The next three years will see dramatic change for most IT management teams, says Gartner, because of new styles of organisations, new roles for IT services businesses and new challenges for CIOs.
Gartner says the outlook for IT organisations and service providers includes accelerated change in their roles and structures and a major increase in complexity.
The firm expects to see business partnerships and integration of services becoming critical centres of IT value, while multi-sourcing will be the standard delivery model.
"Many companies have experienced significant improvement in their markets throughout 2004 and IT leadership teams must change from a cost-containment orientation to revenue enhancement and growth. The next three years will differ dramatically from the previous four for most IT management teams," says the international research firm.
Drivers of change
According to Gartner, five key trends will drive change for IT organisations and service providers:
* The use of external service providers will continue to grow; strategic sourcing and supply/demand alignment will become critical processes.
* Enterprise partnerships will become a critical focus of IT value.
* The growing business focus of IT value and business transformation requires new leadership styles.
* The scope and importance of IT continue to grow in all industries and geographies, despite threats to its credibility.
* Business pressures for consolidation and federalisation increase IT technical and relationship complexity. Application integration and architecture are vital inside and outside the enterprise.
According to John Mahoney, managing VP, IT services and management at Gartner, this presents an excellent opportunity for CIOs to enhance credibility and influence business strategy. However, he warns of failure to understand this shift in environment also presents tremendous risk to the health and possibly survival of the business as a whole.
"The top issues for IT management transformation through 2008 will be to enable business agility and growth, control IT costs, deliver quality service and demonstrate value for the business - all at once," Mahoney says.
"The list goes on to include moving from owning IT to contracting for business service; blending technology, process and business skills organisation-wide; and maintaining integrity of corporate systems despite the invasion of consumer devices into the business environment."
Mahoney says the massive shift in role and responsibility will fundamentally change the IT organisation.
"We predict that by 2008, 50% of IT organisations will refocus on brokering services and shaping business demand, rather than on delivering IT services directly," he says.
"By 2009, design and management of business processes and relationships will supersede management of technology as the leading value contribution for more than 50% of former IT organisations in $1 billion-plus enterprises and for more than 30% of existing IT services businesses."
Gartner predicts that businesses that understand how to generate real business advantage from fusing technology, business process design and business relationships will outperform those that do not by at least 15% per year.
Models for the future
Organisational and business models will need to change significantly to accommodate and profit from this shift, the report says.
Gartner forecasts that at least one-third of 2004 CIO roles will transform or disappear by 2009. One of the most fundamental modifications Gartner foresees is the division of IT leadership and organisation roles. A new business transformation role is emerging that will cause the strategic IT leadership role to split into business technology and business network leaders.
"The IT leadership role has been in transition ever since it was created and that evolution is accelerating," says Mahoney. "One of the primary changes is the need for CIOs to play an increasing role external to the organisation. By 2008, CIOs will need to spend more than 50% of their time on relationships outside the enterprise to ensure they deliver the expected business outcomes.
"There are no more IT investments - only business investments - and playing a leading role requires that IT leaders have greater direct business accountability to participate in growth initiatives."
Gartner predicts that by 2008, at least 60% of IT organisations will reduce their in-house workforce by at least 50% compared to 2000.
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