IT at the Crossroads: Time for Change is Now

An economy on the cusp of recovery presents an unprecedented opportunity, particularly when it comes to transforming underperforming IT operations.

The worst economic downturn in almost 80 years can also bring positive changes. Market watcher Gartner Inc. and other market researchers suggest the market -- if not the global economy -- is showing signs of a recovery. The attendant increase in IT spending levels should be positive for the first time in a couple of years.

Gartner analysts point out that an economy on the cusp of recovery can be beneficial: for imaginative or forward-thinking organizations, it can be a time of unprecedented opportunity. "We are now within one of the rarest and most fleeting periods in business: nearing the bottom of a recession and before a return to growth," said Ken McGee, vice president and Gartner fellow, in a statement.

It's a familiar, if paradoxical, condition: Gartner historically likes to link disruptive forces -- such as the rapid rise of the service-oriented architecture (SOA) -- with opportunity. In the case of SOA, for example, Gartner analysts urged shops to tweak (or completely transform) their business processes to achieve new efficiencies or benefits. Gartner says the economy-on-the-cusp-of-recovery offers shops an unprecedented opportunity to transform lackluster or underperforming IT operations.

"We urge organizations to exploit this unusual opportunity to question the efficacy of their IT business practices and determine whether those practices warrant change," said McGee, who warned that "they need to act now … by the time business growth returns, they will be far too busy, and it will simply be too late to change."

McGee and Gartner suggest several transformative tweaks -- starting with cloud computing. Gartner's advice for the most ambitious (or most imaginative) of enterprise transformers: Don't just commit to cloud computing, champion it. Reconcile any and all opportunities for IT infrastructure spending with your cloud computing strategy. If it doesn't comport with what you plan to do in the cloud, don't do it.

"By explaining today's request for infrastructure and operations … modernization funding within the context of cloud computing in the future, executives are less likely to feel that they are paying twice for modernization when cloud computing is officially adopted," the report notes.

Ambitious enterprise transformers should also look to radically recast their budgeting processes. The emphasis must be on accountability: to that end, McGee and Gartner urge, shops should replace their existing budget methodologies in favor of "zero-based budgeting principles."

This means that, at a minimum, every project request must include a project name, the name of a responsible business unit executive, a one-time project implementation cost estimate, an estimate of a project's recurring annual cost, and -- most importantly -- a business executive's signature.

Educating IT

Gartner says companies need to give IT executives a crash course in business fundamentals. Take, for example, the trial-by-ordeal of contract negotiation. IT executives have been doing it for a long time, but according to McGee and Gartner, they've (often as not) done a comparatively poor job of it. Gartner's recommendation: Hire an IT CFO and teach him/her the basics of contract negotiations.

"For decades, organizations have empowered IT associates to negotiate multimillion-dollar hardware, software, and service contracts, even though those associates have never been formally trained in doing so," the report explains. "Gartner has long recommended the hiring of an IT CFO, as well as better training for IT associates involved in contract negotiation and tighter controls to limit unauthorized purchases."

Moreover, when executives are asked to sign off on a contract -- even one they haven't personally negotiated -- they need to have something at stake. Gartner suggests a simple control: indicating (via a disclaimer) whether a proposed contract has been open to competitive bids. That way, executives will think twice before blindly signing off on deals -- and (hopefully) will push for more transparency and competition in the bidding process. This, in turn, ratchets up the pressure on business sponsors: if they know they won't be able to get a contract approved without first soliciting multiple bids, they'll be more likely to do so.

Gartner also recommends that ambitious enterprise transformers should work to "divest IT operations from IT."

This isn't quite as radical as it sounds, however: it amounts to tweaking, optimizing, and -- in a few cases -- completely overhauling the internal structure of the enterprise IT organization, with an emphasis on running IT (and making it accountable) as a business and improving IT's responsiveness -- particularly with respect to serviceability and accountability -- to the needs of the lines of business.

"CEOs want to employ new CIOs with extensive business and management backgrounds to help IT keep pace with the business," the report says. "Before IT project workloads increase as business growth returns, new CIOs should decide whether traditional IT organizational structures can best exploit their business acumen."