META Report: Buckle Up for the Ride to Recovery

By CIO Update Staff

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CIOs must position the IT organization to improve operating efficiency without subjugating efficiency, quality of service, or value to the enterprise.

META Trend: Throughout 2002/03, IT organizations will create measurement methods to define IT value, with leading organizations mastering the management (and communication) of value. By 2004, IT organizations with consistently high ratings will deliver value through processes such as project and change management, adaptive IT organization and infrastructure development, and human capital management.


CIOs must strike a balance between cost efficiency and performance effectiveness, delivering more with less and adopting cost-cutting (efficiency) tactics without subrogating effectiveness, performance, and IT organization (ITO) value. CIOs must map a course to address the need for greater efficiency and effectiveness, or the enterprise will recruit a CIO that will maintain the balance and deliver value to the enterprise.

As a result of the declining economy, CIOs must manage expectations to lower levels, especially as they position the ITO to reduce core, non-discretionary budget investments. However, Global 2000 (G2000) CIOs face two major problems: 1) we believe more than 60% of G2000 CIOs currently have various projects and investments in IT initiatives (e.g., replacing legacy applications, upgrading infrastructure, enabling CRM initiatives, e-commerce) that may be overdue or overbudget, at the same time that the ITO budgets are undergoing increasing scrutiny or contraction; and 2) more than 75% of G2000 ITOs are still perceived as order takers/cost centers and not strategic to the enterprise (see ED Delta 215, 18 Dec 2001).

In an era of amalgamation between the ITO and lines of business (LOBs), being efficient is no longer enough. Before the economic downturn, CIOs were already under tremendous pressure, both in human capital management (e.g., recruiting/retention of top performers) and in organizational development (i.e., structure, process, and culture).

Currently, fewer than 50% of G2000 CIOs are focused on productivity/efficiency as a prime directive. However, we expect during 2002/03 more than 70% of G2000 CIOs to increasingly focus on driving up productivity and minimizing costs, while undertaking a massive reordering of business/IT priorities. This will require unprecedented ITO restructuring and adjustments. To manage these leadership challenges, CIOs must adopt IT portfolio management techniques to map a course around the cost-versus-performance and human capital management barriers.

During 2002/03, we believe 30% of G2000 CIOs operating in the lower left quadrant of the META Group Credibility/Dependency Matrix (see ED Delta 15, 29 Jul 1999) will improve their perceived value to the enterprise as a result of adopting a value management paradigm. This will focus on creating trust to earn respect and ultimately playing a greater role in the transformation of the business processes. We expect this number to improve to 70% of G2000 firms by 2004/05.

We believe that in 2002/03, 40% of G2000 CIOs will adopt portfolio management techniques (asset management, real-options analysis, and digital planning) and by 2004/05, 60% of G2000 CIOs will focus on strategic IT investments that will produce greater efficiencies (i.e., spending money to save money).

To ride the road to recovery, CIOs should undertake the following activities: