Now that these processes are automated and building and investing in skills for IT personnel; and a infomated, businesses are going on to the next round statement of what IT will be in 2010. That statement of benefits. Executives are telling CIOs, I’m glad you should be different for different companies. 2010 is a automated it, now go on and do something new with major mental milestone that gives CIOs the opportunity it. Another significant trend is, for companies to grow, to shape expectations and the conversation about the they have to be different in a way that matters to the future of IT. If they don’t take this opportunity, others customer. That’s driving a whole new way of business will shape that conversation for them. process and information transformation built around We’re in a moment of economic uncertainty. How will changing the way organizations work. The last trend broader economic trends affect IT? driving this together is that the value of information mcdonald: The economy is not driving IT strategy as a component of product and services is rising and views right now, but if conditions continue to dramatically. So with all those things, for the first time change, many CEOs and CFOs will take the wrong in seven years, IT effectiveness is a major factor in the course of action in an environment of inflation and CEO’s success. The last time IT effectiveness was a major lower economic growth, in large part because none of factor was back in the dot-com days. them have managed in this environment before.

Is this a break from the past? I don’t know if we’ll go back to the same situation [of mcdonald: For highly effective organizations, it is. high inflation and low growth] as when Jimmy Carter

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Going into 2008, too many organizations have an IT strategy that is generic. It’s not differentiated for the company, for the industry, etc. We’ve been comparing CIOs‘ top initiatives for the year; there’s about 80 percent overlap on average. The list includes network and ERP upgrades and business intelligence and security projects. From a business perspective, saying that my IT function is basically pursuing the same strategy as other companies’ IT functions creates no competitive advantage. And that’s what’s accelerating this thing. Once an IT organization establishes a consistent track record for delivery and credibility, there’s an explosion of expectations around processes, information and customers and an expectation that IT will no longer follow a me-too strategy.

So the idea that IT for competitive advantage is going
away is nonsense?

mcdonald: It is nonsense. We’ve found that highly effective IT organizations contribute significant value to their enterprises. We have to eliminate this notion of generic IT, of my IT being like everyone else’s IT is OK.

It means there should be five parts to everyone’s IT plan for 2008: A clear statement of how IT supports the enterprise’s sources of competitive advantage; the set of business metrics IT is willing to hold itself accountable for; a statement of principles that will drive IT decisions; a clearly stated plan on how they are

was president, but latent inflationary pressures exist inside most companies. So here’s the wrong decision: A CFO who’s never managed in this environment will have a tendency to believe it’s a short-term phenomenon because every other financial crisis in the past 10 years has been short-term. However, in the face of sustained upward price pressures, they’ll have a tendency to cut SG&A [selling, general and administration] costs like IT instead of changing their cost structure, which might increase the IT budget slightly. It takes a savvy CFO to recognize that difference—between cutting one to two percent of my cost structure or restructuring 98 percent of my cost structure.

I can remember something my dad said in the late 1970s. We moved to a different house and took a bigger mortgage, and he said, “Don’t worry, I’m paying it back in cheaper dollars.” That kind of thinking is counterintuitive. You may want to kick up your capital spending to improve your cost structure. Here’s the big difference between then and now: in 1978 to 1981, most enterprises passed their price pressures up the chain to the customer because there was no globalization. We’re finding now you can’t pass material price increases on to your consumers as easily as you could in the past. That further solidifies the need to change the way you work, and change your cost structure rather than slashing. Slashing costs is not sustainable.