Technology Gets Disruptive

Chief risk officers want information to feed scenario planning activities and assistance in ferreting out specific data in response to detailed compliance requests from regulatory bodies. And an increasingly technology-literate workforce expects information technology (IT) departments to keep pace with the latest device, software and experiential offerings from leading consumer-technology companies.

"For the first time since the dot-com days, the business is deeply excited about new technologies," observes Janet Foutty, Deloitte Consulting's national managing director, technology. "CIOs have to figure out how to respond in a very thoughtful manner to demands for cloud, social, mobile, cyber-security and analytics."
While doing so, many CIOs confront a bigger challenge, says Tom DeGarmo, the leader of PwC's technology practice. "CEOs and CFOs are asking CIOs for their thoughts on leveraging IT investments to drive innovation and growth."

These demands have CIOs clamoring for help from their external advisors in decoding and prioritizing a tangle of challenges whose complexity rivals the immense intricacy of their networks, platforms and applications.

"Ten to 20 years ago you could walk into a computer room and literally put your hands on everything that was important from a data processing perspective," observes Gary Curtis, Accenture's chief technology strategist and global managing director of the firm's technology consulting practice. "You can't do that any longer because their servers are everywhere. Today's networks are too complex to even draw a diagram of them."

From Plumbers to Profit Centers
This, of course, is good news for consultants, who thrive on complexity. Recent earnings releases indicate that IT consulting shows signs of flourishing once more following a historic recession and widespread reduction in all forms of corporate spending.

Count IBM among firms with positive growth figures. In the first quarter, IBM Global Business Services' practice grew 6.8 percent compared to the first three months of 2010. Big Blue's IT-consulting strategy focuses on helping CIOs deliver "excellence in the fundamentals" (e.g., the secure and reliable delivery of "lights on" IT), IBM Corporation Vice President and CIO Jeannette Horan notes, while also helping them achieve much more strategic objectives.

"CIOs are now increasingly in step with CEOs' top priorities," Horan writes in IBM's 76-page The Essential CIO: Insights from the Global Chief Information Officer Study, which appeared earlier this year. "One priority they agree on is how critical it is for today's public and private sector organizations to derive insight from the huge volumes of data being amassed across the enterprise, and turn those insights into competitive advantage with tangible business benefits."

Although CIO Magazine's annual "State of the CIO" survey results indicate that the IT "retrenchment that has ruled the past two years" is over, a widespread demand for more efficient IT operations persists. Horan says that one of her strategic goals is to cut in half the number of enterprise applications within IBM by 2015. "CIOs are challenged every single day by the most senior leadership of the business to be more efficient and more effective at the same time," Curtis says. "That probably will never go away."

Michael Hugos, principal of Chicago-based Center for Systems Innovation, agrees. "The big challenges facing CIOs are to transition their IT groups away from the traditional focus on operating data centers," he asserts, "and focus instead on delivering quick and responsive services to meet the needs of business in the global, real-time economy."

This transition began several years ago, and its progress was in many cases impeded by the cost-cutting that occurred in response to the recession. "In the past 36 months or so, many CIOs have gone from managing the data pipes and plumbing to becoming a general contractor for shared services and outsourcing," DeGarmo notes. "Today, many CIOs are now on the CEO's agenda."

Challenges and Cloudy Opportunities

To thrive in this new role, DeGarmo and other IT consulting veterans say, CIOs need to respond to a number of major threats and opportunities, including the following five areas:

1. Greater Agility
Roughly 70 percent of IT budgets traditionally have been devoted to the installation and operation of IT hardware and legacy systems, Hugos explains. Cloud computing and software-as-a-service (SaaS) offerings enable the outsourcing of much of this work at an attractive price.

As a result, "CIOs and their in-house IT groups now need to focus more than ever before on delivering IT agility to drive business agility," says Hugos, a former CIO. "This means finding ways to respond quickly and cost effectively to rapidly changing business needs. CIOs need to find ways to do this without asking for large up front capital investment budgets and taking six to 24 months to deliver solutions… CIOs need to implement strategies to respond quickly to business needs."

This means that IT needs to get deeper into the business of enhancing existing products, rolling out new products, identifying better suppliers, identifying new market opportunities and finding ways to differentiate products and services to ultimately increase profit margins. CIOs also need to respond quickly when a business or the company needs to contract," Foutty points out.

2. The Cloud
As Hugos notes, cloud computing and SaaS can enable greater agility. This helps explain why every IT consulting practice leader identifies cloud as one of the top challenges, and opportunities, facing CIOs.

Hugos, author of Business in the Cloud: What Every Business Needs to Know about