Los Angeles – Most 2012 IT projects initiated by the business will not directly support the top priorities of CEOs and boards of directors, according to Gartner Inc. VP and Research Fellow Ken McGee.
“No one believes 100 percent of the projects that IT works on that they get from the business are the kind that are measurable, that are auditable, that deliver financial benefit to the organization, and that is the crux of our message today,” said McGee. “... We believe most IT projects will not directly support the CEO or board of directors.”
To remain relevant in an era of flat budgets and growing business demands, McGee’s second-day keynote at Gartners’s Business Intelligence Summit in Los Angeles called for a “CIO manifesto” in order for chief information officers to match the quality of business-initiated projects to the work of IT.
Part of the requirement is to agree to align the priorities of the CEO to those of the CIO, McGee said. “Any survey we do with CEOs, they will tell you that the number one priority is growth … more specifically organic revenue growth.”
Where CEOs polled by Gartner prioritized the need to retain and enhance customers, attract and retrain skilled talent, attract new customers and create responsive organizations, CIOs prioritized IT management, strategic planning, business value of IT and IT organization design.
“Take a look at whatever [CEO or board of director directives] stand as the charter for this year’s priorities and then look at your 10 most heavily funded IT projects,” McGee said. “It will take you 20 minutes. See if you have a match. If you don’t, are you okay with this?”
The analyst then called up some gloomy statistics. 2012 will yield a flimsy one half of 1 percent budget growth for CIOs worldwide, though IT outsourcing budgets are growing much faster; worldwide CIO budgets have not grown more than 3 percent year over year for the last 11 years; and low budget growth is likely to continue for many years.
If you are not growing, McGee said, your perceived value is declining. “We [CIOs] have not created a level of trust with CEOs," said the analyst, "because they do not believe we are on the same page.”
Thus the CIO manifesto must state that, “a primary goal of IT shall be to create measurable and auditable financial benefits for the enterprise, period.”
McGee says CIOs need to have a direct conversation with the CEO and communicate that they understand growth is the CEO’s priority, and make projects transparent for their value. “We want to enter the war, therefore, will you give us the authority to decline any business-initiated request that does not yield a measurable financial gain? And then when the project is done, can the CFO parachute in and see if the promises made are the same as the promises met?"
Consistent with the manifesto is the goal of becoming a money-making CIO, said McGee, not the first observer to suggest that performance based compensation extend to IT like it does to sales, even though IT usually operates as a support or service function. Nonetheless, he called it "the most radical change in mission in the 50-year history of IT as a formal industry," adding, "we are seeing clients who are doing this."
Some of the measurement McGee calls for depends on an ability to quantify the monetary value of information use, a theme senior Gartner analysts like others have espoused. But in the conversation, there’s not much to lose, McGee concluded. “You can be the traditional IT organization responding to a call for help … that is not where this industry is headed.”
McGee works with CEOs, CFOs and CIOs and is starting to research chief marketing officers and is the primary author of the Gartner IT Scenario.