Creating Enterprise Leverage: The 2007 CIO Agenda: January2007

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Creating Enterprise Leverage: The 2007 CIO Agenda

Corporate Headquarters Building the Next-Generation IT Workforce:
56 Top Gallant Road Focus on Synergies
Stamford, CT 06902-7700 November 2006
U.S.A. Spend Less, Get More:
+1 203 964 0096 25 IT Cost Containment Techniques
October 2006
Europe Headquarters
Tamesis High Value, High Risk:
The Glanty Managing the Legacy Portfolio
Egham
Surrey, TW20 9AW
September 2006
Working With the Board of Directors
Creating Enterprise
Leverage: The 2007
UNITED KINGDOM July 2006
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Success With Standards
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CIO Agenda
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Gartner Australasia Pty. Ltd. Taking Your PMO to the Next Stage
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North Sydney
Growing IT’s Contribution: The 2006 CIO Agenda
New South Wales 2060 Contents
January 2006
AUSTRALIA
Building Business Smarts in IS Executive summary 4
+61 2 9459 4600
IOs report that 2007 business expectations for information technology will concen-
C
November 2005 trate on providing new enterprise capabilities in the face of increasing competition.
CIOs must keep current operations moving while creating future sources of enterprise
Japan Headquarters Overcoming Change Obstacles in the Public Sector leverage. Success during the next three years will require CIOs to find and develop
Gartner Japan, Ltd. October 2005
points of enterprise leverage.
Aobadai Hills 6F Section 1 Enterprises seek leverage in an increasingly

4-7-7 Aobadai, Meguro-Ku Applying Enterprise Architecture demanding market 10
Tokyo, 153-0042 September 2005 IOs report that competition is increasing as more enterprises look to expand their
C
mission. As a result, executives expect IT to provide leverage to make the enterprise
JAPAN The CIO’s Personal Contribution Scorecard unique in ways that matter to the overall market and individual customer.
+81 3 3481 3670 July 2005 Section 2 CIOs create enterprise leverage through focused
leadership 34
Changing Business Processes IOs should focus on specific points of enterprise leverage to deliver the new or
C
Latin America Headquarters
May 2005 improved capabilities required for growth. CIOs create leverage by concentrating
Gartner do Brasil resources on technical excellence, agility, information or innovation. Experiences of
leading CIOs provide road maps for delivering leverage in these areas.
Av. Das Nações Unidas, 12.551 – 9º andar Perception Is Reality: Communication Strategies
for Public Sector CIOs Section 3 Creating enterprise leverage changes the roles of
World Trade Center – Broklin Novo the CIO and IT 68
04578-903 – São Paulo – SP March 2005 xecutives expect CIOs and IT to play greater business roles. This will require the CIO
E
BRAZIL Playing to Your Advantage: Proven Practices
to lead IT out of its traditional technology box and engage the enterprise in new ways.
+55 11 3443 1509 of Midsize-Enterprise CIOs Section 4 Make enterprise leverage a focus of your 2007
March 2005 CIO agenda 76
For more information, IOs must create results now in the business and build for the future in terms of new
C
visit gartner.com. Delivering IT’s Contribution: The 2005 CIO Agenda on-the-business capabilities, innovations, projects and services. Both are required for
January 2005 success in 2007 and beyond.
Appendix 91
Making Time: The Office of the CIO
November 2004 Further reading 93
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved.

Gartner and ITxpo are registered trademark of Gartner, Inc.
or its affiliates. GARTNEREXPPREMIER20070115
Further reading
Gartner EXP reports Tucker, C. and Nunno, T., Spend Less, Get
More: 25 IT Cost Containment Techniques,
Aron, D. and Meehan, P., Driving Enterprise
G00144356, Gartner EXP Premier report,
Agility, G00127380, Gartner EXP CIO Signature
October 2006
report, April 2005
Aron, D. and Powell, R., Timing Is Everything Core research

in Mergers, Acquisitions and Divestments,
Kitzis, E., “CIOs Need to Close Performance
G00142558, Gartner EXP CIO Signature report,
Gaps,” G00144929, December 5, 2006
August 2006
Mahoney, J. and Raskino, M., “CIO New Year’s
Berry, D., Mok, L., Walker, A. and Tucker, C.,
Resolutions 2007,” G00145211, December 8,
Building the Next-Generation IT Workforce:
2006
Focus on Synergies, G00144922, Gartner EXP
Premier report, November 2006 McGee, K. et al., “Gartner’s Top Predictions for
IT Organizations and Users, 2007 and Beyond,”
Blosch, M. and McDonald, M., Strengthening the
G00144544, December 1, 2006
Information Value Chain, G00139561, Gartner
EXP CIO Signature report, April 2006
Books
Broadbent, M. and Weill, P., Effective IT Gov-
Davenport, T. and Harris, J., Competing on Ana-
ernance. By Design, G-11-2709, Gartner EXP
lytics: The New Science of Winning, Boston, MA:
Premier report, January 2003
Harvard Business School Press, March 2007
Nunno, T., Blosch, M. and Mok, L., Emerging
Hagel III, J. and Seely-Brown, J., The Only
Markets: A “Lite” Touch, G00137946, Gartner
Sustainable Edge, Boston, MA: Harvard
EXP CIO Signature report, February 2006
Business School Press, 2005
Rowsell-Jones, A. and McDonald, M., Changing
Business Processes, G00127735, Gartner EXP
Premier report, May 2005
Tucker, C. and Agopian, H., Taking Your PMO to

the Next Stage, G00138608, Gartner EXP
Premier report, March 2006
Layout/Production: Gartner Corporate Marketing

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completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or
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Creating Enterprise Leverage: The 2007 CIO Agenda 93

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Foreword
Business demands are increasing. Executives look
to CIOs and IT to deliver the capabilities to meet
those demands. CIOs will need to find sources of
enterprise leverage to raise performance and make
their companies stand out in a crowded market.
Gartner EXP Premier

Creating Enterprise Leverage: The 2007 CIO We would like to thank and acknowledge the
Agenda draws on the responses of more than many organizations and individuals who contrib-
1,400 CIOs to the annual Gartner EXP CIO uted to this research report, including:
Survey, as well as case studies from CIOs
• The contributors to our interview reports and
around the world. The report addresses the
case studies: Ian Dobb, Channel 4 (U.K.);
question, What should be on the CIO’s agenda
Danielle Savoie, Cirque du Soleil;
for 2007 to meet business expectations?
Kurt Lehmann, Employees Retirement Sys-
This report was written by the Gartner EXP tem of Texas; Jeff Wolverton, Great Ameri-
research team, led by Mark McDonald (group can Financial Resources, Inc.; Ken Harvey,
vice president) and Tina Nunno (vice president). HSBC; Paul Diaz and Rick Chapman,
Other research team members include: Dave Kindred Healthcare; Maurizio Galli, Media-
Aron, Ingrid Berkel, Bill Caffery, Ione de Almeida set SpA; Italo Gennaro Flammia, Natura
Coco, Susan Fortino, Barbara Gomolski, Rich- Logística e Serviço Ltda.; Agostino Ragosa,
ard Hunter, Trish Jaffarian, Lily Mok, Vinu Patel Poste Italiane; Ruben Bocanera, Ternium;
and Martin Plessow. Joe Drouin, TRW Automotive; Audrey Y.
Davis, U.S. Defense Finance and Account-
ing Service; Roger Holm, Wärtsilä; and Alan
Harrison, Yorkshire Water.
• Other members of the Gartner EXP research
team: Patrick Meehan, Andrew Rowsell-
Jones, Sandi Stevens, Chuck Tucker and
adjunct researcher Barbara McNurlin.

Executive summary
Three out of five enterprises plan to grow market
share, and executives expect CIOs and IT to
contribute to that growth and performance. CIOs
have responded by reducing IT and enterprise
costs. To reach the next level, CIOs will need to
create new sources of enterprise leverage.
Gartner EXP Premier

Executives expect CIOs to deliver CIOs cannot rely on traditional actions—like im-
new capabilities to meet market proving operational efficiency, reducing IT costs
demands and automation, which all lead to commoditiza-
tion—to meet these expectations. Success in
Business demands are increasing. According to
2007 requires making the enterprise different to
CIOs responding to this year’s survey, three out
attract and retain customers. In response, many
of every five enterprises are looking to expand
CIOs are looking for new sources of enterprise
their market share or public mission in 2007.
leverage, including technical excellence, agility,
Their executives expect the CIO and IS organiza-
information and innovation.
tion to play a significant role in improving current
business processes, controlling enterprise costs CIOs need enterprise leverage because the pace
and raising workforce performance. These are and scale of customer demands are overwhelm-
the near-term business expectations. Longer- ing traditional approaches to change. They can
term expectations for IT call for building new use leverage to focus their actions and create
strategic capabilities that will use information to significant results for the enterprise and its strate-
attract and retain customers. gies. CIOs will exploit specific sources and com-
binations of sources of enterprise leverage based
The challenge for CIOs is that in 2007, the long
on their role in the enterprise and the activities
term got shorter—as three-year priority goals are
they perform (see figure below).
becoming two-year projects. CIOs will need to
make significant progress on their longer-term
priorities in 2007 to meet executive expectations.
CIOs and IT will look to one or more sources of leverage to deliver current
services and develop new capabilities in support of growth
CIO and IT strategies

In the business On the business
Moving with Bringing new
understanding business ideas
Contributing in a changing to market
environment successfully
Information Innovation
Role of IT in the enterprise
Reducing cost Managing the
structures and speed, scale,
Enabling raising resource cost and risk
effectiveness of change
Technology Agility

Section 1. Enterprises seek • Wider by expanding their geographic and
leverage in an increasingly market reach
demanding market • Closer to customers to grow the size and
Executives are turning up the competitive volume value of those relationships
in 2007. From commercial companies looking Executives expect CIOs and IT to play a signifi-
to grow market share to public sector agencies cant role in leveraging short-term performance
expanding their services, all are competing for and long-term competitiveness in 2007 (see
customers, resources and funding. In the face figure below). The challenge is that CIOs must
of this crowded market, executives are pursuing continue to strengthen the core of IT and cre-
distinct strategies by looking to get: ate new sources of leverage. This requires them
• Bigger through industry consolidation to make significant changes with limited effort
through focusing on IT leverage points rather
• Faster at introducing new products than brute-force change programs.
Top 10 business priorities: CIOs see executives expecting IT to play a

role in current and future enterprise capabilities
To what extent will each of the following business, societal
or government trends impact your enterprise in 2007?
2007 2006 2005
Improving business processes 1 1 1
Controlling enterprisewide operating costs 2 2 3
Attracting, retaining and growing customer relationships 3 3 **
Improving the effectiveness of the enterprise workforce 4 * *
Need for revenue growth 5 8 6
Improving enterprise competitiveness (bottom-line profitability) 6 5 **
Expanding use of information/intelligence in products and services 7 6 7

Deploying new business capabilities to meet strategic goals 8 * *
Entering new markets, new products or new services 9 * *
Faster innovation (shorter product/service life cycles) 10 9 10
* New question for 2007 ** New question for 2006
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Section 2. CIOs create enterprise management disciplines—matching the sup-
leverage through focused ply of change with the capacity for change.
leadership • Information. Gaining the business insight and
CIOs create enterprise leverage when a focused understanding required to act in a changing
effort produces significant results for the enter- environment.
prise and its strategy. This means that CIOs need • Innovation. Bringing new ideas to market
to exploit new approaches to transform the busi- successfully by evolving current capabilities,
ness. CIOs can draw on one or all of the follow- implementing new ones and gaining market
ing sources of enterprise leverage: acceptance for those changes.
• Technology. Reducing enterprise cost struc- Business effectiveness requires technology
tures, improving operational scale or raising effectiveness as a starting point for enterprise
process performance through automation, leverage. CIOs are using that starting point
integration and standardization. to match the sources of leverage with their
• Agility. Managing the speed, scale, cost and CIO strategies (see figure below).
risk of change through applying change
Top 10 CIO strategies: CIO strategies recognize the need to support

growth through strengthening IT services and people
To what extent is each of the following a priority for you in 2007?
2007 2006 2005
Delivering projects that enable business growth 1 1 1
Linking business and IT strategies and plans 2 2 2
Improving the quality of IS service delivery 3 7 7
Attracting, developing and retaining IS personnel 4 5 **

