2011 Prediction: Apptio
Predicting a Decade of Transformation for the CIO
Over the last year, we have seen five key trends emerge that will reshape the role of the CIO. Based on insights gleaned from customers, analysts and partners, Apptio believes that 2011 will inaugurate a decade of significant transformation for the CIO and IT. This will be driven in part by the ongoing adoption of private and hybrid cloud computing and the pressure to make IT services portfolios more transparent, accountable and aligned to the business. Additionally, CIOs will be evaluated by their ability to clearly demonstrate the cost, quality and value of IT and deliver measurable value to the business.
CIOs Will Run IT Like a Supply Chain Strategist to Meet Business Demands
The next decade will be one marked by transformation for IT leaders. This is especially true for the CIO as the role expands to one of business enablement. With this new charter, CIOs will be pressured to become better stewards of the business of IT, with greater focus on financial transparency and the ability to communicate the true costs of the IT services they deliver.
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 and Six Sigma, the CIO will need to accurately calculate the cost of IT components to, in turn, determine what it costs to produce, operate and deliver their portfolio of services. In doing so, CIOs and business leaders will be better positioned to manage and meet the demand for IT.
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, they are introducing third-party competition for internal IT services. This competition provides a valuable benchmark by which to compare service delivery costs, and places pressure on CIOs to deliver IT services that match the quality, cost and value of those offered by the market.
As such, CIOs will be tasked with helping their businesses make more educated decisions about which services should be transitioned to the cloud. Contrary to popular belief, the cloud does not always represent the most cost-effective choice. In the coming year, CIOs will need to demonstrate which IT services would be best served by a shift to the cloud and which should be delivered through traditional IT resources – all while ensuring they maintain the quality of their services.
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 in order 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-to-variable cost ratios, CAPEX ratios, and budget versus forecast.
By marrying data across general ledger, asset management, service desk, monitoring systems, project and portfolio management tools, and spreadsheets into a unified system of record, CIOs can move beyond pure performance metrics to understand the true cost, quality and value of IT services. With this change, a new breed of CIO will emerge: one that unifies deep business skills with IT savvy.
