CIOs, build contingencies for skills shortages into IT budgets for 2008

SYDNEY, AUSTRALIA: Despite continued strong growth in Asia Pacific economies, chief information officers (CIOs) should create contingency plans to cope with escalating personnel costs and skills shortages and to prepare for the potential of global economic uncertainty in 2008, Gartner advised during Gartner Symposium/ITxpo in Sydney.

In the keynote presentation at Gartner Symposium/ITxpo, senior vice president and head of research Peter Sondergaard warned that due to the recent turmoil in credit markets around the world and continued uncertainty surrounding the future economic climate, companies need to plan for all eventualities.

"Your IT budget for 2008 must reflect a continued focus on supporting business growth,” Sondergaard told delegates. “However, it should build in cost contingencies for dealing with escalating personnel costs due to a rising skills shortage and declining quality in IT projects.”

Despite the potential for troubled global economic times ahead, preliminary figures from Gartner’s annual CIO Agenda survey indicate that optimism among CIOs around the world remains high, with 70 percent of CIOs expecting their company to grow faster than the market.

Early indications from the survey show that IT budgets are likely to grow about 5 percent in 2008.  Business spending on technology is growing fastest in software, services and mobility. These three categories made up 57 percent of spending in 2006, will become 60 percent in 2008 and grow to 63 percent in 2011.

According to Gartner, global IT spending will reach US$3.1 trillion in 2007 and spending for 2008 is forecast to grow 5.5 percent to reach $3.3 trillion. IT spending in the Asia Pacific region has a forecast annual growth rate of 9 percent in the next three years. In Australia, IT spending is expected to top A$57 billion in 2008, up slightly on 2007 numbers.

Gartner's Sondergaard highlighted the growing importance of Asia Pacific in global IT spending.

“One-third of IT spending now occurs outside of North America, Western Europe and Japan,” he said. “We believe this development will create new innovation in IT, new competitors, new usage patterns and continued cost improvement benefits for users.”

Be a Business Leader First, an IT Leader Second

“The business is telling us that they want IT to be business leaders. They want IT leadership who looks like them, acts like them, and sees the role of IT as they do, as a business leadership role,” said John Roberts, vice president and distinguished analyst, Gartner.

“You (IT leaders) understand how the business processes really work, and where the key business information really is. And more CIOs and IT leaders are coming from business backgrounds with no previous experience in technology.”

During the opening keynote today at Gartner Symposium/ITxpo, Gartner analysts examined how IT leaders can drive growth for the business. They emphasised that this cannot be accomplished unless IT leaders understand the business of their company, and highlighted six business imperatives that IT must support.

1) Attract and Retain Customers

Gartner analysts outlined how IT leaders need to attract and retain customers by taking advantage of an efficient, secure, always available communications environment. In the emerging strategies for communications, user control is critical. Communications in context, at the right time and place, makes a significant difference.

“We (IT leaders) can put communications in context to give people better information that they can actually act on, at the time they should act on it,” said Martin Gutberlet, research vice president, Gartner. “With intelligent filtering, location awareness, and automated presence management, we can identify the best channels to open based on inferred and learned behaviours. These approaches will not only make the workplace a more liveable place, they will also make it a more productive place. We can integrate our critical applications into our communications systems and reduce the impact of human latency.”

2) Maximise Profitability and Effectiveness

IT must also deliver an efficient, lean, and green infrastructure to maximise profitability and competitive capabilities. IT leaders must run an agile operation that can support the needs of the company as it evolves.

“Exploit technologies like virtualization to lubricate the gears of IT, permitting quick shifts”, said Milind Govekar, research vice president, Gartner. “Apply automation; it not only helps cut down rising labour costs, but it accelerates responses to events and delivers consistent, repeatable actions. Operations must build a picture of the relationship of infrastructure and applications to the business process. You must embrace those business priorities.”

3) Improve Business Processes

A business is the sum of its process. Processes -- what they do and how they perform -– drive business value, and they drive differentiation. IT has addressed the majority of simple and straightforward processes -– those that are predictable, repeatable, and neatly controlled. Advanced organizations will harness the most complex, most volatile, most dynamic, and multi-party processes.

“Find the most critical processes to improve,” said Kristian Steenstrup, vice president and distinguished analyst, Gartner. “Which ones generate the most revenue? Where can you create differentiation that can’t be imitated? Where can you eliminate cumbersome handoffs, costly errors, and duplication?

Orchestrate those services and processes as you need them to power the more complex and highest value processes.”

4) Stop Deleting Opportunities

With the volume of all messages that workers receive — e-mail, text, instant messages, voice mail — the challenge for many is to delete as many of these messages as they can. People want only the right information all the time. Companies want the same thing, at the million document and billion transaction level.

“The problem is not just too much information, it’s too much bad information. The information is delivered unpredictably. It comes from every direction in unimagined forms,” said Brian Prentice, research director, Gartner. “Establish that information infrastructure. Focus on the opportunities grasping for air in the information flood.”

5) Build Innovative and Agile Organisations

It is not enough to be merely efficient. The business must also be agile in order to respond to changing demands. Organisations must find new ways to do better things. Business needs innovation, and that means moving beyond the activities that IT people have obsessed about. IT has been asked to reduce costs, tighten compliance and reduce or even eliminate risk, all while reducing costs.

“Now organisations are asking IT to help them become more agile, which means accepting some risk in exchange for innovation,” said Jeffrey Mann, research vice president, Gartner. “Rather than embracing some collaboration and Web 2.0 possibilities, most IT organisations have spent their efforts trying to prevent people from accessing them.

"How can IT leaders create an innovative and agile organisation if they believe that the most innovative and exciting technologies and services have no business value? To embrace opportunity, IT needs to loosen up to allow good things to happen, safely.”

6) Managed Risk

IT leaders need to understand the risk related to the use of IT, and these people communicate that risk, so the business can make an educated and informed decision whether or not that risk is acceptable. It is not IT’s job to say no.

“Information security doesn’t mean zero risk, it means managed risk,” said Jay Heiser, research vice president, Gartner. “Talk about what all these new technologies can enable, but in a context of a new approach to IT risk management. Help your business colleagues make educated decisions. It is not IT’s job to assume all IT-related risk.”