Demonstrating the business value of IT 5 4 3
Providing new types of information (e.g., analytics) 6 * *
Developing or managing a flexible technology infrastructure 7 8 **
Improving IT governance 8 9 10
Building business skills in the IS organization 9 3 9
Leading change initiatives (involving more than IT) 10 * *

Section 3. Creating enterprise process improvement, enterprise architecture,
leverage changes the roles of the business intelligence and business relationship
CIO and IT management capabilities. At the same time, they
are revisiting the CIO essentials of IT planning,
Creating enterprise leverage positions the CIO
business strategy, governance and the shape of
and IT in new roles relative to improving current
the IS organization.
operations and transforming the enterprise (see
figure below). Creating leverage requires imple- CIOs need these new IT capabilities to deliver
menting the right set of changes to IT and the the new business capabilities executives expect
enterprise, particularly when enterprises seek to successfully compete in meeting the needs of
greater use of information and innovation. demanding customers.
Delivering on executive expectations for new The net effect is that leading CIOs recognize that
and improved capabilities requires CIOs to make the IS organization they have in place today will
significant improvements in key IT functions. not be the IS organization they need in 2010.
CIOs project significant changes in business
Highly effective IS organizations are evolving toward a process and

information orientation
• Innovation
• Improved business efficiency
Information
• Quality of service
• Controlled costs
Operational • Improved business efficiency Enterprise

Process
excellence • Quality of service leverage
2002 2010
Service
Function • Controlled costs
Gartner EXP Premier

Section 4. Make enterprise ics to achieve breakthrough performance.
leverage a focus of your 2007 These changes can lead the future of the IS
CIO agenda organization in many different directions. Thus,
the emphasis on flexibility, coupled with the im-
CIOs are leading IT at a time when it is in transi-
portance of information and information technol-
tion. Creating enterprise leverage involves ex-
ogy, will make the next two years—2007 and
panding IT’s impact beyond making tactical or
2008—pivotal ones for the CIO and IT.
strategic changes to evolving enterprise dynam-
Timing will tighten during the next three years
On the surface, the stability of business expectations and CIO strategies gives the impres-
sion of increasing business and IT alignment. This may also indicate that CIOs have yet to
fully deliver on business expectations for greater IT contribution to strategy and growth.
CIOs continue to see alignment with the business as a major issue in 2007. However, the
alignment issue runs deeper than sharing the same plans.
While most CIOs are aligned with what the business wants, there is a mismatch in when
they expect to deliver on these expectations. Near-term business demands concentrate
on improving business processes, costs and workforce performance, while CIOs concen-
trate on improving the quality of IT services. Business expectations remain for priorities
such as attracting customers, developing new strategic capabilities and expanding the
use of information. These were once longer-term priorities. However, in 2007, expectations
shortened for when the business expects to see results, challenging CIOs and their plans.
CIOs have traditionally relied on reducing IT costs and delivering quality service to demon-
strate their business contribution. While these remain important, they are no longer sufficient
to meet business expectations. CIOs will face demands to implement new capabilities that
require IT business skills, technologies and leadership that few of them are well prepared to
deliver. This will put pressure on the CIO and IS organization to change.
In an environment where the business expects deeper change sooner rather than later,
CIOs need to create significant results through a focused effort. They need to create
enterprise leverage, which is the focus of this year’s CIO agenda report.

Enterprises seek
leverage in an
increasingly
demanding market
10 Gartner EXP Premier

1
In 2007, CIOs report that business demands
on IT are increasing as enterprises look to
expand their mission. Executives expect to
face greater competition for customer atten-
tion, market share and revenue.
In the face of these demands, executives
see IT as providing the leverage to make the
enterprise unique in ways that matter to the
overall market and individual customer.

1
Business demands are increasing
Executives are demanding more. Sixty-one percent of CIOs report that
their enterprise expects to increase its market share or expand its mis-
sion in 2007 (see top figure opposite). That is roughly twice as many as in
2006. This trend exists across all geographies. Business demands for new
and improved capabilities are inevitable when so many enterprises are in
competition.
Competition increases the need for implementing distinctive and diversified

strategies that help the enterprise grow and stand out in an increasingly
crowded and global marketplace (see bottom figure opposite). CIOs report
that their enterprises are implementing more of these types of strategies to
achieve growth. They envision growth coming from one of four sources:
• Getting bigger: growing by acquiring or partnering with others

(includes mergers and acquisitions)
• Getting faster: introducing new products or services into the market
• Getting wider: entering new markets or geographies
• Getting closer: deepening relationships and wallet share with existing
customers
Executives looking to grow faster than the market are implementing one or
more of these strategies. However, executives looking to maintain market
share are concentrating on innovating their product set or deepening their
customer relationships. In either case, executives indicate that they are
implementing distinctive strategies to achieve growth.
Distinctive strategies bring clarity to CIOs and greater direction in terms

of IT decisions and actions. CIOs can use this clarity and direction to help
drive results through IT.
While enterprises are following more distinctive strategies, CIOs by and

large are following a common general strategy. For example, the en-
terprise seeks to grow through deeper customer relationships, while IT
concentrates on reducing its network and storage costs. This creates a
trap and raises the issue of how CIOs can deliver unique, market-specific
solutions when their plans are similar to their peers.

CIOs who concentrate on issues of competitive mation and innovation to differentiate the enter-
leverage—how they use technology, agility, infor- prise—will avoid this trap and drive greater value.
Three out of five CIOs report that their enterprise expects to

increase its market share or expand its mission in 2007
Uncertain (3%)
Challenged (6%)
Maintain Increase
market market
share share
(30%) (61%)
Executives follow a diverse set of strategies to support growth, while those

looking to maintain market share concentrate on products and customers
My enterprise plans to achieve its strategy predominately through:
Getting bigger Getting faster Getting wider Getting closer Total
Acquiring or Introducing new Expanding into Deepening

partnering with products or new markets or current customer
Enterprise strategy others services geographies relationships
Increase market
share or mission 20% 28% 28% 24% 100%
(61% of total)
Maintain market
share or mission 13% 34% 14% 39% 100%
(30% of total)
Challenged or
uncertain 16% 38% 12% 34% 100%
(9% of total)
Total responses 17% 31% 22% 30% 100%

1
Case Study:
Channel 4—Unique among the crowd
Broadcasting since 1982, Channel 4 holds a unique IT delivers new media products and services
position among the U.K.’s national television and The company has a strong core channel, new genre-
media companies. The company is licensed by the focused digital channels and a deep and diverse
government and operates based on a public service portfolio of content ranging from documentaries and
mission but without any public funding—unlike the films to mainstream programming. However, it is taking
British Broadcasting Company (BBC), which receives a portfolio management approach and combining the
public funding. content portfolio with broadcast, digital and Web plat-
forms to create new multidimensional offerings.
CIO Ian Dobb describes the situation: “We are unique
in that we have to serve the public and compete with The business models of broadcast media companies
commercial stations for advertising revenue to fund our like Channel 4 are undergoing significant changes as
operations.” they move to multiple channels, new media and multiple
revenue models. Says Dobb, “We need to be where the
Channel 4 had revenue of more than £840 million
audience is, and now that the Web has gone to video,
(US$1.6 billion) for 2005. The company’s success rests
we need to become more accessible, enrich our online
on defining a unique combination of special and gen-
offerings and harness our strength in video content.” For
eral interest programming that delivers an attractive,
IT, this means a step change in terms of the diversity of
premium audience for advertisers. Based on its 2005
products, services and models supported.
annual report, the company experienced 10% growth
among audiences across the portfolio of channels and New media makes integrating processes end to end
was the only company in the U.K. to see growth in its more important as media companies like Channel 4
core broadcasting channel—a significant achievement begin to sell plays of digital assets rather than broad-
in a crowded, multichannel market. cast advertising-supported programming. These com-
panies are increasingly utilizing generic services that
Channel 4 faces the same competitive pressures for
underpin delivery across the various platforms, thereby
viewer attention and advertising revenue as other
reducing time-to-market, complexity and operational
media companies. New technologies and consumer
costs.
behaviors are distributing audience attention across
multiple broadcast technologies and different types of
media, including television, print, blogs, social network-
ing and other forms of “new media.”

Case Study:
Channel 4—Unique among the crowd (continued)
Business intelligence initiatives pay off Performing well in this environment requires agility, in-
In effect, Channel 4 executives will have to optimize the sight and innovation in IT. Dobb notes, “We are a small
return on the company’s portfolio across multiple broad- group of 60 people using an IS Lite model, so we need
cast and new media channels. Making those decisions to be very knowledgeable about the business and
well requires new sources of information and systems to work cohesively with trusted partners. That combina-
analyze, model and support the decisions. This is where tion gives us the ability to be entrepreneurial and quick
Channel 4’s business intelligence initiatives come into play. to market—an effective ‘fast follower.’”
Channel 4 is doing pay-per-view on a large scale. Sup- Dobb sees the focus on new media as only accelerat-
porting pay-per-view requires billing individual viewers ing. “Today we invest over £500 million [US$973 mil-
for individual programs. This is a focus for 2007 and a lion] each year to develop or acquire broadcast media
change from the company’s existing business model. content that keeps the audience coming back,” he
The team is also working on reducing the time-to-market says. “New media will help us achieve a higher return
of new media offerings. Says Dobb, “The level and pace on that investment.”
of innovation require rapid development of new products
Based on an interview with, and material from, Ian
and systems to provide content and capture revenue.”
Dobb, CIO, Channel 4, December 2006.

1
Executives expect CIOs to play a significant role
in leveraging IT for performance and long-term
competitiveness
CIOs report that executive expectations remain firmly focused on driving
operational performance in terms of business process improvement, en-
terprise cost control and customer relationships (see top figure opposite).
This consistency is a two-edged sword for CIOs:
• Executives expect IT to play a significant role in the value the business

delivers.
• The persistence of these priorities indicates that CIOs need to make
more progress in these areas, a view supported by the business
attention map (see bottom figure opposite).
In 2006, we discussed that CIOs have to work in and on the business. CIOs’
success increasingly rests with their ability to deliver both, with business expec-
tations for on-the-business improvements accelerating in 2007.
In-the-business priorities center on improving

current capabilities
CIOs work in the business when they concentrate on operating current
systems and improving the performance of current capabilities.
CIOs report that executives want their attention front and center in the
business and focused on improving current operations in terms of:
• Business processes
• Enterprise costs
• Customer relationships
These are the top 3 most immediate priorities for the CIO.
On-the-business priorities point to results now

rather than later
CIOs work on the business when they build new capabilities that change
the business performance, products, services or structures. However,
executive attention is getting shorter. The attention map (see bottom figure
opposite) shows executive expectations shifting to the left, making three-
year priority goals into two-year projects. As a result, CIOs are working in
an environment of accelerating operational and strategic pressures.

