The META Group believes that fewer than one in five Global 2000 companies has the vision and planning expertise to navigate through an economic storm and chart a course for competitive positioning through 2003. We also believe that fewer than one in five G2000 CIOs has mapped a course to react to a changing economy by exploiting either digital planning -- a dynamic process that helps identify innovation opportunities and revise budgets instantly -- or event-based financial modeling.
By 2004, we expect one-third of G2000 CIOs to adopt a portfolio management process. By 2002, one-third will institute digital planning, including quarterly reviews. By 2003, one-fifth will promote an IT marketing program for communicating IT value and altering perceptions of management; we predict this percentage will rise to more than one-third by 2004.
We believe the key to economic survival in a sense-and-respond economy is to adopt a planning model that is simple but effective -- one that is easy to teach, comprehend, and apply; one that enables rapid plan development; and one that can be quickly modified and easily communicated throughout the business (to boards of directors, management committees, colleagues, and IT staff). CIOs must increasingly run their departments as a business and contribute to improving the bottom-line financial performance of the organization.
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A best practice is to adopt a portfolio prioritization process that involves a project sponsor, the CIO, and the chief financial officer (for risk review, budget approval, allocation, and commitment); is structured as an IT investment committee; and is chaired by the CFO. This committee should be chartered to achieve higher efficiency by reviewing and managing the IT asset portfolio. It should establish and approve the business rationale for IT investments, support funding, and commit the investment dollars based on the accrual of quarterly objectives and milestones.
At any time, a single member of the triumvirate should be able to suspend further commitment of investment dollars due to problems, changing economic climates, unmet milestones, poor-quality deliverables, or vendor delivery delays. This method of portfolio management and investment enables the group to ensure project success and aggressively respond to changing market conditions.
As a process within portfolio management and digital planning, CIOs should adopt a derivative strategic planning framework with the same attributes of speed and simplicity. ITOs should articulate strategies and tactics that address business expectations for IT alignment and value, or that help alter the business perception of information dependency and IT capability. The plan should be reviewed often (at least quarterly), amended to achieve the intended vision, and revised to adapt to changes in the economic and business climate.
Thoughts on Getting Lean
CIOs should take an introspective look at their IT department functions, services, and asset portfolios to unearth non-performing assets. They must fix, outsource, or dispose of unused assets and reallocate the IT budget to areas that will provide the greatest return to their colleagues. In addition to adopting portfolio prioritization techniques and digital planning and an IT investment committee review of high-priority projects, CIOs should consider the following to trim costs:
CIOs should consider soliciting cost-cutting recommendations from both IT staff and other constituents. CIOs can encourage active participation by publishing recommendations and publicly acknowledging and rewarding those with merit. These practices will result in a leaner, more efficient IT organization.
Business Impact: The absence of a digital planning process, portfolio prioritization management, or a structured IT investment process will result in the CIO's failure to be perceived as an effective business manager.
Bottom Line CIOs must adopt digital planning and portfolio management processes, trim costs, and maximize the return on IT investments to demonstrate their business acumen.
Al Passori is a consultant with META Group, an IT consulting firm based in Stamford, Conn.