The Challenge and Opportunity of Twenty FirstCentury IT Leadership

IT organizations and the executives who lead them find themselves in the most challenging of times. IT, so long perceived as a natural engine of progress, emerged from the recent spending bubble caught between a rock and a hard place: its budget has been reduced, often dramatically, while expectations for its contribution remain undiminished.

Where Else Is Enterprise Portfolio Management Applied?

IT management and governance is not the only application of enterprise portfolio management (EPM). It can be applied to any area of the enterprise where specialized resources work on a portfolio of projects and initiatives. However, aside from IT, EPM is most commonly applied to the management of new product development in engineering and R&D, known as product development planning and management, and to the management of professional services, known as professional services automation (PSA).

Moving beyond this paradox requires a fresh approach to IT management and governance—one that facilitates partnership between IT leaders and fellow operating executives and that delivers tactical execution at a level of excellence rarely seen in the past. Today's world-class IT operations must remain in alignment with the strategic priorities of the enterprise, must deliver promised results with control and predictability, and must transparently report costs, progress, and problems in time to act on them.

Achieving this is a challenge because IT management and governance has always been a uniquely difficult operation to evaluate. Even those who understand its technical minutiae often have trouble objectively judging the quality of results delivered by the chief information officer (CIO).

As it happens, IT is different from other operational departments—not because of the technical underpinnings of servers, networks, and applications but because IT provides the infrastructure for every other department, almost all of which is critical, though only some provides differentiation for the enterprise. Whether or not it is organized on a shared-services model, IT must accommodate the competing demands of departmental heads, business unit chieftains, board-level strategic priorities, and budgetary constraints.

These must be met while rationalizing the typical set of accumulated systems from twenty years of mergers and reorganizations. This web of competing priorities makes for both a strategic planning nightmare and a profusion of programs, initiatives, and projects, the likes of which is not seen anywhere else in the enterprise. To top off this twenty-first-century management challenge, the specialized resources necessary to mobilize modern IT are expensive or scattered, or both.

The CIO's current challenge is somewhat comparable to that faced by manufacturing twenty years ago. The parallel rise of electronics—assembled from thousands of small, expensive, and rapidly obsolescing piece parts—and Japanese just-in-time production methods forced manufacturing executives to reengineer processes and adopt new classes of operational management systems. IT will do the same. The reengineering will come from the savvy use of outsourcing (more about this later), Web services, and utility computing. Of equal importance, new management and governance systems are required.

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