Top 10 business priorities: CIOs see executives expecting IT to play a role
in current and future enterprise capabilities
or government trends impact your enterprise in 2007?
2007 2006 2005
Improving business processes 1 1 1
Controlling enterprisewide operating costs 2 2 3
Attracting, retaining and growing customer relationships 3 3 **
Improving the effectiveness of the enterprise workforce 4 * *
Need for revenue growth 5 8 6
Improving enterprise competitiveness (bottom-line profitability) 6 5 **

Expanding use of information/intelligence in products and services 7 6 7
Deploying new business capabilities to meet strategic goals 8 * *
Entering new markets, new products or new services 9 * *
Faster innovation (shorter product/service life cycles) 10 9 10
Executive attention is growing shorter and focusing on progress in the

business and on the business
Front of mind
Improving workforce
effectiveness
Improving Deploying new
Improving competitiveness strategic capabilities
business (profits)
processes Expanding the
Controlling Attracting use of
enterprise and information
costs retaining and intelligence
customers
Now: 2007 Later: 2010
Need for
revenue Faster
growth Entering new innovation
markets,
new products
Legend: or services
Horizontal axis is time when the issue is expected to be resolved.
Vertical axis indicates the attention paid to the issue.
Size indicates importance of the issue. Back of mind

1
CIOs expect modest increases in their IT budgets
In 2007, total IT budgets are estimated to grow an overall average of 3%,
with the range being between 3.1% and 2.8% (see top figure opposite).
This represents the fourth year of budget increases, with:
• 51% of CIOs reporting planned IT budget increases at an average

of 4.96%
• 30% of CIOs reporting no change in their budget from 2006 to 2007
• 19% of CIOs reporting a planned IT budget decrease at an average
of 1.52%
In the face of rising business expectations for process, people and opera-
tional changes, CIOs will need to continue their focus on financial practices
to maintain and increase their budget effectiveness. Financial practices
include:
• Business case management

• Portfolio management
• Benefits realization
IT portfolios continue to reflect the CIO’s aspiration

to shift spending to more strategic investments
CIOs continue to see their spending shift from infrastructure and
transactional spending toward informational and strategic investments
(see bottom figure opposite). This shift in spending supports business
expectations for new capabilities.
IT portfolios reflect the changing requirements for CIOs and IT. On aver-
age, CIOs predict a shift in their portfolio spending during the next three
years toward informational and strategic systems. That shift will come
from either real savings in infrastructure and transaction systems or
through slower rates of growth in these areas relative to informational and
strategic systems.
Realizing this shift in spending will require CIOs to move their attention
and priorities toward informational and strategic changes—working on the
business in new ways.

IT budgets in 2007 are expected to increase an average of 3.0%, providing
resources for current operations and new capabilities
Anticipated average
increase in IT budgets
3.5%
3.0%
3.0% 2.7%
2.5%
2.5%
2.0%
1.5% 1.4% 1.3%
1.0%
0.5%
0.0%
0.0%
2002 2003 2004 2005 2006 2007
Trend line
CIOs plan to increase the resources applied to informational and strategic

solutions over the next three years
What percentage of your total IT budget is allocated across these categories?
100%
90% 15% 21%

24% Strategic
80%
23% 18%
70%
21% Informational
60%
50% 27% 24%

22% Transactional
40%
30%
20% 35% 37%

33% Infrastructure
10%
0%
2005 2007 2010
(reported) (reported) (projected)

1
CIO strategies are consistent with the business,
but CIO time frames may not match business
expectations
CIO strategies reflect the same stability as business expectations. They
revolve around issues of growth, the quality of IT services and aligning
with business strategy (see top figure opposite). On the surface, these top
10 priorities look to be in step with business expectations. However, the
priority of these strategies does not tell the whole story.
The CIO attention map (see bottom figure opposite) looks at priorities in a
different way than the top 10 list. It shows that CIOs are concentrating pri-
marily on improving the quality of IT services and governance, and linking
business and IT strategies and metrics. These issues are more immediate
priorities for 2007. However, they are near-term priorities that do not map
well with the near-term expectations of the business (see table below).
Near-term business expectations of IT Near-term CIO strategies for IT
• Improving business processes • Improving the quality of IT services
• Controlling enterprise costs • Improving IT governance
• Attracting, retaining and growing customers • Linking business and IT strategies and metrics
• Improving workforce effectiveness • Demonstrating the business value of IT
• Growing revenue • Building business skills in the IS organization
Comparing near-term business expectations with near-term CIO strategies

points to why alignment and linkage are significant CIO issues. From this
perspective, the business is better served by CIO longer-term strategies:
to deliver projects that enable revenue growth, develop flexible infrastruc-
ture and provide new types of information.
CIOs must resolve the difference between

expectations and plans
The difference between expectations and priorities creates tension and
the potential threat to CIO credibility and standing. The business expects
near-term improvements in operational capabilities and the creation of
longer-term enterprise leverage.

CIO agendas in 2007 should also focus on how the mation technology to improve current performance
IS organization will leverage information and infor- and create enterprise capabilities for the future.
Top 10 CIO strategies: CIO strategies recognize the need to support growth
through strengthening IT services and people
2007 2006 2005
Delivering projects that enable business growth 1 1 1
Linking business and IT strategies and plans 2 2 2
Improving the quality of IS service delivery 3 7 7
Attracting, developing and retaining IS personnel 4 5 **

Demonstrating the business value of IT 5 4 3
Providing new types of information (e.g., analytics) 6 * *
Developing or managing a flexible technology infrastructure 7 8 **
Improving IT governance 8 9 10
Building business skills in the IS organization 9 3 9
Leading change initiatives (involving more than IT) 10 * *
CIO attention on current services limits the resources applied to new

capabilities and projects the business expects
Front of mind
Developing
infrastructure
flexibility
Linking
business and
IT strategies Providing new types
Improving Delivering of information
the quality Building projects for
of IS business growth
services skills in IS
Now: Later:
2007 2010
Demonstrating the Attracting and

Improving IT business value of IT retaining IT personnel Leading enterprise
governance change initiatives
Back of mind
Legend:
Horizontal axis is time when the issue is expected to be resolved.
Vertical axis indicates the attention paid to the issue.
Size indicates importance of the issue.

1
Executive demands are increasing in the public sector
Public sector agencies do not have the same pressures for growth and
profit as their private sector counterparts. However, public agencies find
themselves under similar pressures as constituent demand for services
strains agency resources (see top figure opposite). In response to these
pressures, CIOs see public sector executives calling for improving busi-
ness processes, workforce effectiveness and costs. These demands are
similar to those of private sector executives. The major difference in busi-
ness expectations concerns the sensitivity of public sector information,
which places a higher priority on data protection and security.
Public sector CIOs see the quality of IT services and processes as the key
issues for IT. In 2007, public sector CIO strategies have an inward focus
on personnel, IT process and measurement, which drive the quality and
cost of IT services (see bottom figure opposite).
Overall, public sector CIOs face a similarly demanding environment. While

the public sector uses different mechanisms to manage resources, public
sector CIOs still need to achieve results by managing their resources
effectively.

Top 10 business priorities: The public sector shares many of the same priorities
as the private sector but with more emphasis on service and security
or government trends impact your enterprise in 2007? Ranking
Public sector Overall
2007 2006 2007 2006
Improving business processes 1 1 1 1
Improving the effectiveness of the enterprise workforce 2 * 4 *
Concerns about security breaches 3 6 12 7

Controlling enterprisewide operating costs 4 2 2 2
Expanding use of information/intelligence 5 3 7 6
Deploying new business capabilities 6 * 8 *
Requirements for greater data protection and privacy 7 9 15 5
Faster innovation (shorter product/service life cycles) 8 8 10 9
Increasing regulation and compliance requirements 9 * 13 *
Attracting, retaining and growing customer relationships 10 4 3 3
Top 10 CIO strategies: Public sector CIOs have similar strategies

as their private sector counterparts but have a greater focus on IS
personnel and skills
To what extent is each of the following a priority
for you in 2007? Ranking
Public sector Overall
2007 2006 2007 2006
Improving the quality of IS service delivery 1 8 3 7
Implementing IS process improvements 2 9 11 12
Attracting, developing and retaining IS personnel 3 2 4 5

Linking business and IT strategies and plans 4 5 2 2
Improving IT governance 5 6 8 9
Demonstrating the business value of IT 6 1 5 4
Flexible technology infrastructure 7 11 7 8
Building business skills in the IS organization 8 7 9 3
Applying metrics to the IS organization and IS services 9 4 13 7
Increasing IT productivity 10 * 12 *

1
Case Study:
U.S. Defense Finance and Accounting Service—Focusing on customer needs
The U.S. Defense Finance and Accounting Service Davis has mobilized resources and applied project
(DFAS) is the world’s largest finance and accounting op- management principles to meet this goal. She ex-
eration. DFAS delivers accounting and finance services plains, “The 21-day reporting requirement is a project.
to men and women in uniform as well as those who People wouldn’t necessarily think of treating a busi-
support the warfighters defending the U.S. In fiscal year ness process like a project, but it is. We worked with
2005, DFAS paid 6 million military, civilians, retirees and the business to lay out every step in the process—the
annuitants; processed 14.2 million contractor invoices; responsibilities, the handoffs and the actions. This
recorded 2.7 billion accounting (general ledger) transac- made the process visible and kept people focused
tions; managed $70.2 billion in military pay funds (active on their responsibility. We then enabled the process
and reserve); and accounted for $9.9 billion in foreign with portal technology to make the workflow visible in
military sales (reimbursed by foreign governments). real time to deliver the type of coordination required to
reduce cycle times.”
According to CIO Audrey Y. Davis, since January
2001, measures for success have been based on the
Involving IT in the business
central question, “Did we actually meet our customers’
needs?” To meet customer needs, Davis has focused Davis believes a key part of her role is to work effec-
on customer service, cost management and business tively with the rest of the enterprise. “I don’t sit back
process improvement. as an IT person or CIO and only try to work on my
area,” she says. “I step out and work with my business
partners and areas of governance. I feel less like a
Reducing IT costs and improving service levels
technologist every day because of all the things we’ve
DFAS has reduced its costs and improved service lev- taken on within the agency.”
els over the past few years. Says Davis, “We measure
customer satisfaction of the software and services Davis hopes that at some point in the future, the “I” in
used by the agency. We are consistently earning high CIO changes from “information” to “innovation.” She
marks, as we have been able to reduce reporting cycle ultimately views the role of IT and the CIO as “looking
times.” DFAS has concentrated its improvement efforts for innovative ways to help people solve problems.”
on reporting processes to meet requirements for these
reductions. One target was a requirement to reduce Based on an interview with, and material from, Audrey
delivery cycle time from 45 to 21 days—an improve- Y. Davis, CIO, U.S. Defense Finance and Accounting
ment of more than 50%. Service, December 2006.

Case Study:
Poste Italiane—Leveraging technology in support of operations and agility
The Poste Italiane Group is Italy’s biggest service com- strategies and the evolution of the company’s technical
pany. Thanks to its widespread presence throughout infrastructure. CIO Agostino Ragosa says, “Simplifica-
the country and highly integrated business model, the tion will make us more effective, reduce our costs and
group is capable of offering integrated communica- make us more agile to introduce new products and
tions, logistics and financial products and services to services. This will enable us to compete in a deregu-
meet the needs of a wide range of customers—while lating market.” Poste Italiane will need to become
guaranteeing certified quality standards in line with more agile, with increased flexibility and the ability to
those in other major European countries. work across multiple channels in the face of increased
competition.
Poste Italiane provides core postal services through
its Web site, call center and more than 14,000 post
A common strategic direction creates competi-
offices throughout Italy. The company is prepared for
tive advantage
pending deregulation of mail and package services
and has already achieved extraordinary success in in- The main decision in 2007 will be how to evolve the
novative services such as prepaid cards. Deregulation business in the direction of a common strategic posi-
creates an opportunity for Poste Italiane to use its core tion. This is complex, as Poste Italiane will be required
capabilities in logistics, payment processing and other to provide universal service to all addresses in Italy,
areas to compete in new markets created by the digital where its competitors will not. This requires the com-
postal service and the convergence of financial and pany to be very efficient (to serve the entire country)
postal offerings. IT plays a significant role in realizing and innovative (to capture market share in the more
this strategy, as these opportunities require total knowl- profitable and competitive markets).
edge of the client and IT systems are a fundamental
unifier for that understanding. In effect, information is becoming increasingly impor-
tant. “The challenge for the future is seeing the more
profitable segments and building market share in those
Simplification creates a platform for innovation segments,” Ragosa says. “This is important, as new
In 2004, executives initiated a plan for using IT to re- companies will compete for those segments without
structure the company. This included updating the tele- the obligation to provide universal service. We have
communications network, upgrading and consolidating to be competitive in both markets.” Creating a single,
data centers and initiating a major application consoli- unified IT infrastructure and implementing applications
dation program. The goal of this project is information that integrate the company around common process-
and communication technology simplification with a es, tools and information are important parts of achiev-
target of reducing the cost structure by 8%. ing that blend of operational efficiency and agility.
Simplification creates a platform for operational perfor- Based on an interview with, and material from, Agos-
mance and innovation. The goal is consistent with past tino Ragosa, CIO, Poste Italiane, December 2006.

