Article

Two scenarios: Are IT shops industrialized, or all but gone in 2020?

Linda Tucci, Executive Editor
Conference season has begun in earnest, and that means predictions about the future of IT shops are flying fast and furiously. At Forrester's CIO Forum 2010, held recently in Washington D.C., analysts Alex Cullen and James Staten asked CIOs to consider two strikingly different scenarios for IT shops in 2020 -- and to choose which approach would likely prove most useful for their respective businesses.

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Under the first scenario, IT shops will be industrialized powerhouses in 2020. By then, most businesses will be global in scope and operating in a radically altered business environment. As their businesses expand, IT shops will expand alongside, providing the technology platforms and services that enable the business to change products or enter new markets on a dime (or Yuan). The CIO's guiding principles will be consistency, scalability and, above all, control. IT shops in 2020 will orchestrate and manage IT services, rather than "build and run"-- and focus their internal skills on optimizing business processes and delivering innovation as a service.

Or IT shops will not be industrialized in 2020. IT expertise will be embedded in the business, and IT shops will shrink to five people. IT's work will revolve around technology management -- of security, IT services and vendors. But forget about business process optimization. That assumes business processes will remain stable enough to be improved. Elastic enterprise architectures, data management and data integration are what's needed from IT shops, because in 2020 the CIO's role is to roll with the business. The guiding IT principle is not control, but making sure the business has the ability to build anything it needs. Instead of "orchestrate and manage," IT shops will teach the business what governance means -- then step away.

Not surprisingly, the Forrester analysts ultimately recommended a blend of the two, but not before provoking some lively reaction from the audience of CIOs.

"I intensely dislike your setting up two dichotomous academic scenarios," said one CIO who was employed, ironically enough, in academia. "We work in the real world, and the truth is, these models have cycled all the way through from the time that most of us started in this business, and will continue to cycle through. There will always be tension between these two models."

An IT leader from the National Institutes of Health cast his vote for both scenarios. He said his users represent two different cultures: an administrative arm that distributes and monitors grants to scientists in universities nationwide, and an internal faculty of lab scientists. The former needs common processes and controls to function well. The scientists are "like herding cats." An embedded model works better for these intramural labs, he said.

Another CIO argued that industrialized IT will never go away, because "even with embedded IT shops, you will have to bring technology back over the wall because it gets too complicated," for the business. "The business always wants to hand it off to IT to manage at some point." As for self-governance, "that hasn't worked in financial services," he added. "Why should it work in IT?"

Fuzzy IT and the future of IT shops

Whether IT shops in 2020 are industrialized, embedded or more likely an amalgam of both, Forrester argues that over the next decade CIOs must contend with three forces that are reshaping the role of IT:

  1. Self-service and business-ready technology.
  2. More tech-savvy employees.
  3. A business environment that forces companies to alter products, pricing and sales volumes to serve a radically different customer base.

The business-ready tech delivered by Software as a Service, hosted application service providers and the cloud will account for half of all IT service spending in 2020, an estimated $258 billion according to Forrester. In addition, self-service IT -- e.g., the salesperson buying 5,000 iPads without asking IT -- will become the norm rather than the exception.

By 2020, Millennials will make about half the workforce. They may not know how to program, but they can string together apps to create business processes and do so whether you want them to or not.

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The tech-savvy Millennials, or digital natives who now account for 26% of all employees, will make up about half of the workforce. They may not know how to program, said Staten, but they can string together apps to create business processes and do so "whether you want them to or not," According to Staten. Millennials' skepticism about the value that IT shops provide is already evident. A recent Forrester survey of this cohort showed that 66% insist in choosing their own phone for work; 39% said they "don't care" if it is an IT-approved phone.

In 2020's business environment, China will be the world's largest economy. The United States will remain among the top five economies, but Western European countries will be supplanted by India, Russia and Indonesia, according to Forrester. The standard of living for these growing economies, however, will be lower than today's top economies, requiring businesses to rethink their products. Price points need to be lower to serve this market. (Tata Motors Ltd.'s $2,000 car and cheap pharmaceuticals are examples of re-engineered products for a poorer customer base.) Volume needs to be higher to maintain profit levels, and IT systems need to be configured to help businesses do both.

So how do IT shops accommodate and capitalize on these trends? Forrester recommends that CIOs look at the "hard boundaries" in their enterprises and make them permeable. Fuzzy IT empowers the business and gives users some degree of self-governance, but only after teaching them the "rules of the road," Cullen said. IT shops in 2020 will provide the guardrails that allow users to self-provision IT safely. In fuzzy IT shops, systems scale but still allow for differentiation; IT aims for consistency but allows for variance when it makes sense for the business.

This type of "empowered business technology" rests on four IT-related roles: business technology visionaries who think about what is possible for the business; consultants with specialized technical and business skills that are available on demand; integrators who tie the dynamic collections of IT systems and services together; and sustainability experts. The latter are people who ensure that the technology can be scaled and sustained over time from a technology perspective, as well as from a compliance, security, business process and vendor management perspective.

This is a big group of people, Cullen said, but "the bottom two are the only ones that actually default to IT." And if IT shops don't prove up to these roles, "the business will find partners who do."

Let us know what you think about the story; email Linda Tucci, Senior News Writer.


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