2007 kicks off, leading CIOs are focused squarely on bringing their organizations quickly, firmly, and efficiently back to the fundamentals.

By Mark Lutchen

As the chief information officer (CIO) of one well-admired company puts it, she just wants "a refresher course" one that gives the most-senior executives of her company a high-level review of management's crucial role in IT governance, decision-making, and project completion. She needs them to better understand their responsibility in shaping IT's contribution to the business. Many of them don't even know what questions to ask.

CIOs at other leading global organizations are similarly focused on just getting basic IT management capabilities in place. A senior IT executive at one major consumer products company is having difficulty securing executive sponsorship. He's looking for help in explaining to senior management how centralizing common IT services for all business units under a single umbrella will benefit the entire enterprise. A CIO at a Fortune 500 financial services company just wants a simpler, more accurate understanding of his organization's IT costs, because he knows that he can't begin to shift the culture without it.

These aren't isolated examples from companies just beginning to build effective IT organizations. They're among the top-line IT objectives for 2007 at companies that many outside observers would assume were well versed in tapping the business value of technology. As we step into a new calendar year, they reflect the fact that technology is still unquestionably in the hot seat and that top-notch CIOs are requiring their teams to get back to basics.

Same trends, new pressure

Don't look too hard for new trends and issues this year. Many of the issues that drove IT budgets and agendas forcefully last year continue to shape CIO challenges. But there is a difference this year. Business communities are growing frustrated with IT's lackluster contributions to broader business projects, and they're increasingly aware that IT's high costs and elusive benefits directly affect earnings. That's the case, for example, with a large decentralized pharmaceutical company, which is under pressure to show gains in shareholder value after a long period of growth fueled by acquisition. Confronted by a widely fragmented set of IT capabilities, company executives realize that they cannot continue to meet growth targets without aggressively addressing IT integration.

Of course, many companies are poised to make large-scale commitments to strategies such as instituting service-oriented architectures, ERP initiatives, or outsourcing relationships or applying lean-manufacturing principles to data center operations. But these initiatives will stumble if the underlying elements of IT managerial maturity are not in place. Case in point: a leading energy company's $1 billion SAP implementation, which is now $200 million over budget.

What's important in 2007

You can expect three areas in particular to be top priorities for CIOs in 2007 and you should consider focusing resources on similar objectives:

• Making IT investment decisions and setting the right priorities - Many executives want, first and foremost, to establish the governance structure and practices necessary to define the rules of interaction between IT and the business, to determine IT project and spending priorities, and to ration resources accordingly. Managing the IT investment portfolio is one of the best ways to accomplish this, because it helps ensure that IT expenses and initiatives are comprehensively examined, assessed, and presented as a full IT portfolio, including total costs, quantitative and qualitative benefits, and key business risks.
• Delivering on business projects with IT components - With stakeholder patience running thin and funding approval less likely for projects with long payback periods, successful CIOs will focus on realizing measurable results in shorter time frames. This means implementation schedules with discrete "chunks" of value delivered in three to six months and ruthless discipline in withholding funding for any project that can't fund itself in a reasonable period.
• Improving transparency across IT cost and performance - Addressing costs will continue to be a leading priority this year. But whether the focus is on simplifying, standardizing, sharing, or sourcing IT, many CIOs will strive for greater visibility and transparency across what IT spends and what it delivers - that is, performance. Those who do so successfully will be able to achieve real transformation by steadily shifting IT resources away from maintenance activities - including those that support costly legacy-based infrastructures - and toward more-strategic initiatives that provide far greater business value at much lower cost.

What's the bottom line - Achieving IT managerial maturity will be a mandate in 2007. Revisit your objectives for the year, and tighten the focus on the fundamentals. Do more with less. Forecast and deliver ROI. And bring the discipline of a CFO to financial and performance measurement. Get back to the fundamentals. It may be your winning prescription in 2007.