1
CIO technology priorities focus on renewing core
business technologies
While business intelligence represents the leading CIO technology prior-
ity, CIO technology budgets reflect a strong focus on renewing current
technologies rather than building new solutions (see top figure opposite).
These technology investments include:
• Enterprise application renewal

• Server and storage technologies
• Legacy application modernization
• Security technologies
• Network and communications technologies
These technology priorities fit with CIO strategic priorities that focus on
improving current IT service delivery (see bottom figure opposite). They
also reflect the reality that many CIOs face the need to invest in core sys-
tems and technologies as part of the capital replacement cycle.
Renewal and modernization projects are important; however, they often

concentrate on replacing existing functionality rather than driving new sourc-
es of leverage and value. In this environment, CIOs need to make sure they
are both updating technology risk exposure and delivering business results.
CIOs need to be aware of the difference between information and

information technology
Information technology is the domain of the CIO and IS organization. Both information and
technology are assumed to have equal importance for the CIO. During the past 15 years,
the roles of the CIO and IT have focused almost exclusively on the technology side of IT. As
CIOs look to create enterprise leverage, they need to re-emphasize the distinction between
information and information technology:
• Information—the business understanding created and applied in running the enterprise.

• Information technology—the mechanism used in the capture, processing, storage and
distribution of information.
The distinction may seem academic; however, it is increasingly important as technologies
commoditize. This means that CIOs will need to concentrate on information as a lever-
age point to enhance efficiency, increase effectiveness and support competitiveness. This
also corresponds to the continued importance of business intelligence in 2007. As such,
CIOs will continue to be responsible for IT—the mechanism. They can play a greater role in
leveraging information—the understanding that drives performance and innovation.

Top 10 CIO technologies: CIOs are investing in strengthening core assets
that support enterprise information and transaction systems
2007
2007 2006 2005 increase
Business intelligence (BI) applications 1 1 2 12.4%
Enterprise applications (ERP, supply chain, CRM, etc.) 2 * * 10.5%
Legacy application modernization 3 10 5 8.8%
Networking, voice and data communications (VoIP) 4 8 7 8.2%
Servers and storage technologies (virtualization) 5 9 10 8.4%
Security technologies 6 2 1 9.3%
Service-oriented applications and architecture 7 7 4 10.2%
Technical infrastructure management and development 8 12 ** 6.6%
Document management 9 * * 11.4%
Collaboration technologies 10 4 * 8.8%
Top 10 strategic technologies: These technology trends will gain greater

acceptance over the next 18 to 36 months
Visibility
EIM Real-time DW Grid Open Source

WiMAX Web2.0 AJAX Rich Client Portals iSCSI SANs
IP telephony Utility computing Instant messaging Bluetooth
Nanocomputing XBRL UWB Information access ZigBee
Ontologies Virtualization Mobile applications Microcommerce
Natural language search Micro fuel cells e-Ink
BPMS Ubiquitous computing 802.11g Trusted platforms
OLED/LEP Wikis Mesh networks Service registries
Tablet PCs Information extraction IT self-service 4G Wireless
Semantic Web Unified communications Smart Dust Camera phones
Communities Smart phones Web 2.0 mashup
Technology trigger Peak of inflated expectations Trough of disillusionment Slope of enlightenment Plateau of productivity
Mainstream Important long-range trends

Open Source Information access
Virtualization Web 2.0 mashup composite model
Service registries Communities
Business process management suites Ubiquitous computing
Enterprise information management
Web 2.0 AJAX
Source: Claunch, C., “Top 10 Strategic Technologies for 2007,” presentation delivered at 2006 Gartner Fall
Symposium/ITxpo®, Orlando, Fla., U.S.

1
CIOs need leverage to focus resources for delivering
new business capabilities
CIOs report business expectations calling for IT to both achieve current
improvements and position the company for long-term success. That is a
daunting challenge in an environment of growing but modest IT budgets.
Based on their survey responses, CIOs are concentrating their efforts on

current in-the-business priorities such as the quality of IT services, metrics
and linking business and IT plans. However, business demands for new
capabilities are accelerating. CIOs who postpone working on the business
do so at their own risk as they provide high-quality utility services rather
than the new capabilities called for in the strategy.
CIOs have limited resources to work both in and on the business. Rather
than spread their investments across multiple projects, they can concen-
trate their efforts in information and technology capabilities that create
enterprise leverage.
Enterprise leverage exists when a focused effort produces

significant results for the enterprise and its strategy.
Thomas Friedman points out in his book The World Is Flat that competi-
tion increases as communications and logistics technologies remove
geographic and market barriers. Erecting and sustaining those barriers no
longer guarantee success. In a “flatter” environment of constant change,
learning enterprises must compete in a more dynamic way.
CEOs seek enterprise leverage when they ask for greater flexibility, innova-
tion and growth. Enterprise leverage provides a way of thinking about how
CIOs and IT can meet those demands by meeting the following conditions
(see figure opposite):
• Creating a capability that is unique in the marketplace

• Providing a result that is valued by customers and therefore important
to the market
• Making that capability distinct and recognized in the market to attract
customers
• Operating the business to deliver the performance needed to serve
customers effectively

Applying enterprise leverage moves the company out of the crowd to
make it the choice of customers
You
You
You
Creating a capability Making that capability Operating the

that is unique in the recognized in the business to deliver
marketplace with a market to attract the performance
result that is valued customers needed to serve
by customers and customers effectively
therefore important
to the market

1
CIOs create enterprise leverage in the business
through the way they use information and
information technology
Enterprises use information and information technology to leverage the
power, scale and scope of enterprise capabilities. Concepts like technical
excellence, agility, information and innovation have been on the manage-
ment agenda for some time.
As concepts, they frustrate strategic plans and cloud management ac-

tions. CIOs who are able to move from concept to action turn these ideas
into specific results that create enterprise leverage, using one or more of
the following four elements (see top figure opposite):
• Technology. Reducing enterprise cost structures, improving

operational scale or raising process performance through
automation, integration and standardization.
• Agility. Managing the speed, scale, cost and risk of change through
applying change management disciplines and matching the supply of
change with the enterprise’s capacity for change.
• Information. Advancing the strategy with the certainty and insight
required to understand and act in a changing environment.
• Innovation. Bringing new ideas to the market successfully by evolving
current capabilities, implementing new capabilities and gaining market
acceptance for those changes.
Enterprise leverage creates new enterprise

capabilities
Enterprise leverage leads to new enterprise capabilities (see bottom figure
opposite). Leverage allows the company to use its capabilities in multiple
areas to meet market and customer demands. This makes the enterprise
adaptable. An example is Capital One’s use of enterprise information
leverage to identify, experiment, develop and deploy new financial services
products in retail and now commercial financial services.
An enterprise or agency that cannot exploit its sources of leverage builds

solutions that are readily copied and commoditized. However, to continue
to attract and retain customers, the enterprise needs to develop and apply
new sources of leverage to its capabilities.


Reducing cost Managing the
Technology Agility
These sources of enterprise leverage build upon one another to realize new
enterprise capabilities
Enterprise Technology Agility Information Innovation Additional
capability items
Operational Required Desired Optional Optional Consistent financial and operational

efficiency performance measures
Multisourcing Required Required Desired Optional Enterprise operational and process

architecture with clearly defined
interfaces
Post-merger Required Required Desired Optional Business design and economic

integration model of the combined entity
Collaboration Required Required Required Required Enterprise operational and process

architecture with clearly defined
interfaces
Learning Required Required Required Required Fact-based strategy with

organization integrated goals, measures and
management processes

1
Case Study:
HSBC—Leveraging IT for efficiency, innovation and global talent
HSBC is among the world’s largest global financial ser- of the bank, including technology operations. In this
vices institutions. With a market capitalization of $180 area, Harvey and his team are expected to improve IT’s
billion and 306,000 employees, the company operates operational performance by 10% per year. This goal
in 78 countries. CIO Ken Harvey leads an organization exists not because IT needs to do more with less, but
of 26,000 employees with a budget of $5 billion. because of the economics of customers and the bank.
In 2007, HSBC is delivering results by leveraging IT in Says Harvey, “We want customers to have a relation-
the face of customer and transaction growth. “We seek ship with us, and that means customers are perform-
competitive advantage through IT,” explains Harvey. ing more transactions than ever before across more
“The IS organization has the responsibility to sell trans- channels.” For example, a 10% increase in the cus-
formation to the business.” tomer base drives 10% to 12% growth in branches,
18% to 20% growth in call center volumes and 16%
In doing so, HSBC is looking for technology to achieve growth in automated teller machine (ATM) transactions.
the following objectives:
The relationship between customer growth and transac-
• Build deeper and more comprehensive relationships tion growth drives the economics of the bank. “We have
with customers. a target to reduce the unit cost of operating expenses
• Translate transactions into business products and to match the nature of the customer demands,” Harvey
services. says. “Specifically, we are looking to reduce the costs
of the 89 services we provide to the operating units.
• Deliver improvements in operational efficiency and Meeting operating cost targets is a significant part of IT
customer attractiveness. leadership bonuses and compensation.”
Technology excellence delivers efficiency in a HSBC manages costs by improving operational pro-
growing market cesses, reducing technology costs and identifying and
implementing best practices. This includes bench-
Operating at this scale and complexity involves driv-
marking internally every year and externally every
ing a significant part of the bank’s performance. IT’s
three years.
primary focus is on production—the efficient operation

Case Study:
HSBC—Leveraging IT for efficiency, innovation and global talent (continued)
Leveraging IT and architecture for innovation transaction at an HSBC ATM at no additional charge.
and agility HSBC offered this service to the cellular telephone
Innovation at HSBC is critical to creating the new providers to make using their service more convenient.
products, services and delivery platforms required to HSBC charges a small transaction fee for processing
fuel future growth. Harvey recognizes the connection the payments.
between technology and the brand. “Technology is the
“Today, every major U.K. cellular carrier subscribes to
major and most common touchpoint with the outside
this service,” Harvey says. The time-to-market of the
world,” he says. “Technology is integral to the brand
solution was short, facilitated by the standard APIs in
because it’s the platform on which we fly our flag. Every
the ATM and electronic payment systems. The result
CIO needs to consider this, as technology is increas-
is a new product that benefits customers, carriers and
ingly becoming part of the value of the brand.”
the bank:
Innovation and growth at HSBC rest on a strong archi-
• HSBC customers get convenience and a free
tecture that delivers agility at scale. “Our CEO believes
service.
in technology as a competitive weapon,” notes Harvey.
“We have been investing in architecture and infrastruc- • Cellular carriers generate more revenue, as it’s easier
ture for the past three years to create a platform that for customers to buy more airtime.
gives us the combination of flexibility and efficiency
• HSBC gains a larger share of its customer purchases
required to deliver new products and services across
and transaction fees from cellular carriers.
the bank.” HSBC is achieving this through platforms
utilizing standard application program interfaces (APIs), HSBC looks to continue leveraging its global capability.
and message transport and message independence. Harvey notes, “In 2007 our theme is taking IT to the
bank by realizing the value of our people, technology
An example of the relationship between the technology and innovation.”
platform and product innovation is HSBC’s service for
cellular phone customers. In the U.K., HSBC enables Based on an interview with, and material from, Ken
its customers to refill prepaid cellular phone cards via a Harvey, CIO, HSBC, October 2006.

CIOs create
enterprise
leverage through
focused leadership

2
CIO responsibilities range from daily
operations to strategic change. Leading
in this environment requires focus. For
2007, CIOs should consider focusing on
specific points of enterprise leverage to
deliver the new or improved capabilities
required by the business.

