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As recession looms, Gartner says CIO role should generate revenue

As the economy continues to falter and IT consumerization rises to the fore, Gartner shines a new light on the CIO role: Think less service provider, more revenue driver.

ORLANDO, Fla. -- Forget about the old CIO role as servant to the enterprise. According to analysts at Gartner Inc.'s...

annual Symposium/ITxpo, CIOs must drive the business and generate revenue, or risk losing their budgets -- perhaps even their entire departments.

The warnings may sound dire, but they’re part of what Stamford, Conn.-based Gartner has declared the “new CIO manifesto,” which recommends that:

  • The majority of a CIO's budget be directed to IT projects that improve the financial condition of the company by reducing expenses.
  • More than 50% of company-wide IT spending support business activities that generate revenue.

Most CIO budgets allocate 75% to simply maintaining IT operations currently, while the majority of IT-related spending company-wide supports "business processes related to the expense side of an income statement", explained Ken McGee, a Gartner vice president.

According to the manifesto, the CIO should accept business requests for only new IT projects that demonstrate "measurable and auditable" financial benefits for the company. Green-lit IT projects that cannot predict financial benefits should be labeled as "Approved Without Quantifying Value."

Of course, operating in this brave new competitive business world will require a serious shift in paradigms. IT leaders will need to stop thinking of themselves as a "great service provider," there to fulfill orders from the business, said Gartner analyst Tina Nunno. "Stop taking demands and requirements and start making recommendations."

Re-imagine the CIO role … or else

The recommendations for the CIO role were part of a series of warnings on the opening day of the symposium. Analysts pointed out that as technology and digital information become ever more integral to business operations and workforces, IT departments and the systems they've built are becoming obsolete thanks to factors like outsourcing and cloud providers. By 2013, the chief marketing officer will have a bigger IT budget than the CIO, according to Gartner. Even more dire: Gartner predicts that CIOs will have lost control of 25% of IT spending by 2014.

Stop taking demands and requirements.

Tina Nunno, distinguished analyst, Gartner Inc.

While Gartner stressed a "new world order", much of the advice seemed old hat to CIOs in attendance. "It's always easy to sell something that is different, and that is in essence what they are doing," said Kevin Barrett, CIO of Elan Corp., who added that IT's main focus at his company had long been delivering business value. While Elan is leveraging cloud services, he moreover remains "highly suspicious" of cloud's ability to deliver cost savings over internal systems, except for experimental work implemented in a short time frame. However, Gartner is correct on one account, he said. "Mobility is taking over. We all can see that is true. And they are dead right about the consumer coming to the work environment with their own device."

As for the CIO role or new manifesto, Barrett said that most of "what is presented here are things we have already done." One CIO who wished to remain anonymous was a bit more generous in his assessment. The CIO, who works at a business division of a railway transportation company, said it "affirmed a lot of what we are doing," from getting rid of cumbersome legacy systems when possible to aligning closely with business projects that generate revenue.

However, for companies that have been flush with cash over the past decade, it might be new news, Barrett conceded. IT costs have long been viewed "as evil" unless they materially contribute -- not just to revenue, but also to the company's core mission of getting a drug to market faster, he said. "We have been in a business where we have had to generate as much cash as possible to fund a fairly extensive research and development project."

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

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