Last month my column addressed the need for a change in the way that information technology (IT) investments are evaluated, arguing that the returns from the IT portion of any business investment cannot be separately measured, nor is it meaningful to attempt to do so. This month I will discuss some of the implications of this change for the IT organization.

From 1960 to the mid- 1980s, the evolution of the IT organization closely mirrored that of information technology itself. Starting in the realms of research and engineering, IT then migrated into the back office as "data processing" became the dominant activity, and the "DP" or "EDP" department emerged as the norm. Around 1985, a major disruptive force emerged in the shape of the personal computer. As PCs started to become widely deployed in business, the effect was to move much of the control of computer processing from the remote and isolated data center to the desktop. Far from disappearing, the data center remained the workhorse for heavy-duty processing; however, the visible focus of IT became the desktop. This shift had a number of effects, not the least of which was to fragment the IT budget to such an extent that as much as 60 percent of total technology costs in some companies were external to the IT budget. Another effect was to place IT directly in front of business management as critical business decisions began to be evaluated using complex PC models and key business processes such as order entry and billing became wholly reliant on the effective operation of computer systems. These changes led to the creation of the chief information officer (CIO) and an elevation in the role of the most senior IT executive, many of whom now reported to the CEO (or, at the very least, became part of the executive management team).

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