2
CIOs draw on four sources of leverage
Enterprise leverage exists when a focused effort produces significant re-
sults for the enterprise and its strategy. Enterprises recognize information
technology as a source of leverage—particularly in the areas of automa-
tion and cost reduction. In 2007, CIOs indicated that these sources are
reaching the point of diminishing returns. TRW Automotive CIO Joe Drouin
reflects the feelings of many CIOs: “For years, our role was to reduce costs,
with success measured by the dollars returned to the bottom line. 2006
was a pivotal year for us; we moved from measuring cost containment to
demonstrating IT’s impact on the business.” Moving beyond cost-cutting
requires executives and CIOs to look for new ways to apply IT to create
leverage in the enterprise.
New sources of enterprise leverage reflect a maturing understanding

of the role of IT in enterprise operations and strategy. CIOs can expand
enterprise operational and strategic flexibility by creating new sources of
agility, information and innovation that can be applied to different enter-
prise challenges. For example, HSBC has developed technology leverage
through standardization that enables it to apply technology to develop
new products, manage operating costs and support the bank’s global
reach. Leverage is in contrast to CIOs who install individual solutions that
can address specific issues, often through achieving market parity.
Moving beyond technology services to more

complex forms of leverage
CIOs will continue to apply technology leverage to the enterprise through
initiatives designed to standardize, integrate and improve processes and
systems. Technology leverage approaches the point of diminishing returns
when CIOs cannot see a way to grow further, improve services or reduce
costs without changing business practices and processes. Those chang-
es involve more complex forms of leverage, such as agility, information or
innovation.
Complex leverage requires more than focus and force to achieve results
(see top figure opposite). Coordinating multiple factors across the enter-
prise is required to achieve sustainable results.
This section of the report concentrates on the factors that lead to effec-
tive enterprise leverage from increasing agility, applying information and
improving innovation (see bottom figure opposite).

Simple leverage requires focus and force; complex leverage requires
bringing together and managing multiple factors to achieve results
Simple leverage uses IT to Complex leverage uses IT to

multiply force create a force advantage
Pulleys in the
right configuration
multiply force
Force
Result
Force
Result
Enterprise leverage is an essential ingredient in the new business

capabilities required to meet customer and market demands
Leverage can be applied to address multiple issues and leverage gains in effectiveness from
its repeated application
Leverage Business capabilities
A solution addresses a specific solution, but a solution can lose its effectiveness when it is applied
to new challenges
Solution
Business capability

2
Case Study:
Great American Financial Resources—Combining sources of enterprise leverage
Great American Financial Resources, Inc. (GAFRI) is a business at a very low incremental cost per policy.
diversified financial services company headquartered in Wolverton has found that a standardized architecture
Cincinnati, Ohio, U.S. The company provides annuities, also accelerates product development and the profit-
supplemental insurance and life insurance through a ability of products.
distribution system of licensed independent agents and
registered representatives. In 2005, the company re- “We’ve been able to convert all policy administration for
ported nearly $12 billion in assets and $70 million in net all lines of business onto one enterprise solution,” he
earnings. The company’s core net operating earnings says. “This allows us to standardize our tool sets within
improved in each of its lines of business, with a 15% IT and processes across all lines of business, making us
increase in core operating earnings per share compared a much nimbler and more efficient organization.”
to the prior year.
As a key member of the acquisition team, Wolverton
GAFRI is pursuing a combination of strategies to sub- brings an operational dimension to decisions about
stantially grow its business. First, it is acquiring entire what types of policies and companies the company
companies or major blocks of business that fit with its looks to acquire. “We will not buy business at any
overall strategy. Second, the company is introducing price,” he says, “as every purchase impacts our bal-
new products and services to drive organic growth. ance sheet and reserves. IT has the power to veto an
The company also is looking to acquire new customers acquisition based on its impact on our operations.”
in existing and new markets. Pursuing a multipronged
strategy is required to grow at above-market rates in Growth is the goal, IT is the leverage point
the insurance industry.
According to Wolverton, GAFRI’s goal is to triple in size
during the next three years. This requires technology
Leveraging technology services for efficiency and at scale while maintaining operational cost efficiencies.
growth GAFRI is using a business approach to invest in tech-
CIO Jeff Wolverton and his IT team are central to nologies to make this happen based on the ability of
providing the competitive leverage for the company’s the enterprise and IT capacity to absorb change. “This
growth strategy. Explains Wolverton, “IT’s core com- year, the original wish list of IT projects the business
petency is standardization and simplification. We have requested would have almost doubled our budget
reduced the number of major systems from 63 to for 2006,” he says. “That’s a great endorsement of IT;
about 20 and more than cut our IT costs in half since however, increasing IT to that degree would not be
1999. We’ve done the benchmark studies that show sustainable. We have worked hard to establish a track
our IT cost of operations is less than half the industry record of results, and we did not want to risk that re-
average, giving us a highly efficient and flexible opera- cord. Our credibility is based on our ability to focus and
tion that is a leverage point for our growth strategy.” get a return on our investments—that requires results
rather than luck.”
The standardized platform was built with scalability
in mind and has given GAFRI the ability to grow its

Case Study:
Great American Financial Resources—Combining sources of enterprise leverage (continued)
Wolverton and his team engaged the business in a company’s growth strategies. The company is treating
discussion of its capacity to successfully absorb new information as a resource and formalizing its gover-
processes, technologies and products. These elements nance. “Technologies such as data visualization will be
make IT an effective leverage point. The dialogue cre- important in 2007 as we look to exploit customer and
ated a budget based on business outcomes. market patterns and identify opportunities for innova-
tive solutions,” says Wolverton.
Driving metrics from information to drive growth
Wolverton, who also has responsibility for the compa-
GAFRI plans to extend its standard platform to maintain ny’s e-business strategy and operations, sees deliver-
its operational leverage across its growth strategies. The ing competitive leverage as the major challenge to
business is focusing on straight-through processing for the future of CIOs and IT. “CIOs and IT have survived
efficiency, business process management to raise pro- by cutting costs,” he says. “Now that we are making
cess effectiveness, and business intelligence. Wolverton investments, we have to think about IT as making a
notes, “Information is becoming an offensive weapon. difference in how we compete, how we work and our
Standardization creates a wealth of quality data that relevance in the future.”
needs to be connected to the business.”
Based on an interview with, and material from, Jeff
In 2007, IT will be looking to drive leading metrics Wolverton, CIO, Great American Financial Resources,
from that data to information executives, who will then Inc., November 2006.
use them to drive the economic engine across the

2
Effective leverage starts with effective technology
Technology leverage is at the core of effective enterprises. The scatter chart
opposite shows the relationship between reported enterprise and IT ef-
fectiveness with a close relationship between the effectiveness of the two.
This relationship forms the basis for creating enterprise leverage through
information and technology. Business effectiveness is measured based
on the leadership, funding and organizational performance related to the
enterprise’s ability to achieve its strategy and financial objectives.
Effective enterprises, those with strong leadership that achieve their financial
goals, have a better understanding of customer needs and are able to orga-
nize and invest to meet those needs. IT contributes to this success through
concentration on IT personnel skills and service levels to create flexibility and
introduce new technologies as required.
CIOs see executive leadership and investment as areas of strength in

current enterprise performance. Those strengths will be important in
addressing the issues that limit enterprise effectiveness:
• Understanding and communicating market needs across the business

to organize the enterprise on those needs and use IT effectively
• Improving the personnel and resource productivity; two-thirds of CIOs
believe the organization is not resourced properly in terms of its
investments or people
• Organizing enterprise resources and responsibilities to be successful;
less than 50% of CIOs believe their organization is properly structured
IT has a substantial role to play in these areas, as only 54% of CIOs
believe that the business uses IT to gain competitive advantage. IT
represents a source of leverage and significant opportunity for addressing
enterprise effectiveness issues.

The relationship between enterprise and IT effectiveness provides a basis
for creating enterprise leverage
High
100% High enterprise effectiveness High enterprise and
and low IT effectiveness (17%) IT effectiveness (38%)
Enterprise
effectiveness
Average 66%
Low enterprise effectiveness

and high IT effectiveness (14%)
Low Low enterprise and IT effectiveness (31%) Average 68%
Low 100% High
IT effectiveness

2
Case Study:
Kindred Healthcare—Directly leveraging IT
Kindred Healthcare is a Fortune 500 healthcare ser- • Making IT a reliable shared-services organization
vices company, based in Louisville, Kentucky, U.S.,
• Applying a strong governance process with
with annualized revenue of $4.3 billion. The company
measures and metrics to support delivery of
provides services in 500 locations in 39 states. With
business value
55,000 employees, Kindred operates long-term acute-
care hospitals, skilled nursing centers, institutional • Creating transparency across the enterprise
pharmacies and a contract rehabilitation services
Chapman’s strategy from day one was to implement a
business. The company’s mission is to be the nation’s
centralized, scalable technical architecture that would
leading provider of skilled nursing and long-term acute-
grow cost-effectively as the company grows and de-
care hospital services.
liver consistent, reliable results to the business. Kindred
Kindred operates in an industry facing challenging also made a commitment to standardize all application
regulatory mandates, as well as reduced reimburse- solutions for each of the four divisions and have com-
ment rates, forcing the company to control costs while mon data definitions to support roll-up reporting and
maintaining the highest quality levels. Information tech- data mining.
nology plays an important role in providing the man-
Kindred uses a strong governance process to ensure a
agement reporting and scale of service that enable the
high level of business alignment. CEO Paul Diaz chairs
company to compete effectively. Chief administrative
the IT steering committee, which consists of most
officer (CAO) and CIO Rick Chapman says, “IT has built
members of the executive committee. With all busi-
its credibility through implementation of best practices
ness units actively engaged in setting priorities, it’s the
and disciplined processes to deliver reliable, cost-effec-
business unit management teams that champion new
tive IT services. The result is that the CEO and board
initiatives and projects. Adding measures and metrics
now think about how to use this tremendous IT asset
to reinforce Kindred’s service culture and communi-
to drive service and quality advantages, as well as
cate the importance of service in the strategy solidifies
financial economies of scale.”
the alignment. “We look for the metrics that raise the
visibility of important business issues,” says Chap-
IT’s credibility is based on service, metrics man. “That usually means one performance metric
and transparency that drives the business and another metric that drives
Kindred IT has established this role by seeing itself as cost. In that way, we are able to manage both.”
an integral part of the business. “We are considered
part of the business and how it differentiates itself in Transparency is central to this strategy. IT is transpar-
the market,” Chapman says. “When IT sees itself as ent in terms of its results, costs and overall perfor-
separate, that is when the war starts. That is not ac- mance. Chapman notes, “You cannot have broad
ceptable—we are one company.” credibility in a company without transparency. IT is
not special; we cannot require 10% budget increases
IT’s contributions start with its support of the business when the business units receive only a 5% increase.
infrastructure that includes technical platforms and all If IT is to be business-relevant, it must run itself like
of its business applications. “No matter what we do, IT the other business units and be held accountable for
is accountable for the agility and performance of that delivering a competitive cost structure.”
infrastructure,” says Chapman. This was achieved us-
ing the following strategies: Kindred separates base costs from incremental project
costs. Base operating costs are allocated to the busi-

