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CIOs must prompt board rethink on IT, says analyst

John-Paul Kamath

The need to innovate will drive the next big wave of spending on IT, but CIOs must change the way technology is promoted at board level if it is to deliver value, research released today by analyst firm Forrester concludes.

A survey of 3,000 IT decision makers by the firm revealed that 30% intend to spend their IT budgets over the next eight years on developing new applications and programmes, rather than on maintaining older system.

"Developing internet-based applications to improve interactions with customers and suppliers is now key on CIO's agendas," said David Metcalfe, senior vice-president at Forrester.

"CIOs are under increasing pressure to innovate through new IT applications, and the opportunity cost of losing ground to competitors is fuelling this trend."

However, Metcalfe said only a small number of companies recognise the importance of innovating through the use of IT. These companies were ones where IT was already central to doing business, such as information providers and telecom operators.

According to Metcalfe, bricks and mortar companies with traditional boards still regard IT with indifference or as a cost centre, and so CIOs need to change the way they represent IT innovation.

"It is not a given that technology will deliver business results. For example, IT and its business constituents still have mismatched expectations for how long changes to IT systems should take, and the perspective of firms' top executives reflects that disconnection."

To bridge this, Metcalfe advised CIOs to focus on measuring whether IT applications are delivering to business performance metrics, such as profit, revenue, opportunity cost, or contribution to innovation, rather than on technology efficiency metrics.

"Business will become so deeply embodied in technology, and the technology so deeply embedded in the business, that the development of next generation IT applications needs to be managed with more savvy than it is today," he said.

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