have deeper pockets. That logic is incorrect, according to Marquis. He suggests looking instead at the "user-to-IT-worker" ratio in midsize and large companies. "Larger companies of the Fortune 1000 support almost three times—2.9 times, to be precise—as many users per IT staff member than mid-market companies," he writes. This makes "mid-market IT organizations only about one-third as effective as their larger Fortune 1000 cousins."

The problem? "It's not more staff that's needed," Marquis concludes. "Existing staff must become more productive." The report offers several tips for improving productivity.

Manage human capital. Invest in training and new skills for staff and actively measure worker performance.

Improve business process management. Research process-oriented frameworks like ITIL, Six Sigma or formal IT project management.

Service customers efficiently. Encourage IT staff to communicate with end users in order to understand their needs.

-Thomas Wailgum

By the Numbers

Why IT Modernization Should Be on Your Radar

strategy If IT modernization isn't a top priority at your organization this year, it should be, according to a recent report from consultancy Gartner. The reason? By 2010, more than a third of all application projects will be driven by the need to deal with technology or skills obsolescence, according to the report.

Gartner defines IT modernization as a movement that recognizes the strategies for and approaches to managing the evolution of business processes and applications, and supporting technology portfolios for optimized value, cost and risk objectives. To achieve that goal, CIOs need to address strategic planning capabilities and focus them on IT asset modernization.

Three main factors drive the need to modernize now, says Dale Vecchio, research VP in application governance and strategy at Gartner. The most significant is the skills crisis.

"It's a big deal. It's the first time a generational shift in developers and consumers of IT has been felt," he says. "Baby boomer retirement is becoming real. These retirements impact the availability of skills, and CIOs will have difficulty filling those open slots." Other factors include the agility gap (IT's ability to respond to business demands) and portfolio diversity (managing too many systems, resulting in additional costs). Digital natives brought up on Facebook, IM and the Internet are another factor. These employees have a different expectation of how IT systems should work, says Vecchio. Today's systems, he says, aren't necessarily built for that.

So how do you know if your organization needs to modernize now? Review the status of your long-term strategic plan. If your IT management team has weak or nonexistent processes for keeping up with and replacing systems, IT modernization should be on your radar.

Best Practices

Drive the agenda. As CIO, expect to drive the discussion around IT modernization directly, using the full resources of the IT management team.

Gather information. Identify key asset portfolios across the IT domain, and assign management responsibility across the IT management team for each asset portfolio.

Identify a point person. Find the best individual to take responsibility for comprehensive IT planning across all portfolios. Make this person a direct report.

Get the big picture. Organize an offsite planning session where asset owners can explain the IT maturity and modernization issues inside their own portfolios.

IT Modernization Moves Up As Issues Mount

Up to 30% of employees with IT legacy skills will be eligible to retire in the next three years. At the same time, many artifacts (old programs, databases, platforms, etc.) will need to be replaced between 2008 and 2015.

CIOs list legacy modernization, upgrades or replacements as their No. 4 priority for 2008. In 2006 it ranked No. 10. Source: Gartner

Copyright © 2008 IDG Communications, Inc.

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