Tuesday  February 17, 2009

Topic: IT Project Leadership

Reference: Spang, Stefan. “Five trends that will shape business technology in 2009.”The McKinsey Quarterly: http://www.mckinseyquarterly.com/article_print.aspx?L2+21&L3=37&ar=2296. February 2009.

All indicators point to the fact that 2009 will not be a great year for financing business projects. Funding sources are not lending, credit is hard to access, and many organizations are working hard to conserve cash. This is not a great environment for spending on IT projects, particularly ones with high price tags or attached to projects with a history of low service delivery. As a result, CIOs will be asked to make more concessions, scale back plans, and reduce outflows more than in recent memory. This will make the job harder, the stakes higher, and lengthen the timeframes for project completion. In the referenced article the commentator also describes other likely trends as the result of current market conditions. “In a world where capital is at a premium, CFOs will seek to use IT assets as a lever to generate cash. They may sign outsourcing deals that include a bigger financing aspect, such as having IT service providers make a large up-front payment in return for higher margins over the course of a contract. They may sell and lease back hard assets, such as data center facilities.” That means to get funding CIOs will have to set clear priorities, be better with project assessments and clean the pipeline of poor investment choices. The commentator also mentions the increased demands that regulators will require from information as it is subjected to closer scrutiny. “In the future, policy makers and regulators will probably demand that IT systems capture more and better data in order to gain greater insight into and control over how banks manage risk, pharma companies manage drugs, and industrial companies affect the environment.” Vendor relationships will remain a large part of the equation as leverage changes from transaction to transaction. I already see many of these observations at work and the scale and scope of IT investment has been revised to reflect the current market reality. What’s not clear is that CIOs have gotten smarter at managing their project portfolios, internal relationships, or cashflow to reduce current outlays but to continue to build for future opportunities. The market will come back and when it does, enterprise requirements will not allow for elongated delivery schedules. It is time to bet wisely on future requirements. How best to do it is the big question. Let me know how you are addressing this critical area.

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