FRAMINGHAM, 9 APRIL 2010 - First contemplating the dire ramifications of 2008's Global Economic Meltdown was a serious gut check. Slicing and dicing the IT budget in 2009 just to get through the Great Recession was strenuous. And day to day life in the New Normal hasn't been much fun either.
There appears to be daylight ahead for businesses. So, now what?
According to Rudy Puryear, a partner at consultancy Bain and leader of its global IT practice, all that CEO-mandated cost-cutting in IT-"necessary for business survival," he says-is now poised to create an even bigger problem: Overspending on IT as companies rebound and respond to pent-up demand that could add more complexity to IT operations and further strain business-IT relations.
Part of the problem is attributable to lingering business-IT disconnects. "I believe there is a broken dialogue that exists between business and IT," Puryear says, "and they don't have a good language or taxonomy for talking."
To help kickstart a conversation-in this case an "intervention" from the CEO-Puryear offers five questions that CEOs need to ask their CIOs right now. And IT leaders better have good answers. Puryear says the intended outcome of the conversation is "critical for managing IT to win in the recovery."
1. Do we understand what we broke, and what is our plan to fix it? There were plenty of valid business reasons for all the IT slashing and burning. "But I've seen a lot of actions taken that were necessary of business survival that got awfully close to the edge and have done two things," Puryear says. "Those actions destroyed some assets that businesses had been building for years, and they introduced unacceptable business risk."
As an example, Puryear says a client of Bain's backed off their IT refresh policies during the downturn. It's one thing to do that with laptops (stretching their life for another six to 12 months), he says, but this client did it with their servers. "They recently took a look, and it was something like 32 percent of mission-critical apps were now running on servers that are not supported by a vendor anymore," he says. "In my view, it created unnecessary business risk."
The straightforward question to ask is this: What compromises did we make in the IT inventory and infrastructure that are no longer acceptable risks to the company now?
2. How do we get full potential from discretionary spending? Puryear posits this: At typical companies, approximately 80 percent to 90 percent of the IT budget is locked in to non-discretionary funding, i.e. "business as usual": running, operating, maintaining, supporting and adding minor enhancements to the existing environment. Conversely, just 5 percent to 20 percent is discretionary.
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