Case Study:
Kindred Healthcare—Directly leveraging IT (continued)
ness units, with the agreement that IT is on the hook to with success.” Creating an institutional pharmacy com-
improve operational productivity and deliver the same pany, with Kindred IT providing the IT services, also
volume of transactions for less. Business units must transforms the IS organization from a cost to a profit
campaign for incremental projects during the annual center with both internal and external customers.
budget process, providing solid business cases with
positive ROIs. Discipline as a path to greater executive
involvement
This strategy, coupled with clear governance process-
es, has given IT the discipline and opportunity to gain Chapman has led IT from being a corporate cost
the CEO’s confidence. That confidence was clearly center to providing a cost-efficient competitive edge
demonstrated in Kindred’s recent decision to create a for the company. He has also transformed his position
new venture where IT can participate as a source of from CIO to taking on the additional role of chief ad-
competitive leverage. ministrative officer. Building on his IT successes, such
as using disciplined project management to complete
complex IT projects on time and on budget, he was
IT is providing competitive leverage and scale
asked to manage a broader scope of responsibilities
for a new venture
outside of IT, including human resources, corporate
Kindred announced in 2006 that it was merging its communications and corporate office operations.
pharmacy services division with AmerisourceBergen’s Chapman explains, “What prepared me for the chief
PharMerica Company to create the second largest administrator job was that I had a large number of
company in the institutional pharmacy services busi- employees in IT, so I had experience dealing with larger
ness, with revenue of approximately $1.9 billion and a management issues. It also helped that I had a proven
customer base of 330,000 licensed beds in 41 states. management template for improving performance.”
Preliminary synergy cost savings from the merger is
estimated at $30 million. The CAO role solidifies Chapman’s place at the senior
executive table with responsibility for two critical
Kindred’s IT capabilities are one of the core contribu- sources of competitive leverage: IT and HR. This
tors to this deal and were specifically called out in role requires strong communications skills, executive
investor conferences. In discussing the deal, the CEO presence and earned credibility to stay engaged with
commented, “We are leveraging Kindred’s IT capabili- executive peers. By being at the table, he is posi-
ties and standardized infrastructure to provide world- tioned to acquire a more in-depth understanding of
class IT services to the newly merged companies the company’s critical success factors and business
beginning day one.” In addition to providing business priorities. “For those CIOs who aspire to it,” Chapman
applications, operations and other services, Chapman says, “success at this level involves having to look at
is also responsible for the business integration using an the world through the eyes of non-IT executives. This
integration management office. better enables the IT group to deliver business value to
the company.”
Enabling the new company to handle transactions at
speed, scale and low cost is the goal of putting IT at Based on interviews with, and material from, Paul
the center. The CEO says, “Putting IT into the venture Diaz, CEO, and Rick Chapman, CAO and CIO, Kindred
will enable the company to have economies of scale Healthcare, October 2006.
and better capability on day one at a cost that aligns

2
Technology effectiveness requires skills and strategy
Technology effectiveness is strong; 83% of CIOs feel that current service
levels meet business expectations. Areas of IT strength include organizational
and technical flexibility to respond to changing business expectations and
IT funding levels, where 62% of CIOs see IT as having the funding to meet
its 2007 commitments. Creating leverage using IT, however, will place new
demands on the areas of current IT weakness: personnel skills and the
CIO’s role in business strategy (see top figure opposite).
Skills are a significant constraint on IT performance. While CIOs recognize

this gap, many appear unable or unwilling to address it. Close to three-
quarters, or 71%, of CIOs see the IS organization as not having the right
number of skilled people to meet business needs.
This gap appears intentional, as 64% agree that their IT workforce strat-
egy is aligned with the business. This indicates that the issue is one of
skill proficiency levels rather than the number or types of skills. CIOs must
incorporate the following actions into their agenda to build IT skills:
• Include business knowledge and skills into IT hiring and performance

evaluation criteria.
• Hire business people or college graduates with business-based
degrees—such as supply chain management—for roles beyond
business relationship management, and teach them the technology.
• Institute a formal development plan to enhance business skills across
the IS organization.
• Start thinking of IT professionals as business people who happen to
work in IT.
Effective enterprises involve the CIO in forming the business strategy, but
only half of CIOs see themselves as a key player in determining busi-
ness strategy. Enterprises where they are involved have an average 10%
improvement in their enterprise effectiveness. Executives are missing an
opportunity to leverage technology when they restrict the CIO’s participa-
tion in strategy formulation (see bottom figure opposite).

CIOs report that funding, technical innovation and IT service levels are
the foundation of IT effectiveness; IT skills remain a challenge
Percentage of respondents
80%
Percentage of CIOs who agree 71%
70% 65% 64%
62%
58% 58%
60% 53%
50%
50%
50%
47%
40%
42% 42%
36% 38%
30% 35%
Percentage of CIOs who are neutral or disagree 29%
20%
10%
00%
IT delivers IT workforce IT has the IT has the IT service IT has culture The CIO is a IS has the
technology strategy funding to right levels meet of innovation key player in right number
innovation aligned with meet its 2007 organizational business strategy of skilled
needed by business commitments and technical expectations resources
the business strategy flexibility
Enterprise effectiveness declines when the CIO is less involved in

forming business strategy
No loss CIO plays a

significant role
Decrease in reported effectiveness
in business
-5% strategy
-10% -8%
-15% -13% -13% -13%
-14%
-20%
All other
-22%
-25% responses
Enterprise Enterprise Enterprise Enterprise Enterprise Enterprise
has clear and achieves its invests opens new understands uses IT for
effective financial enough to markets customer and competitive
leadership objectives achieve its effectively market needs advantage
strategy

2
Case Study:
Ternium—Acquiring scale at speed
Ternium is a $4 billion steel company headquartered work, so culture and process change is more heavily
in Argentina and operating in 100 countries. The steel involved. Ternium believes that this staged process
industry is in the midst of strong growth and increas- enables it to gain operational efficiencies quickly
ing consolidation as global players seek growth by without creating significant operating disruptions for
acquisition. customers and personnel.
Ternium’s business goals call for global expansion Leveraging core systems to create velocity is part of
through acquisitions and achieving operational syner- the company’s multiyear program of simplification and
gies as part of that expansion. CIO Ruben Bocanera improvement. This project includes implementing a
and his IT team are charged with realizing these goals program management office and portfolio manage-
by leveraging common processes, information and ment to commoditize and modularize the post-merger
applications. This includes applying a combination of integration process and back-office operational
strategies that focuses on the quality and speed of processes. Ternium is achieving this goal through an
acquisitions. aggressive use of services and middleware—creat-
ing an “information bus” that enables a single-user
Operational savings and efficiencies are common interface across all operations. The company is linking
goals of an acquisition-based growth strategy. Buying this bus to user profiles rather than individual people or
operations increases the company’s operational size jobs. This has given the company greater flexibility in
and theoretically creates economies of scale. Realizing supporting different operations and organizations.
these goals requires revising business and operational
processes, applications and information. Ternium’s “User profiles enable us to design flexible jobs with
approach involves addressing this scale of change. clear and documented lines of accountability,” says
Bocanera explains, “We are not doing traditional IT; Bocanera. “This is important when we purchase a
we are doing business engineering with computers.” company, as we can define their roles within our
systems and give them access to our tools and pro-
Leveraging standardized processes and services cesses. It is also powerful for regulatory controls like
Sarbanes-Oxley.”
Leveraging processes and services to gain speed is
behind Ternium’s approach to post-merger integration; Core systems provide the information necessary to
the approach relies on a playbook that combines both run a business that grows by acquisition. Ternium is
standard processes and services to reduce the time continuing its move to an information-based ap-
required to integrate operations. “Our challenge is to proach to managing the company. Bocanera says of
consolidate the acquired systems in a way that mini- this transformation: “Managers and executives need
mizes operational disruptions,” says Bocanera. information to know the issues to resolve both now
and in the future. We used to think that work created
To this end, Ternium follows a two-step process. First, information that we then managed and reported. Now
the company integrates back-office applications and we are working with a management cycle based on
processes such as finance, receivables and accounts information, decisions and actions. This is enabling
payable. That creates efficiencies from day one. Next, us to transform our culture, effectively measure our
the company transitions front-office systems into a sin- company’s performance and manage based on fact
gle enterprisewide platform. The second step involves rather than reports.”
changing the way front-office and production personnel

Case Study:
Ternium—Acquiring scale at speed (continued)
Building global enterprise leverage with is that we have become ‘knowledge catchers’ who
information and operational velocity better understand the business, culture, issues and
Ternium is building a global culture, which includes its actions needed to continue to grow the company.”
1,000 employees working in IT. The IS organization is
Ternium is building enterprise leverage with informa-
virtual, spanning three development centers. With 300
tion and operational velocity, particularly in the area of
projects scheduled for 2007, Bocanera and his team
post-merger integration. By using a combination of
are using work to build a common culture.
technology middleware, business process engineering
“We use people where they are to gain local efficiencies, and information, Ternium is creating the scale, process
as well as moving them around to provide face-to-face efficiencies and agility needed to effectively compete in
time on projects,” he says. “Much of the work can be the global steel market.
done remotely, but people still need to work together
Based on an interview with, and material from, Ruben
and see each other on occasion to help build trust and
Bocanera, CIO, Ternium, October 2006.
support collaboration. This is what the company is
looking to do, and we have done it within IT. The result

2
Leverage agility to change at speed, scale and cost
Agility has different meanings. For some, it is a characteristic, like a sports
car being able to change direction rapidly. For others, it is associated with
nimbleness and athleticism, like a gymnast. An enterprise is neither an
automobile nor an athlete. An enterprise-relevant definition of agility is the
ability of an enterprise to:
• Change when needed, requiring the company to understand

customer and market needs and recognize and respond to change
• Change with managed cost, requiring managers and executives to
have a process for planning and executing enterprise change
• Change with managed risk, requiring changes to be implemented with
minimal impact on the business
In a joint study conducted by Gartner EXP and MIT Sloan School of
Management Center for Information Systems Research, there is a pattern
CIOs follow to achieve greater IT and enterprise agility. That path (see top
figure opposite) rests on the following characteristics:
• IT service delivery that meets current business and operational

commitments
• Effective IT governance and leadership that are able to set a clear
direction
• Delivering new projects and solutions as required
• Building a CEO-CIO relationship that connects IT agility with
business agility
CIOs looking to increase enterprise agility will find themselves concentrat-

ing on three aspects of the enterprise (see bottom figure opposite):
• Simplifying business and technical operations by standardizing appli-

cations, infrastructures and operations to reduce the complexity, cost
and risk of change
• Increasing the visibility of business information to improve the ability of
executives to recognize, decide and act
• Enhancing the adaptability of processes and systems by designing
them with a tolerance for change

The path to greater enterprise agility builds on IT agility
Now and
in the
future Enterprise
agility
Technology IT
is an agility
accelerator
Working
on the Project delivery
business CEO-CIO
relationship
Working on
what’s Governance and leadership
important
Meeting
current IT service delivery
commitments
Agility requires CIOs to create operational simplicity, increase business

visibility and develop adaptive processes and systems
Simplicity
IT agility
Adaptability Visibility

2
Case Study:
Wärtsilä—Leveraging the value of global information
Wärtsilä is a global provider of ship power and power looked at the improvements that could be made in
plant solutions and services, with 2005 total net sales the company’s internal cross-company transactions.
of 2.6 billion euros (US$3.4 billion). Operating in 60 “Executives understood the potential when they saw
countries, the company competes on a combination of the manual intercompany transactions that would be
its leading-edge engine technologies, global coverage eliminated, as well as the benefits that improved global
and service network, and its environmentally friendly visibility brings to the business,” he says.
solutions.
Global platform enables process optimization
In 2006, Wärtsilä continued its global deployment of
an SAP solution, which is now live in 23 countries. The Global information and the solutions it enables are
project is leading an evolution in management thinking important for Wärtsilä’s future. The global platform also
throughout the company. CIO Roger Holm explains, gives Wärtsilä the possibility of starting to optimize the
“We are creating global processes—that is, changing operations even further. “We had a test project where
the way we look at our business.” The result is that we could show a process improvement by 20%,” Holm
country operations are requesting to be on the global notes. “This is a showcase project for the rest of the
system. business in terms of how to optimize processes, and
we will now continue in other areas to further improve.
Reaching critical mass “Our approach to information has been based on the
“The business is seeing the potential of global infor- premise to not share information unless sharing was
mation,” says Holm. “This is happening because we explicitly approved. Now we are moving more into an
have a critical mass of countries on the same sys- approach of sharing information unless explicitly pro-
tem. Executives now have global master data and hibited. That will open up new opportunities for
global processes. This is leading us to look at more innovation and improvement.”
advanced processes, such as product data manage-
ment and product life-cycle management, which would Global information and processes are giving Wärtsilä
strengthen our operations and the power of our engine the leverage to strengthen the company’s sources of
technologies.” competitive advantage.
Holm observes that executives began seeing the Based on an interview with, and material from, Roger
potential of global data and processes when they Holm, CIO, Wärtsilä, December 2006.

