During 2001-03, we predict more than a quarter of Global 2000 CIOs that specialize as turnaround specialists (15 to 25 percent of the CIO population) will adopt a process to restructure IT resources and divest (or outsource) low-value IT operations. This is in response to a slowing economy, increasing competitive pressures, and eroding profit margins.
By 2004, more than half of turnaround CIOs will selectively outsource between 50 and 60 percent of IT functions, thereby taking on the role of general contractor to deliver an optimal balance between investment costs (efficiency) and business demands for IT service value (operational effectiveness).
We believe that through next year, between a quarter and a third of Global 2000 CEOs will increasingly seek to employ turnaround CIOs, either recruited from competitors or complementary industries. These CIOs will be charged with breaking down existing IT services into building blocks that raise the IT organization's credibility to a level complementary to the company's dependence on IT.
We expect market demand for turnaround CIO executives to increase by 40 percent in the next five years, as Global 2000 companies seek to reinvest, reallocate, and realign IT resources (e.g., infrastructure development, operations, personnel, and IT portfolio investments). Turnaround CIOs will be in greater demand during this period than harvester or caretaker-type CIOs, required to re-engineer IT processes and improve the IT office's effectiveness and perceived value to the business.
Based on our research, turnaround CIOs have a 12- to 18-month life cycle and are able to deliver measurable, bottom-line efficiency gains in as little as 30 to 90 days without hurting the IT organization or IT asset portfolio. These CIOs go on to develop more strategic, long-range plans to optimize IT investments and drive resource efficiencies after establishing their credibility in the first 100 days in office.
We believe more turnaround CIOs in Global 2000 organizations will implement IT marketing programs to inform -- that is, communicate IT value and manage executive and board perceptions of their offices' performance and contributions. We predict the percentage of turnaround CIOs adopting public relations campaigns for IT services and investment in technology resources will rise from 20 to 40 percent by 2004.
During economic slowdowns, companies (and turnaround CIOs) may be tempted to cut back on capital spending, including IT budgets, because technology is a visible area (perceived to be convenient and low impact) for cutbacks when companies reassess capital and expense outlays. However, according to our Technology Leadership Index, a direct correlation exists between IT investment and business performance, demonstrating that technology investment is a differentiator among company performances.
High-performing turnaround CIOs understand there is a concomitant approach to rationalizing IT assets while continuing to invest in them (people, process, and technology) -- all designed to garner the greatest return-on-investment for the enterprise. A successful turnaround is not just a function of streamlining costs, but a simultaneous reorganization and redeployment of assets to create new growth opportunities and sustained profitability for the company.
How Do Turnaround CIOs Do IT?
Last year more than 450 CIO positions went unfilled in the United States, coupled with about 20 percent turnover of Fortune 500 executives. In their haste to fill open requisitions, companies may hire "charismatic leaders" when they need a "turnaround executive" with the courage, tenacity, and conviction to make difficult decisions that a more charismatic leader would be unwilling or unable to make.
CIOs who aspire to be perceived as turnaround specialists or "quick-change artists" and lead the IT organization and enterprise to prosperity should:
A turnaround CIO must exhibit these character traits to inspire and earn the trust, confidence, and respect of the IT staff, executives, shareholders, and customers. To ensure a quick change and attainment of profitability, the turnaround CIO must have personal goals that are in absolute alignment with the goals of the enterprise.
Business Impact: During times of economic uncertainty, the lack of a turnaround CIO (who can aggressively implement a plan to eliminate organization and asset redundancies) puts the business profitability and future growth potential at risk.
Bottom Line: A turnaround CIO must adopt a transformation strategy that aligns IT investments with line-of-business goals, make difficult choices, and then have
the courage to act on those decisions.
Al Passori is a consultant for META Group Inc.. Copyright 2001 META Group Inc., 208 Harbor Drive, P.O.
Box 1200061, Stamford, CT 06912-0061. Telephone: (203) 973-6700. Fax: (203) 359-8066. This publication may not be reproduced in any form or by any
electronic or mechanical means, including information storage and retrieval systems, without prior written permission. All rights reserved. Reprints are
Al Passori is a consultant for META Group Inc.. Copyright 2001 META Group Inc., 208 Harbor Drive, P.O. Box 1200061, Stamford, CT 06912-0061. Telephone: (203) 973-6700. Fax: (203) 359-8066. This publication may not be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without prior written permission. All rights reserved. Reprints are available.