IT Execs Boost Focus on Business in 2007

By Laurie M. Orlov with Alex Cullen and Bo Belanger

Business relationships trump technology concerns for IT execs in 2007, despite unfinished or vexing technical tasks, based on a recent survey of 239 IT executives. These respondents picked the long-standing issues of alignment, governance and communicating value as their top concerns. Below these, but still important, were cross-unit business initiatives, migration to shared services, and the exploration of business process management (BPM) technologies as a way to formalize the management of business processes. These areas of concern highlight the growing realization among CIOs that while technology prowess and depth are critical for their organizations, they must help the business units of their enterprise achieve still-elusive efficiencies from technology.

Connecting to Business, Improving Perception

In an August 2006 survey of 239 IT executives, we included a question about focus in 2007 and requested that they select their top priorities from a list of 16 choices.

When asked about priorities for 2007, 50 percent of the respondents said that improving and demonstrating IT/business strategy alignment was one of their top three priorities. The good news is that progress is detectable. Between 2005 and 2006, Forrester's IT governance data reflected a significant jump—from 52 percent to 71 percent—in respondents who indicated that business and IT collaborate equally in setting IT direction.

Thirty-six percent of respondents noted that IT governance was top of mind, making it number two on our list. And 34 percent of executives placed the prioritization of tech investments near the top of their priority list. The issues? These IT organizations have yet to form a steering committee with the right stakeholder representation or, if they do have a steering committee, its purpose is unclear. And if they do have some form of steering committee, they may not have a means of valuing and ranking investments.

Thirty-five percent of respondents identified marketing and communicating IT value as one of their top priorities for 2007. The good news? In Forrester's recent IT governance survey, 45 percent of 451 responding IT organizations report improvement in perception—they are viewed more positively than a year ago. When asked how they managed this, two key approaches they cited were improving the reliability of their infrastructure and better communicating IT's value and success to the rest of the company.

Key Factors That Contribute to a More Positive View of IT

What else is on the minds of IT executives for 2007? A notable number were working to increase business efficiency and lower those costs that may have ballooned during years of mergers and acquisitions, the decentralization of IT and data centers, and the difficult task of changing app-dependent processes to match demands of business peers. Additional items on their list included:

• Cross-unit business initiatives. IT executives (19 percent) who cited cross-unit business initiatives are trying to overcome their organization's application silo history, whether it involves standardizing business practices, streamlining a business process like order-to-cash, consolidating instances of ERP applications, or extracting and leveraging customer information managed by multiple departments.

• Migration to shared services. Although many organizations that could do so have already migrated, 18 percent noted shared services as a 2007 priority. Consolidating infrastructure, such as data centers, network management, information security and the help desk has been a no-brainer cost-saving move for IT organizations, helping them contribute to the bottom line or freeing up money for investment in new capabilities. Less obvious are the applications management and project manager's roles. Those that still put these roles on their list may have been daunted by political barriers and lack of a mandate.

• Business process management (BPM) to frame and automate work. Seventeen percent of respondents see 2007 as a year in which they will undertake or expand their efforts to deploy BPM as a way to define, create, execute, monitor and optimize business processes—those interconnected activities that combine to achieve a specific result, such as procure-to-pay or order-to-cash services. BPM tools enable a higher level of collaboration between business and IT people during process definition, real-time end user monitoring of business processes, and the quick modification of process execution based on changing business rules.

What to Add to the 2007 List?

Because IT organizations differ based on the expectations and governance of their enterprise, Forrester's 2007 to-do list differs based on this variation in archetype. Add the following priorities based on your particular situation:

• Solid utilities: Employ shared services beyond infrastructure. Executives of solid utility organizations that have honed their shared services infrastructure are increasingly likely to be asked to take responsibility for transactional operations like processing insurance claims or to take ownership of corporate functions like facilities or employee benefits. Execs who envision business technology (BT) career growth should make the first move after their infrastructures have stabilized, enabling them to move outside the walls of IT and out into the business.

• Trusted suppliers: Rationalize apps portfolios. Despite the best of intentions, complex portfolios of legacy applications remain the backbone of many enterprises; the situation is even worse when an enterprise is a collection of acquired firms, each with its own legacy. Trusted supplier organizations should take the initiative to sort their applications into clear strategic buckets, understanding which applications to migrate to new platforms, which should be replaced, or which should be left well enough alone.

• Partner players: Become engaged in new business. High-performing partner player organizations recognize that their assignment is business technology. Their infrastructure is stable, app rationalization is under way, and the technology priorities for key business strategic initiatives are set. But this opens the door for new challenges and opportunities that directly contribute to new revenue opportunities, such as using existing infrastructure to deliver revenue-generating services as BT and Nortel have done, becoming engaged in new product development like IT within Avaya or Verizon, or even spinning transaction processing expertise into a new line of business, like Security Benefit Group.

Some 2007 To-Dos Are Not Optional

No matter what type of IT organization an enterprise has or where it is in its evolution, executives need to redouble their efforts in several areas or risk slipping down the maturity curve. IT execs should:

• Manage demand with greater rigor. Every IT organization pushes at least one large rock uphill; these organizations are faced with a list of business needs that can never be fully met and must therefore focus resources on doing the right work. IT execs should ensure that the governance process is working and that the potential benefits of projects are evaluated using the appropriate valuing methodology. They should also consider either a pro forma or actual chargeback mechanism to help match supply with demand.

• Give enterprise architecture (EA) a greater business focus. Most IT organizations know that one reason they fall behind is that they are reacting to business requests rather than being proactive with recommendations for streamlining enterprise work. And typically, the EA group is overly focused on technology standards and policy. Instead, IT execs should charter the EA group to refocus at least some of its staff on identifying key areas of potential business impact. They should propose these to executives in customer service, sales or product development.

• Formalize career development initiatives. Some IT organizations are still reeling from the effects of downsizing, cost cutting and outsourcing, and staff career development has been neglected, resulting in a nadir of morale. Even in organizations that have outsourced so-called commodity work, like programming or infrastructure operations, there are still good career opportunities for IT talent. IT execs should focus on developing business skills, including communications, negotiation and analysis; establish formal rotation programs within IT and to and from business groups; and start marketing the IT career as the great opportunity that it is for contributing to the success of the firm.

Companies have long been losing patience with the insular and tech-focused IT of the past. Just ask executive search firms why they have been engaged to replace a particular CIO. Or ask a CEO why he or she replaces the CIO with someone from marketing or sales so that there is a business exec on the management team. Today, however, technology is completely pervasive, day-to-day operations of every type are totally technology-dependent, and business innovation nearly always has a technology implication. In 2007, senior IT executives look down at their operations, up at their boss' expectations, and out and around. As a result, many of them will continue or begin their transformation beyond the old IT and into BT.

Copyright © 2006 IDG Communications, Inc.

Make your voice heard. Share your experience in CSO's Security Priorities Study.