The Heat Is On

Each year, EXP surveys our worldwide CIO membership about their top enterprise business trends, CIO management priorities and CIO technology priorities. An unprecedented 620 EXP CIOs responded to this year's survey, making it we believe the world's largest. The findings paint a challenging scenario for CIOs. In 2003, CIOs must work with business executives to clarify business and technology trade-offs in an environment of severe cost pressures. Business budgets are showing some increases, but IT budgets remain flat. Despite this, the business is making more demands on IS.

Key Business TrendsThe four top enterprise business trends are continuing cost pressures, data security concerns, faster innovation and a higher focus on risk management. The big story is the concurrent rise in the need for both innovation and risk management. CIOs are being driven to keep costs down and manage business risks better while concurrently supporting faster innovation and increased security.

The "must-dos" are business continuity, data security, privacy and keeping pace with the business. The "want-to-dos" have to do with satisfying stakeholders, customer relationship management (CRM), knowledge management and e-enablement. Enterprises are still trying to keep these on the table, but their priority has slipped.

The increased priority for faster innovation, while seemingly inconsistent with the cost pressures, is indicative of the business strategy to stimulate demand and grow revenue, via a shorter product cycle. Faster innovation is important in a more globalised and competitive world. So the pressures on flat IS budgets are even greater.

The impact of September 11 has been significant. Business executives now realise just how dependent they are on IT, so business risk management has moved to number four.

Last year the hype was on CRM. Now the pressure is on that technology to fulfil its promise. Customers actually want self-service, so they can check that their orders are being fulfilled and make changes if required. A key business driver is to be responsive to the customer, but in a way that's affordable to the company.

Requirements for greater transparency in financial and management reporting appeared for the first time. It was expected to be a big issue in North America, but EMEA and Asia/Pacific rank it equally high.

Concern about personal data privacy also appears in the top 10 for the first time. The implications of terrorism have brought data security and privacy to the fore. Increased government action to combat terrorism is leading to regulations that invade individual privacy. IS must ensure compliance, but that's counter to achieving efficiencies by using personal data across divisions and companies.

Management Priorities The top-three CIO management priorities are providing leadership and guidance for the board, demonstrating the business value of IS and improving IT governance. All of these focus outward from the IS organisation, not inward. This outward shift could demonstrate the maturation, business criticality and increasing complexity of the CIO's role. It may also demonstrate the importance of executive relationships.

Surprisingly, reducing total IT costs is fourth priority. This is higher than it's been in the last two years, but still significantly lower than the priority of business cost reduction. Effective CIOs have been successful in educating their business colleagues that investing in IS can bring bigger savings to business.

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The fifth priority highlights the increasing importance of IT architecture. Clearly, although not a short-term play, architecture is seen as an investment that pays dividends longer term. On the other hand, strategising and leading the IS team have both slipped in the rankings. An explanation for both movements is that strategising and leading one's own organisation are now just part of the CIO job. Both may still be issues, but they need to be handled in the context of the enterprise's current economic situation. Pressing, short-term business actions are at the forefront.

Technology Priorities Security enhancement tools have the highest technology priority. This ranking is well aligned with the data security concerns of the business. Applications integration, middleware and messaging have climbed steadily to the second priority, as cost-effective means to leverage legacy systems to be more agile and support - or, at least, not constrain - business innovation. Enterprise portal deployment is another cost-effective approach to making data more easily available to employees, business partners and customers. In seventh place, storage management deployment has been climbing steadily in priority as more enterprises see the opportunity of reducing costs and making data available internally.

Three enterprise environments and each needs a different focus. Based on responses of the 2003 survey, three business environment patterns are evident: fighting for survival, maintaining competitiveness and breaking away. Each of these environments requires a different set of priorities and focus areas. For example, it would be disastrous for a CIO to follow a breaking away strategy in an enterprise that's fighting for survival.

Fighting for survival is characterised by multiyear, deep budget cuts in business and IT. These enterprises have already cancelled all new development, gone through multiple layoffs and are still looking for ways to further reduce costs. This is real survival mode. During 2003, CIOs in these enterprises will focus on minimising IT and business costs without introducing excessive risk.

Maintaining competitiveness is characterised as having relatively flat budgets year-to-year. These enterprises are completing projects already started and enhancing existing systems. They are being cautious about making any major new business initiatives and waiting to see what happens. During 2003, CIOs in these enterprises will focus on implementing proven processes, while positioning for possible growth.

Breaking away is characterised by significant increases in business and IT budgets. These enterprises are using the slow economy as an opportunity to get away from the pack. During 2003, CIOs in these enterprises will focus on driving IT-enabled innovation to spur growth, without under-delivering on daily IT needs.

The level of the CIO's leadership role is increasing. CIOs must manage two competing forces in their role: demand and supply. The demand side involves working extensively with business colleagues and is about shaping and managing informed expectations. On the supply side, CIOs are charged with delivering timely, efficient and cost-effective services. They must take on an amplified business and technology leadership role because of the increased business criticality of IT. This will involve constantly reviewing business directions and examining assumption-based strategies with their business unit colleagues. This is why we see such a focus on providing leadership and guidance for the executive and board.

Perception counts at least as much as reality. If you can't get enough of the attention span of your executive colleagues, you might want to implement the top 10 tips for CIOs (above) who are trying to be proactive, but not getting the responses they expected (with thanks to input from my colleague, Bob Hayward). CIO survival, in organisations with relentless IT budgetary pressures, is dependent on both the perception and reality of cost-effective service delivery. So we suggest you take these top 10 tips more seriously than might seem warranted at first glance.

Dr Marianne Broadbent is group vice president and global head of research for Gartner's CIO Executive Programs