TechWorld

IT leaders need to take risks in the postmodern age of business

To thrive in these environments, IT leaders need to create a virtual and fluid business that changes as quickly as their customers

Welcome to the postmodern age of business where IT leaders need to re-imagine their role and lead from the front by taking more calculated risks.

It is an age where the enterprise has no walls and customers demand change much faster than architectures.

To thrive in these environments, IT leaders need to create a virtual and fluid business that changes as quickly as their customers.

This is the message to be delivered to more than 1,500 IT executives attending Gartner's annual symposium on the Gold Coast tomorrow.

The three-day event features keynote presentations from: Commonwealth Bank CIO, Michael Harte; former South East Water CIO, Marcus Darbyshire, who has since joined Gartner; ABC managing director, Mark Scott and; Gartner's global head of research, Peter Sonderguard.

Outlining this new business landscape, Gartner's managing vice president, Daryl Plummer, said the challenge for CIOs is capturing the interest of customers whose attention span is shorter than ever.

"In a world where the average company only lasts 10 years, every added point of customer satisfaction alone could add one year to the life of your business," Plummer said.

"Postmodern businesses don't spend all their money just on customer loyalty programs. They invest in company loyalty to the customer."

With worldwide IT spending set to reach $2.7 trillion in 2012, the role and significance of IT in business has never been greater.

Gartner's Sonderguard said the days of IT being a passive observer are long gone, instead IT is a primary driver for business growth.

"This year 350 companies will each invest more than $1 billion in IT," Sonderguard said. "They are doing this because IT impacts their business performance.

"Two thirds of CEOs believe IT will make a greater contribution to their industry in the next 10 years than any prior decade.

"This new era brings with it urgent and compelling forces. They include the Cloud, social computing, mobility and an explosion in information."

IT executives need to understand how each of these forces will shape IT in coming years.

While $74 billion was invested in public Cloud services last year, this spend will grow five times faster than overall enterprise IT spending for the next three years.

To survive in the Cloud computing age, Sonderguard said three out of 10 IT organisations will become Cloud brokers for their business.

Another trend shaping IT is mobility. By 2015, mobile application development projects targeting smartphones and tablets will outnumber PC projects by four to one.

Sonderguard said by 2016, 900 million media tablets will be purchased — one for every eight person on earth.

When it comes to mobile computing, he said no single platform, form factor or technology will dominate and companies should expect to manage a diverse environment with two to four intelligent clients through to 2015.

"IT leaders need a managed diversity program to address multiple form factors, as well as employees bringing their own smartphones and tablet devices into the workplace," he said.

Social computing is another trend identified by Gartner as one of the top 10 strategic technologies for 2012.

With 1.2 billion people on social networks, Sonderguard said social computing is entering its next phase.

"IT leaders must immediately incorporate social software capabilities throughout their enterprise systems," Sonderguard said.

At the centre of this phase are context aware applications which will appear in targeted areas such as location-based services, augmented reality on mobile devices and mobile commerce.

A contextually aware system anticipates the user's needs and proactively serves up the most appropriate and customised content, product or service.

Describing information as the oil of the 21st century and analytics as the combustion engine, Songerguard said it is time to rethink data management strategies.

"The concept of one enterprise data warehouse containing all information needed for decisions is dead," he said.

"Multiple systems including content management, data warehouses, data marts and specialised file systems tied together with data services and metadata will become the logical enterprise data warehouse.

"The impact of these forces will make architectures of the last 20 years obsolete."

Other technologies in the top 10 include extreme low energy servers and in-memory computing.

Gartner sees a huge increase in the use of flash memory in consumer devices, entertainment equipment and other embedded IT systems.

It offers a new layer of the memory hierarchy in servers that has key advantages including space, heat, performance and ruggedness.

Besides delivering a new storage tier, the availability of large amounts of memory is driving new application models. In-memory application platforms include in-memory analytics, event processing platforms, in-memory application servers, in-memory data management and in-memory messaging.

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Running existing applications in-memory or refactoring these applications to exploit in-memory approaches can result in improved transactional application performance and scalability, lower latency (less than one microsecond) application messaging, dramatically faster batch execution and faster response time in analytical applications.

As cost and availability of memory intensive hardware platforms reach tipping points in 2012 and 2013, Gartner said the in-memory approach will enter the mainstream.

Worldwide data centre hardware spending, which includes servers, storage and enterprise data centre networking equipment, will reach $98.9 billion in 2011.

Gartner expects this figure to climb to $106.4 billion in 2012 and surpass $126.2 billion in 2015.

The biggest category in this market is data centres with more than 500 racks.

These organisations will increase their share of spending from 20 per cent in 2010 to 26 per cent in 2015.

Gartner research director, Mr Jon Hardcastle, said traditional in-house enterprise data centres are under attack from three sides.

"Firstly, virtualization technologies are helping companies to utilise their infrastructure more effectively inhibiting overall system growth," he said.

"Secondly, data centres are becoming more efficient leading to higher system deployment densities and inhibiting demand for floor space.

"Thirdly, the move to consolidated third-party data centres is reducing the overall number of midsize data centres. Meanwhile, the largest data centre class is benefitting from the rise of Cloud computing."

While all of these trends will certainly impact IT organisations in coming years, the reality is that 70 per cent of most IT budgets is still allocated to maintenance and keeping the lights on.

To break this mould, Gartner is advising IT organisations to eliminate legacy, to selectively destroy low impact systems and to make greater use of Cloud computing.

Other speakers at the symposium include Gartner VP, Diane Berry, who will present a paper called CIOs must break through the unsustainable IT staffing model.

CIO power politics and effective communications strategies for dealing with the board of directors will be covered by Gartner VP, Tina Nunno.

Earlier this month, Gartner released a paper which identified seven areas CIOs must understand and act upon when dealing with the board of directors.

It found that only 16 per cent of board directors have any IT background or experience.

Gartner VP Jorge Lopez said the board of directors has little IT experience but is the highest authority in the management of the organisation.

Lopez said the board only meets a few times a year so CIOs should use that time wisely and prepare their messaging to ensure it is effective.

He said it is also worth noting that the board's business is only focused on a few priorities.

"More than 90 per cent of the board's time is consumed by the areas of risk, strategy, audit, finance, investment, social issues and compensation," Lopez said.

"Prepare to be flexible in the time you are allotted even preparing two minute summaries that state the purpose, conclusion and action you want the board to undertake.

"Don't expect too much time to be paid to your initiatives unless it is highly strategic or catastrophic."

Lopez said CIOs should also be prepared with business case justifications and work closely with the CEO.

"The CEO will usually navigate the path to approvals. Never surprise the CEO in front of the board," he said.

Like all human organisations, boards have their share of politics which is why CIOs should have an understanding of each director's background and be aware of alliances.

"The bottom line is that CIOs must learn to treat their board of directors as they would treat customers," he said.

"They need to get to know the members and their priorities, and make certain that they have the plans in place to meet board-level expectations."