CIOs don’t need to read any comprehensive Chaos Manor report to know that project deliveries come always in late and are never or rarely in advance. It is like flights or train travels, things always happen in such way. They undergo asymmetric events. If we try to get measures of it, we could find that when projects portfolio undergo 2 months delay in average on delivery planned time, there is no or few chance any project will be above 10 months delay, but real chance to have 30 above 2 months for hundred projects portfolio.
IT budgets always increase year after year. It is their fate since new projects increase IS functions and, consequently, yearly maintenance. To cope with this situation, CIOs have settled portfolio management process:they assess projects from several points of view -technical, business, risks, strategy…- and make priorities. It results in postponing low prority projects…
After a while, postponed projects pile up like sand and become high priority. So, IT budgets contain also low priority projects which have become high prority for budget year.
Finally, projects portfolio is viewed by Business units as postponing facility on behalf of IT Division. No matter Business units are main projects issuers who make IT budget growing. Moreover they use to complain for additional IT costs though they are not accountable for expected gains which projects business cases have set under their responsibility.
When a project is delayed, costs usually increase in proportion of the time. So current IT capital expenditure budget is also made of slipped projects pieces as current IT operations expenditure budget still contains projects slipped since they have already rolled out platforms.
As current IT budget is flood of slipped past projects, less and less room remains for new ones. Negotiations are hard. Pure IT projects are scrutinized and often postponed if they have not a strong costs saving business case. So are pieces around Business projects that not seem to be required to Business even though IT has stated they are highly desirable.
It comes that IT planning and budgeting are breaking teeth activities. In such a situation, even the best CIO could not avoid to be seen as delayer and costs bearer. Poor companies strategy execution is felt due to IT issues that CIOs didn’t deal with. It has lead IT Divisions to streamline their operations by adopting ITIL and service orientation which have transformed them into internal service providers. Company systems are clearly shown as coming from Business demands.
In the same time, forces around IT Divisions continue to change : Business unitsare keener to be more agile and to be more empowered for local optimisations and transformations. 2012 would be even a turn point. Cloud business would increase, fuelled by SME market. It would be more attractive for some non critical big companies business. Integrators have transformed themselves into Business Process turnkey deliverers able to deal directly with Business Units which challenge their internal services provider by external ones. For big business moves, IT Divisions are already out of touch, as Business Units have become main prescriptors for solutions. At the end, only systems maintenance and some technology projects, like email systems, networks or infrastructure will remain under IT responsibility.
Are dices already throwed and finally, Gartner prediction will be just a trend estimation when saying: “By 2015, 35 percent of enterprise IT expenditures for most organizations will be managed outside the IT department’s budget. CIOs will see some of their current budget simply reallocated to other areas of the business. In other cases, IT projects will be redefined as business projects with line-of-business managers in control.” ?
If Information Technology appears more and more embedded in Business, reverse is also true. Business units would like to be sure that technology work mainly on their behalf. As Business has become more and more complex due to customization, competition, cooperation, integration,… all business units must act toward IT in a coordinated way. On the other side, IT should be more business oriented, getting multi skilled people, Business and IT, keeping new risponsibilities, for instance those of Business process turn key internal deliverer and/or Business process support. All this would happen only in favourable conditions, environment and context resulting of business units coordinated vision and new links established with IT. Some Forrester analysts feel, this would be a “Copernican shift” : a radical change in IT mindset.
A new coordination business function would be pivotal for this change, this is Enterprise Architecture. Reporting to CEO it help to bring projects portfolio management outside IT Division, as a core process for steering enterprise change. It settles processes to identify and qualify business projects candidates. It supports decision process and implementation. It monitors utilization. But, the really change in there is that projects are no more lead for developing systems but centered on business processes or capabilities development. Main considerations are for business, projects are managed by business, roll-out and implementation are planned taking in account business costraints before technical ones, purposes are business objectives.
This is a shift in company change center of gravity. Decision and execution will be smoother as actors contributes with respect to their stakes. CIO is no more an internal service provider executing orders from business, but a partner who contributes positively to business projects. Technical debt which slow down change is not only a CIO question to deal with, but a company question. Project risks are part of business risks and included in enterprise risks management process.
Then, if projects are in late as strategy execution slips, priorities are set according to business costraints, replanning is done in accordance too with a better balance of resources. In 2012 crisis context, companies are more fragile, so changing successfully has become more important. It is all my 2012 wishes for enterprises : “to change successfully”