IT’s strategic contribution increases in uncertain economic times

In the midst of a belief that tough times lie ahead, more boards of directors are saying that they expect a high to extremely high strategic contribution of IT in 2012, according to the Gartner Forbes 2011 U.S. Board of Directors Survey. The expectations of “high” to “extremely high” strategic contributions of IT climbed from 32 percent of survey respondents for 2010 to 66 percent for 2012.

From October to December, 2010, Gartner and Forbes surveyed 96 company directors. The Gartner Forbes 2011 U.S. Board of Directors Survey was designed to gain insight from a group that has low visibility to IT and business leaders, yet is ultimately held accountable for the performance of the corporation.

The survey examined the key business issues and priorities of a sample of directors from companies with revenues over $1 billion, their view of what is ahead for their businesses, and their expectations for IT’s strategic contribution to the business.

“The pursuit of higher impact for IT in an environment of budget constraint is one that insists on rewriting the rules for how IT acts,” said Jorge Lopez, vice president and distinguished analyst at Gartner.

“There are two dimensions: IT productivity, where the internal operations and structure of IT itself are restructured to perform at a cost vastly different from the competition, and the entrepreneurial CIO scenario, where the IT organization takes a leadership position to rewrite the rules of competition for the industry. To meet the expectations that have risen will require rethinking about how IT operates,” Mr. Lopez said.

While 73 percent of board directors surveyed believe that the economic situation is tough and will remain so for the foreseeable future, 51 percent said they are still focused on growing revenue.

The tension between these two views means that CIOs will need to plan for the systems that will be required for growth but build in flexibility should circumstances change amid high levels of uncertainty.

One of the goals of the survey was to test how board directors view the different business issues in front of them. The hypothesis was that board-level issues, such as corporate governance, would rank highly, along with the issue of corporate social responsibility, such as workforce diversity, instituting green policies and philanthropic activity.

However, in listing the top 28 priorities, there was a clear delineation where business priorities fell into three distinct groups:

The Top 12: The Business Performance Block — This top-ranked list was dominated by issues that have a direct connection to revenue and profit.

The Middle 8: The Board Policy Block — This list was dominated by issues that concern the board directly, such as instituting or strengthening corporate governance.

The Bottom 8: The Social Responsibility Block — This list contained “green” policies, corporate social responsibility and philanthropic activity, and political lobbying.

“The prevailing sentiment is one of focus: Pare away all that is not central to the business you are in,” Mr. Lopez said. “The recession has already pared away a substantial amount of extraneous effort across the entire business for most industries, and there is work remaining in federal, state and local governments. The moves will be to reduce the efforts of the business that are off the main strategy, and IT should be no different.”

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