30 Trends for 2006: Pursuit of the Frictionless Business Platform

It’s been a year of unsettling events and natural catastrophes. Hurricanes led to a jarring hike in gasoline and energy prices. Escalating interest rates, higher healthcare costs and a real-estate bubble on the verge of bursting threatened to reduce consumer spending.

Despite all this, the U.S. economy enters 2006 with plenty of forward momentum. The U.S. economy grew an annualized 3.8 precent in the third quarter of 2005, foreigners continue to invest in U.S. companies, and inflation remains relatively low. Perhaps some new calamity will make Corporate America pull in its horns, forcing CIOs to stop concentrating on revenue growth and focus again on cost reduction.

But unless that happens, CIOs will keep pursuing their current agenda: to build IT platforms that give their companies the flexibility to enter new markets, better serve customers old and new, and partner effectively with other companies—all in the pursuit of growth.

Growth and flexibility are the threads that tie together this year’s special issue on Top Trends for 2006. To prepare this report, we combed through the 13 surveys CIO Insight conducted in 2005 to identify 30 trends that will be critical in shaping our readers’ priorities and careers next year.

That research shows that CIOs are now trying to create a frictionless infrastructure. Companies need to be flexible, fast and informed to survive in the “flat” global economy described by New York Times columnist Thomas Friedman. CIOs are on a mission to build a technology base that will not impede the free flow of information, the availability of applications or the malleability of business processes.

78% of companies plan to increase earnings through growth, not cost reduction.

43% of IT departments are regularly unable to make requested changes to systems.

78% of IT alignment efforts have had a direct, positive impact on growth.

84% of IT departments are actively involved in business process innovation.

Universality, openness, speed and convenience will be IT’s operating principles in 2006; efficiency, security and continuity the operating necessities. Having adopted the Internet as their universal standard and core technology, CIOs now want to be able to serve up applications and data to anyone on their networks, yet keep the required number of servers and storage devices to a minimum. It’s a goal that has made service-oriented architecture, Web services, and virtualization today’s hottest technologies.

What do companies want to be able to do with their smooth-running infrastructures? Our research finds that CIOs have long, ambitious to-do lists. By combining broadband and mobile technologies with e-commerce, companies want to reach customers anywhere and provide all kinds of services, information and marketing pizzazz.

By running supply-chain and logistics systems over their networks, companies seek to integrate partners, outsourcers and suppliers into their operations. Portals and collaboration software can allow employees to use the same systems wherever they go.

Our research also indicates that companies are giving more employees access to business intelligence tools, in hopes they apply the insights those systems generate. And there’s strong interest in using business process management systems to quickly adjust how business is conducted.

An ambitious list? Absolutely. But CIOs have more going for them than the rise of the Internet, open systems, Web services and SOA. Infrastructure is no longer the difficult sell it once was, because the business side of the house apparently understands its importance. Even though infrastructure is grabbing so much attention, four out of five business executives believe IT is well aligned with their company’s strategy.

In fact, talking about “IT executives” and “business executives” as if they are two different species is becoming an anachronism. Many if not most CIOs have substantial business experience, and about a quarter have divided their careers equally between IT and other functions.

Business leaders realize their IT managers and staff know a great deal about the intricacies of their company’s processes. More CIOs now report to COOs—a development that represents a new career path for technologists. IT executives now have more influence when they say infrastructure investments are needed to improve business processes.

The great unknown for 2006—other than whether the economic expansion will continue—is whether SOA, virtualization and the other new integration technologies will actually work. Will CIOs make enough progress building flexible infrastructures to convince themselves it really can be achieved with today’s technologies? Or will new problems cause delays, raise costs and cast doubt on the entire effort? Plenty of problems that commonly dog CIOs—management and employee resistance, difficulties finding the right technical talent at a reasonable price, vendors who can’t deliver what they promise—add to the uncertainty.

Probably the most obvious problem is security and privacy: If customers no longer believe the networks they use can keep their personal information safe, companies will be forced either to introduce tighter security measures that can inconvenience users, or to adopt a less flexible architecture. A less obvious but equally important issue is data quality: Inaccurate and inconsistent data will inevitably disrupt the flow of information and stymie integration.

CIOs may treat security and quality as just technical issues, but they’re not. The human dimension is more significant than the technical. CIOs will compete to find IT talent to solve these problems. Even more important, CIOs have to get other executives to take on more responsibility for ensuring security and data quality. That’s one thankless task that’s sure to cause friction.

CIO Insight’s Survey Methodology

Each month, CIO Insight’s editors survey hundreds of IT executives on a different topic, then cross-tabulate the results to uncover differences by company size, industry, role and other groupings. Except for our annual alignment survey, which includes both IT and non-IT executives, our research includes only CIOs, CTOs and vice presidents or higher at companies with more than 50 employees. In our 2005 research, on which this special report is based, we conducted 13 surveys and included a total of 5,761 qualified respondents; 64 percent of these participants, on average, were CIOs or CTOs. The surveys are designed by the editors of CIO Insight together with Equation Research, LLC (www.equationresearch.com), an Estes Park, Colo.-based supplier of custom research services. IT executives gathered from Ziff Davis Media publication lists are invited to participate in our studies by e-mail, then answer questions by accessing a password-protected Web site.

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