One Step Forward - Ten Steps Back

A recent CIO Gartner report covering 1526 CIO's, with over $138 billion of private and public IT spending power, got me thinking about technology boom and bust, and what this means to innovation within IT and the lack of business case rigor in IT investment decisions.

The top 5 business priorities for CIO's in 2008 were as follows (numbers in brackets are 2007 and 2006 priorities):
2007 Priority 2006 Priority
1. Improving business processes (1) (1)
2. Attracting and retaining new customers (3) (3)
3. Creating new products or services (innovation) (10) (10)
4. Expanding into new markets or geographies (9) (9)
5. Reducing enterprise costs (2) (2)

Now look at the effect of the credit crunch and the top 5 in 2009 are:

1. Improving business processes
2. Reducing enterprise costs
3. Improving enterprise workforce effectiveness
4. Attracting and retaining new customers
5. Increasing the use of information/analytics

There is a distinct feeling of retrenchment in 2009, although Attracting and Retaining new customers seems inconsistent with the other priorities. Similarly, within the list of 2008 priorities cutting costs seems at odds with major innovation and expansion.

The main reason CIO's have changed priorities is the inward looking nature of their business in a recession and they simply cannot articulate the business value of projects in monetary terms and in these tough economic times. A recent report on Enterprise Architecture predicts that by the end of 2009 55% of EA programs will have ceased due to economic pressures and lack of perceived value. I'll say it again...Lack of perceived value.

If CIO's think in terms of business-aligned IT then why do these business transformation programs get major cuts when other initiatives which may have less direct bottom line impact remain untouched? Are CIO's missing a trick to avoid mass layoffs of staff, slashed budgets and potential reputational damage?

Why do we technologists find it so difficult to articulate the business value and fight our corner in the hard times? I certainly think that too many of us get easily distracted by the latest and greatest thing to reach the top of the hype curve and lose our focus on delivering real value to our clients, the business. I also think that we have still not fully integrated with the business as we have been trying to do for a number of years and it's still a case in the main of Us and Them, even at board level.

After we come out of this global recession which appears to be the case at the time of writing then I think we will have put IT back another 5 years in terms of what we were trying to achieve with business integration and major transformation programs and at the same time stifled innovation - this is all linked to the poorly constructed business cases in the boom years, and little thought to what happens if someone from the CFOs office questions IT spend a little further.

One glimmer of hope for IT is an area of increasing IT investment around Business Intelligence projects - it seems CEO's according to their priorities are very inward looking currently and not finding the answers to the questions they are asking: "Why can I not see the profitability of every product we produce and what is the cost trend?"; "What are the costs of my supply chain and who is the most efficient supplier?"; "Why can I not get a clear, consistent view of profitability across division silos?"; "Who are my most profitable customers and who cost me money?" These then drive the programs, maybe tactical initially, but which will form the next enterprise data warehouse rush in 2010.

Do Tactically, Think Strategically is what I'm recommending to CIO's. If you can't write your business case in a way your CFO or group accountant can understand then throw it away and start again. Let's hope that IT can weather the storm and build upon these tactical projects in 2010 and beyond and we improve the way we create business cases which demonstrate the true value of IT.