Case Study:
Mediaset—Innovating in new media
Mediaset is an Italian commercial television network because it doesn’t require the customers to identify
headquartered in Milan. The company is the leading themselves, other than by the prepaid card.
private broadcaster in Italy, with strong advertising
revenue, profitability and an expanding library of The service provides access to movies, theater and
quality content. sporting events. “Football [soccer] is among our most
popular pay-per-view products,” says Galli. “People
Mediaset operates three flagship channels and recently can buy an individual game for five euros [US$7] or pay
launched two new ones: Boing for kids and Medi- 100 euros [US$130] for the whole championship.”
ashopping (TV sales). The company just introduced
a premium pay-per-view offer and has developed a The structure of the smart-card service provides flex-
platform for mobile TV. ibility to the customer and reduces the complexity of
Mediaset’s operations. The smart cards are sold at
Mediaset’s position is under pressure as “new media” local retail shops and recharged using scratch-off
and media models crowd the marketplace. Its answer cards similar to lottery tickets, or are purchased by
has been to innovate and use technology to manage credit card on the Mediaset Premium Web site.
the complexity of expanding channels, products and
services. IT plays an important role in meeting this Complexity: The challenge for IT in 2007 and
challenge. beyond
CIO Maurizio Galli says, “IT’s job is to support the Galli summarizes the challenges for 2007: “Our market
group in a proactive way as we make the move from is changing, our customers are changing, and that
broadcaster to multimedia company—from having creates greater complexity. We are experiencing both
viewers to having customers. We are also moving from business and technical complexity; they seem to go
selling a single service to millions, in terms of broadcast hand in hand as convergence continues between
television, to selling individual products to individual telecommunications and media.”
customers.
Time-to-market is a major focus in 2007, and Me-
“IT has the knowledge of the enterprise’s processes and diaset is looking for more flexible ways of working on
systems, which enables us to be proactive as we move well-supported platforms. “We need to manage our
from having viewers we don’t know, to customers we work to stay focused on value-creating activities and
know and engage with new products and channels.” keep producer-generated activities, such as software
updates, to a minimum,” Galli says.
Entry into pay-per-view is an innovative approach Convergence and customer choice are transforming
Mediaset’s premium pay-per-view service represents the competitive environment for media and entertain-
an innovative solution tuned to the local market. The ment companies, and requiring new systems, chan-
service works with smart cards rather than requiring nels and technologies. Mediaset has approached this
people to subscribe to individual programs. “The ser- challenge with a focus on customers, products and
vice works like a prepaid mobile telephone,” Galli says. innovation.
“You buy what you want and use it when you want.”
This approach has greatly simplified the processes and Based on an interview with, and material from,
information systems required to support pay-per-view Maurizio Galli, CIO, Mediaset, December 2006.

2
Leverage information to understand and act in
a changing environment
Information is at the center of the mission of the CIO and IS organiza-
tion. Leveraging information remains a significant enterprise opportunity
for CIOs—and a threat. CIOs report that information is at the heart of
enterprise operations and decisions for performing tasks such as improv-
ing current operations, making fact-based decisions and understanding
market and customer needs.
However, only 37% have confidence that their enterprise has the right
information to run the business (see top figure opposite). This begs the
question of what information the business is using to perform these tasks,
particularly if executives are using information provided outside enterprise
transaction systems.
To improve information effectiveness, CIOs need to incorporate informa-

tion into high-priority business activities, such as business process
improvement and workforce effectiveness. This can be achieved by:
• Incorporating information and information quality requirements into

new and improved business processes
• Standardizing and consolidating applications, business processes,
workforce skills and activities to increase the consistency of informa-
tion definition and use
• Building management capability to identify and apply operational
information in management processes
It’s best to perform these activities prior to making extensive investments
in technologies such as business intelligence.
Enterprises with high information effectiveness are

leveraging information to achieve their strategies
Enterprises in the top quartile in terms of information effectiveness repre-
sent 13% of the total survey respondents. These companies are pursuing
business objectives that leverage information into new products, services
and capabilities to improve competitiveness (see bottom figure opposite).
This is in contrast to all other respondents, who are concentrating on improving
current processes, lowering enterprise costs and improving workforce
effectiveness. The priorities of enterprises with information effectiveness
demonstrate the potential of leveraging information as a resource.

Management processes use information; however, CIOs have little
confidence that managers are using the right information
65%
Strongly 60%
55% 53%
agree 49%
37%
Agree
Neutral
Disagree
Strongly
disagree
We use We use We use We use We use
information information information information information
to improve to make to measure to allocate to analyze We currently
current fact-based business resources customer have the right
operations decisions impact and market information to
needs run the business
Top 10 business priorities: Enterprises with high information effectiveness

are extending their future position while others are fixing current operations
Information effectiveness All responses
To what extent will each of the following business, societal top performers ranking
or government trends impact your enterprise in 2007? ranking
Expanding use of information/intelligence in products and services 1 7
Deploying new business capabilities to meet strategic goals 2 8
Improving enterprise competitiveness (bottom-line profitability) 3 6
Providing services that support competitive advantage 4 13

Increasing global competition (low-cost producers, new entrants) 5 16
Improving business processes (business process management) 6 1
Faster innovation (shorter product/service life cycles) 7 10
Business restructuring (mergers, acquisitions, alliances, divestitures) 8 12
Requirements for greater data protection and privacy 9 15
Improving the effectiveness of the enterprise workforce 10 4
Entering new markets, new products or new services 11 9
Concerns about security breaches and business interruptions 12 11
Need for revenue growth 13 5
Attracting, retaining and growing customer relationships 14 3
Increasing governmental regulation and compliance requirements 15 14
Controlling enterprisewide operating costs 16 2

2
Case Study:
Employees Retirement System of Texas—Leveraging information to create new products
The Employees Retirement System of Texas (ERS) these requirements by also planning the implementa-
in the U.S. manages retirement benefits for 200,000 tion and migration activities. Governance arrange-
current and former state employees, which include ments are clear, with Lehmann being the single point of
assets of $23 billion. ERS’s mission is to enhance the executive contact.
lives of its customers through the efficient delivery of
high-quality benefits at the lowest practical cost. ERS The result was an accelerated implementation plan
administers benefits programs including: retirement; of 4.5 months versus the average of 21 months to
deferred compensation; health, dental, life, disability, implement the same functionality. The project also won
death and dismemberment insurance; and flexible ben- the prestigious “Best of Texas” award for best project
efit reimbursement accounts. ERS customers include implementation methodology.
active state and higher-education employees, retirees
and their families. Information leverages a flexible, efficient platform
for new products
CTO Kurt Lehmann is leveraging information to
expand the set of products and services available to The new system is Web-based, facilitating customer
the organization’s customers. The goal is to give the self-service options and reducing the costs of fund
investment management team increased control of management and administration. Lehmann points to
retirement assets and investment options. This involves the impact of the new system on IT: “It created new
changing core business processes and information product features, such as self-service modeling and
involved in managing retirement funds, and a move to capabilities, real-time annuity calculations and benefi-
unit-value information and reporting. “Unit valuation ciary management, which we did not have and would
will give investment managers the ability to manage have otherwise had to build for ourselves.”
their accounts similar to the way they manage mutual
The new management application increases the
funds,” explains Lehmann. “This opens the doors to a
granularity and usefulness of information throughout
whole range of new product and service possibilities
ERS. The agency is using this to increase the transpar-
to help achieve our mission. Our systems were limiting
ency of portfolio management and performance. The
our ability to take advantage of financial innovations.”
new information is also creating an environment for
Moving to unit valuation required changing applications new products and product innovation. Lehmann and
for fund management and accounting. Managing funds his IT team’s changes give beneficiary accounts more
is at the core of the agency’s business, so a move of the functionality associated with mutual funds in
to a new system would be disruptive and require the terms of investing in a broader array of asset types and
collaboration of the whole business. “We needed to be distributing accounts across multiple funds. A potential
agile, and achieving success involved creating an en- product innovation enabled by the new system is to
vironment of mutual accountability with a strong single allow active and retired employees to invest additional
point of executive support,” says Lehmann. ERS met non-retirement money with ERS.

Case Study:
Employees Retirement System of Texas—Leveraging information to create new products (continued)
Using information to improve performance communications technologies to increase workforce

management flexibility and collaboration.
ERS’s plans for 2007 build on the themes of transpar-
ERS is looking toward further exploiting service-oriented
ency and information to continue to improve perfor-
architecture to collapse systems into components
mance management. “We are concentrating on under-
organized around common source data. This would
standing and delivering information to the business that
lead to the creation of an “information communications
will enable a refinement in performance management,
bus” that will act to limit the number of system silos
better risk and portfolio exposure management and
and increase enterprise agility and responsiveness.
advanced portfolio modeling,” he says. These new
“Information is central to managing our beneficiary
performance management tools carry a responsibility
retirement assets and to the products we offer,” he
to make sure that ERS associates have the skills and
says. “Enhancing our ability to manage and apply
ability to use the new information effectively.
information to current processes and new products is
Over the next three years, Lehmann sees IT continuing essential to delivering our mission to enhance the lives
to play a central role in the transformation of ERS in of our customers.”
terms of its efficiency and product attractiveness. The
Based on an interview with, and material from, Kurt
agency is looking at moving to a paperless workflow
Lehmann, CTO, Employees Retirement System of
in 2007 to reduce costs and improve responsiveness.
Texas, November 2006.
Along those lines, Lehmann is investing in unified

2
Innovate to bring new ideas to market
Innovation can be defined as the process of making improvements by
introducing something new. While it is often associated with “break-
throughs,” innovation occurs at all levels—from transformational change,
to new products and services, to process improvements and inventions.
Innovation is the goal of many CIOs but achieved by few.
Innovation by definition provides a source of enterprise leverage. This is

one of the factors behind 85% of CIOs seeing innovation as important to
enterprise success during the next three years. Enterprises seek leverage
from innovation, but only 26% believe that their innovation processes are
sufficient to achieve their strategy (see top figure opposite).
Making innovation important is not a strategy—

Innovation requires a more focused approach
Innovation is important to enterprises. However, importance does not guaran-
tee success, nor do the resources required to develop and sustain leverage
from innovation. Innovation is a capability that involves people, processes and
technology (see bottom figure opposite). CIOs will need to concentrate on
creating an innovation capability within the enterprise. This involves:
• Starting with an innovation process, where innovation is the result

• Implementing innovations, using project and program management
disciplines
• Concentrating on change leadership and benefits realization that
prove the value of new ideas and fuel additional investment
An innovative culture is the result of successful innovation—not a prereq-
uisite to innovation.
CIOs recognize the need for business innovation
Creating innovation leverage requires business innovation rather than technology innova-
tion by itself. CIOs need to fold technology innovation into business innovation. Two-thirds
of CIOs believe that IT is delivering the technology innovations required by the business.
However, of the two-thirds, less than half agree that IT is a primary source of business
innovation, and most CIOs see a need to improve their innovation process.

