2011: A Look into the Crystal Ball

Microsoft will become a private company; Steve Ballmer will no longer be CEO. F5 and Concur Technologies will be acquired. Microsoft will buy Nokia Android will become the default smartphone OS in 2011. These are just a few of the predictions thrown out by myself and the other panelists at the WTIA’s annual predictions dinner on November 17. While some of these predictions are lofty and bold, I’m willing to bet a few might come true.

This discussion got me thinking about a topic I live and breathe everyday - Technology Business Management, and the trends that will impact the CIO in the coming year. We’ve all heard about the changing role of the CIO, but what does that mean and what type of market pressures are driving this?

The good news is that we see the role of the CIO and his/her team growing. In fact, Gartner predicts that by 2015, enterprises with long-term IT cost transparency initiatives will increase the size of the CIO team by 25% and cut IT costs by 25%.* As the CIO’s role changes to a more business-oriented leader focused on managing the business of IT, Gartner recommends that “IT leaders should consider rotating finance people into IT, and hiring business staff into IT relationship management roles.” At Apptio, we are already seeing this transformation unfold through our work with CIOs and IT teams at many of today’s leading organizations such as Microsoft, VW Credit, and Motorola.

Based on these market forces, here is a sneak peak at our top five predictions for the CIO in 2011:

1. CIO’s Will Run Their IT Portfolio Like a Supply Chain Strategist

The next decade will be one marked by transformation for IT leaders. This is especially true for the CIO as their role expands to one of business enablement. In this respect, the CIO will be required to think about delivering IT services in the framework of a supply chain - similar to the transformation that took root in the manufacturing industry with holistic supply chain initiatives like Lean Manufacturing (hence the name of our blog “Lean IT”) and Six Sigma.

2. The Cloud Will Force CIOs to Deliver Services at Market Rates

In addition to the scale and agility that public and hybrid clouds bring to the enterprise, the cloud introduces third-party competition for traditional IT services. As such, CIOs will be tasked with helping their businesses make more educated decisions as to which services should be transitioned to the cloud.   This will create pressure to deliver internal IT services at market rates.

3. CIOs Will Demand a Full Spectrum of New Metrics to Drive the Accountability of IT

As the financial acumen of IT leaders becomes a greater priority, CIOs will be required to combine financial and operational data across disparate systems to be fully aligned with the business units they support. Transforming IT in this manner will require a new set of financial metrics that will help CIOs plan over both the long and short-term. These metrics will include operating profit and margin, net present value (NPV) of the IT portfolio, return on IT assets, IT spend ratio, unit cost by service category, total cost of ownership by business application, fixed vs. variable cost ratio, CAPEX ratios, and budget versus forecast.

4. CIOs Will Reject Assumptive Data in Favor of Actionable Data to Make Real-Time, Fact-Based Decisions

Delivering IT cost transparency has long been a major initiative for forward-thinking CIOs but they lacked the right tools for the job. However, new solutions like Technology Business Management are helping to arm CIOs with data that’s grounded in reality, not assumptions.

5: CIOs Will Leverage New Technologies to Better Collaborate with Business Partners

Cost-transparency and real-time metrics alone are not enough for tomorrow’s CIO to transform IT in a meaningful way. While they provide a mechanism by which to identify and evaluate cost drivers, they only represent one half of the Technology Business Management coin. Rather, for real transformation to happen, CIOs will need to forge a true partnership with the business to achieve operational excellence.

What are you forecasting for 2011? We’d like a look into your crystal ball…

*Kurt Potter, Michael Smith, Donna Scott, Gartner, Inc., November 10, 2010, Predicts 2011: IT Financial and Performance Management Gets Strategic