Improving biz process continues as top concern of CIOs

Chief Information Officers (CIOs) will come

under increased pressure in 2006 to perform while they transform their IT

organisation to become more externally focused, according to a worldwide survey

of 1,400 CIOs by Gartner Executive Programs (EXP), a unit of Gartner Inc.

Gartner said executives now expect IT to play a significant role in business

growth and competitiveness, a shift that will accelerate in 2006.

The study -- which the group had also performed in 2005 -- found that

worldwide IT budgets are expected to increase by an average of 2.7 percent in

2006. This compares to an increase of 2.5 percent in 2005 and represents a

modest budget increase for the third consecutive year. Growth is on the CIO

agenda as IT budgets at companies planning to grow faster than the market are

increasing by an average of 4.8 percent.

"The survey results make it very clear that business expectations of IT

have changed dramatically and executives are expecting their CIOs to move beyond

concerns about cost, security and quality to help grow the business," said

Marcus Blosch, vice president and research director at Gartner EXP. "Last

year saw the beginning of a transformation that is intensifying in 2006."

As a result, the survey found that business process improvement - making a

company easier to do business with - is the top business priority for CIOs for

the second consecutive year. In addition, 2006 will see CIOs become more

externally focused; helping the business to grow customer relationships, improve

competitiveness and increase overall efficiency.

While CIOs are playing an increasingly business-focused role, the

responsibility for running effective technology operations remains. Commenting

on the fact that business concerns over security breaches and disruptions fell

from the second to the seventh ranked priority, Dr. Blosch said, "This does

not mean that security is no longer an issue. Rather, it indicates that in 2006

the business expects IT to be secure and is looking to the CIO to keep it that

way." Overall, the survey found that IT spending on security related tools

remains healthy at a projected average increase of 4.5 percent in 2006.

"Business leaders expect CIOs to run an effective technology

operation," said Mark McDonald, group vice president and head of research

for Gartner EXP. "With that in place, executives are looking for ways in

which IT can make the company more prominent in a competitive market. CIOs are

looking to help the business stand out with strategic and innovative use of

information, business processes, and intelligence in products and services. They

are looking to use technology tools, rather than buying package solutions, to

support competitive difference."

CIO Challenges in 2006

In response to these priorities and changing work patterns, the survey

revealed that CIOs see themselves facing three critical challenges in 2006:

1. Strengthening the 'information value chain' - Two thirds of CIOs believe

that their competitors make better use of information, creating opportunity for

the business and IT. In order to strengthen the information value chain, CIOs

and the business are making their communication and collaboration more dynamic

based on ongoing business needs rather than according to annual planning cycles.

2. Building IT business skills - The skills of IT professionals will become

the differentiating factor as technologies continue to commoditize. The gap in

skills is considerable with seven out of 10 survey respondents recognising the

need to build new business skills in IT to deliver business results. Building

business skills in the organisation will be a big priority in 2006 with an

increased demand for management disciplines such as relationship and sourcing,

process design and information design.

3. Getting closer to customers - Two out of three CIOs still see the business

as the barrier to IT increasing its business contribution. Effective CIOs and IT

organisations work within the business to get results. Companies looking to grow

market share are investing in IT to use information better, to make themselves

distinct, and to attract and retain customers. The CIO's goal in growing IT's

contribution in 2006 must be to change the conversation between IT and the

business from one based on "what IT can do for me" to "how we

will solve the problem together."

"CIOs who are doing this effectively today enjoy a deeper business

relationship, report to the CEO, and play a greater role in strategy formulation

and major decisions," Mr McDonald said. "The distinctions between

companies using technology effectively and those that do not are becoming

clearer for the CIO and for the business."

"This is not a transformation that is going to happen over night,"

said Mr McDonald. "We tend to forget that until last year, business process

improvement was far from a key priority for CIOs, and ranked only eighteenth

priority in our 2004 survey." Mr McDonald maintained that good progress has

been made by many CIOs in 2005 and concluded by highlighting Gartner's top-level

recommendations for CIOs in 2006.

• Make time for customers and the "front office" capabilities. Generating
  
  growth from the core of your business is the greatest challenge facing
  
  executives. Get involved earlier in product development and launch
  
  processes. Increasing your direct experience with customers will help CIOs
  
  and IT leaders understand the customer context and how information and
  
  business tools can address more customer needs.
• Build business awareness and skills across the IS organization.
  
  CIOs must raise the business relevance of IT services and solutions and this
  
  requires increasing business knowledge within IT.
• Identify opportunities to use information more effectively. Understanding
  
  and applying what you know is a prime source of competitive difference and
  
  advantage. As the Chief Information Officer, CIOs should look to enhance the
  
  value and quality of information flowing through systems and processes.
  
  Improving the use of information to assess and understand customer needs is
  
  a particular area of focus as that drives growth and higher enterprise
  
  effectiveness.
• Remain vigilant on enterprise security and risk management. Security
  
  and risk are now assumed to be part of the CIO's and IT's responsibility.
  
  Continue to invest in processes, people and tools to protect the brand and
  
  the business. Executives build confidence and CIOs credibility when they
  
  know what to do and practice how to respond.

"Information technology has changed the world and now the world is

changing IT as concerns about growth, customers and market needs top the

business agenda. In a world of increasing competition and customer choice, IT is

rising to the challenge of making a tangible difference in the business,"

said Mr McDonald.