Enterprises seek innovation; however, few believe that the leverage from
innovation is sufficient to achieve their strategy
To what extent do you agree with the following statements about

Percentage 85% innovation in your enterprise:
of CIOs
who agree
39% 37% 36% 35%

31%
26%
Innovation My My We have a We routinely We use a Our

is important enterprise enterprise culture of implement process for innovation
to my invests in views IT as innovation innovation creating and processes
enterprise resources a source of successfully deploying are
success for business innovation sufficient to
innovation innovation achieve our
strategy
CIOs leverage innovation by starting with an innovation process that

over time creates an innovative culture
Achieving results generates Innovation Innovation is more than

the confidence for further process luck—it’s a focused activity
investment to make innovation concentrating on business
continual needs
Investment Culture Implementation
Fault-tolerant culture: Innovations are explicitly

It’s better to have a 24 – 3 implemented and deployed
record of success than a Sufficient in the organization
4 – 0 record

2
Case Study:
Cirque du Soleil—Realizing creative advantage
Cirque du Soleil, based in Montreal, Canada, is the experiences. This generates the research information
leading innovator in the entertainment industry and re- used to develop new production concepts and ideas.
inventor of the modern performance troupe. Creativity That information takes the form of text, graphics,
is the source of the company’s enterprise leverage, and audio, video and even artifacts from the culture that
the organization relies on IT to deliver that advantage. capture the essence of the experience. Researchers
use this information as the raw materials in putting
“The challenge for us is to be aligned with the creative together new and unique productions.
cycle, to be proactive with each production and realize
the company strategy,” explains CIO Danielle Savoie. “Memory fuels the creative cycle and increases col-
Cirque du Soleil leverages information and information laboration and creativity,” says Savoie. Entrusting that
technology in creating new and unique productions memory to the IS organization demonstrates its ability
that define new markets and audiences rather than to leverage information and technology to deliver new
seeking to compete in existing markets. This is consis- sources of growth. Company memory represents an
tent with the company’s “blue ocean” strategy, which important contribution of IT, but it is not the only source
looks to create new shows and runs through the entire of that contribution.
company—from its strategy to its IT priorities.
Leveraging artists and partners to gain scale at
Cirque du Soleil currently fields 13 shows, with some
speed
at specific locations and others touring the world.
Developing, supporting and operating creativity at this Delivering Cirque du Soleil experiences around the
scale require a comprehensive approach to the creative world is a complex challenge, involving hundreds
process. “IT is expected to be involved in the creative of performers, permanent locations and traveling
process and address the challenges around informa- performances. The company manages this complex-
tion and technology,” says Savoie. “We cannot stand ity through partnering effectively with performers and
in the background and create value; it is not part of our producers and concentrates its attention on creative
culture or our strategy.” Two information-intensive initia- advantage.
tives demonstrate how IT plays a supportive role in the
company’s enterprise leverage. The company’s growth rates will require the com-
pany to double the number of artists during the next
four years. The company will need to partner with
Keeping the company memory is leverage for more than 22,000 performers from around the world.
creative advantage Some are working in a current production, others are
“Creativity starts with vision and imagination, and IT has preparing for a new production, and still others form a
a mandate to be the keeper of the company memory,” reservoir of future talent.
says Savoie. This is a significant responsibility, as that
memory serves as the creative basis for current and Managing these relationships is the focus of new IT
future productions. That memory is also at the center of projects and processes. Explains Savoie, “We are
the creative process, which starts with research. unique in that we involve multiple artists operating
in different countries. We have to not only manage
Company researchers travel the world to explore and our relationships with the artists, but also be able to
identify new concepts and ideas for future productions. compensate and support them to ensure that the right
They seek to immerse themselves in local culture and people are in the right performances.”

Case Study:
Cirque du Soleil—Realizing creative advantage (continued)
“Many of the artists we work with are young and tech- and operational leverage. Information and information
nology savvy,” she says, “so traditional command-and- technology play important roles in realizing creative
control systems will not work.” As a result, Savoie’s leverage, as they provide ready access to the company’s
teams are opening the system to the world in terms of memory and facilitate the creative process.
using Internet-based applications, Web logs and social
networking to attract, evaluate and engage new artists. In effect, says Savoie, “IT has the knowledge to partner
“We need to capture the attention and imagination of effectively within the business and with suppliers to
our artists,” she says. “We need to work in the way contribute to the creative cycle.” That ability is de-
they want while still running a successful production.” manded by the company’s strategy and focus on
creating new productions. It also is valued by the com-
pany based on the delivery of results to the customer,
Realizing creative advantage requires leveraging
the production and company’s partners. Achieving
information and technology
all these is the role of current and future information
Cirque du Soleil has successfully leveraged its creative professionals.
advantage through a combination of information-
intensive applications and innovation-oriented sourcing Based on an interview with, and material from, Danielle
relationships to deliver a combination of creative focus Savoie, CIO, Cirque du Soleil, October 2006.

2
Use IT’s role and focus as guides when tapping
leverage sources
Moving from concept to action requires realizing that these sources of
leverage are equally valuable and an enterprise may pursue them individu-
ally or in combination (see top figure opposite). CIOs looking to exploit
leverage points should look to match them with the role IT plays in their
organization and the focus of IT’s activities in the enterprise.
Confirm IT’s role in the enterprise

CIOs and IT play either an enabling or contributing role in the enterprise
that sets enterprise contribution expectations:
• Enabling IS organizations provide the services and operational support

to the business. They measure success in terms of the quality and
cost of IT services.
• Contributing IS organizations build on their enabling capabilities and
take on responsibility for realizing a change to new capabilities. They
measure success in terms of the business impact of their activities.
IT’s role in the enterprise establishes limits on the degree to which IT is
directly responsible for creating business results. CIOs are strongly
warned against assigning a value judgment to these roles. They have
equal value and only lose value when IT’s role does not meet business
expectations for IT.
Identify the focus of IT activities for the coming year

CIOs and IT have a unique range of possible activities as they deliver cur-
rent operations. They also transform those operations through building
and deploying new capabilities. The focus of IT activities further narrows
the possible sources of enterprise leverage.
Use the combination of IT’s role and the focus of its activities to select the
starting source of leverage (see bottom figure opposite). Then it is pos-
sible to add new sources to support the business strategy. But avoid the
temptation of trying to be all things to all people.


Reducing costs Managing the
Technology Agility
Use the 2007 CIO business priorities as a guide to the required sources of
enterprise leverage
2007 CIO business priorities Required Sources of enterprise leverage
in 2007?
Technology Agility Information Innovation
Yes No
Improve bottom-line profitability
Improve data protection and privacy
Control enterprise costs
Reduce security threats
Deliver high-quality technology services
Address increased government regulation
Improve business process performance
Improve workforce effectiveness
Respond to increasing global competition
Deploy new enterprise capabilities
Restructure business operations
Deliver products and services to the market
Lead enterprise change initiatives
Attract and retain customers
Support competitive advantage
Increase the use of information and intelligence
Improve business continuity
Improve product development effectiveness
Increase the rate of innovation
Bring new ideas to customers and the market

2
Case Study:
Natura—Using innovation and information to expand its markets and products
Natura Logística e Serviço Ltda. is a $1.5 billion global and then distributed by them to the end customer.
cosmetics company headquartered in Brazil, with
• A manufacturing company, producing ecologically
sales and operations in the Americas and France. The
sustainable cosmetics and beauty products. Natura
company’s motto centers around the idea of “being
produces 200 million items per year. The company
well,” and it influences the company’s strategies and
is evaluating a move toward distributed production
approaches.
to improve service and reduce costs. This involves
CIO Italo Gennaro Flammia says, “Our company’s IT providing manufacturing systems across Latin
philosophy is socially and business conscious—if you America and using communications and IT to
have well-being, then you are being good to yourself connect business managers with the company.
and others.” Natura is currently in the process of taking The cosmetics and beauty industry is one of innova-
that philosophy global and extending its products and tion, customer relationships and efficient operations.
market reach beyond Latin America to North America Natura is focusing on innovation as a significant part
and Europe. of its growth strategy. Says Flammia, “Our challenge is
how to take the value of well-being and make it attrac-
IT provides unique forms of competitive leverage tive to the customer, supported by our sales consul-
tants and delivered by our products and services. To
Natura is leveraging innovation and intelligence to real-
do that, we need to be innovative and think about how
ize its strategy for growth and expansion. The com-
we can do more with a particular aspect of our busi-
pany is like three distinct companies, with IT providing
ness. We cannot grow with just innovative products;
unique forms of competitive leverage for each:
we need to innovate our processes and the customer
• An innovation company, creating 200+ new products experience.”
per year for the cosmetics marketplace. As their
name implies, these cosmetics are developed from Focusing on the end goal—Innovation
sustainable sources, providing an ecologically sound
Achieving the innovation goal is a significant focus for
business. According to Flammia, information guides
IT in 2007. To that end, Natura has centralized IT and
the innovation process, and IT is providing systems
created business process managers that live within
that enable the company to support control of the
each of the company’s main business areas. Natura
product development life cycle, from development
is creating a mid-term training program for business
through bill of materials and catalog management.
process managers, including subjects such as:
• A retail company, supporting 500,000 sales consul-
tants working as individual business people. Retail • Company strategy and business models
volumes are significant, involving 50,000 invoices and • Analytics and statistical methods
2 million line-item orders per day. IT supports retail
operations through supporting order management, • IT concepts
picking and shipping processes. Here the focus is
• Business intelligence
on order velocity and picking and shipping accuracy,
as individual orders are sent to the sales consultants • Business process design and optimization methods

Case Study:
Natura—Using innovation and information to expand its markets and products (continued)
The goal involves creating business process managers companies working across multiple countries. Specifi-
who could become leaders in the business through cally, IT is focusing on building a new CRM capability
their knowledge and results. Business managers use a to support expanding geographies, sales consultants
standard innovation methodology, tools and processes and product lines. Creating a business intelligence
to identify and innovate with the business leaders. “We platform will improve the company’s use of information,
used to wait for the business to create demand for IT,” drive the innovation process and improve vendor and
Flammia says, “whereas now we want to discover that supplier relationships.
demand at the same time as the business and influ-
ence the business’s direction.” The expectation of the business is that IT will provide
the competitive leverage needed from increased in-
novation, flexibility, quality and agility to achieve the
Making the challenge personal
immediate goals of bringing new and existing products
In 2007, Flammia has made it a personal challenge to a larger market.
to build the IT team’s skills to the point that they can
make a significant difference in achieving Natura’s Based on an interview with, and material from, Italo
growth strategy. Meeting this goal requires aligning with Gennaro Flammia, CIO, Natura Logística e Serviço
business needs and handling the complexities of three Ltda., October 2006.

2
Match your source of leverage with the enterprise
strategy
An effective source of enterprise leverage should be flexible enough to
apply in different ways, depending on the enterprise strategy and context.
Enterprise leverage requires flexibility so it can be redirected and applied
to new issues and challenges. Otherwise, points of flexible leverage
become liabilities, as they fail to evolve to meet changing market and
customer demands.
CIOs and executives should match their enterprise strategy with one or
more sources of leverage. To this end, the case studies presented in this
report create and exploit leverage following different growth strategies (see
figure opposite).
Building leverage requires knowing how to execute

a focused, IT-based business strategy
Selecting a source or sources of enterprise leverage gives CIOs a target
for focusing their 2007 agenda and plans. However, a target is only one
part of a plan, and the remaining parts of this section discuss the factors
that drive CIO and IT effectiveness for each of these sources of enterprise
leverage. Analyzing the results of the Gartner 2007 CIO Survey and case
studies reveals the following insights:
• Enterprise effectiveness is the goal of enterprise leverage; an effective

enterprise is one that is able to achieve its strategy or mission better
than its peers.
• Effective enterprises can combine sources of leverage, particularly to
achieve separate strategic goals.
• The effectiveness of all leverage sources starts with effective
technology leverage.
• Effective innovation involves information effectiveness.
• Increasing enterprise leverage involves changing.
The next section of this report highlights the impact on IT capabilities and
the CIO of building enterprise leverage.

The case studies illustrate different applications of enterprise leverage in
support of enterprise strategy
Strategy
Getting bigger Getting faster Getting wider Getting closer
Acquiring or partner- Introducing new Expanding into new Deepening current

ing with others products or services markets or customer
Leverage points (M&As) geographies relationships
Technology Managing a technol- Managing the Deploying resources Reducing transaction

Reducing cost ogy platform that complexity of large- to build relationships costs generated
structures and increases capability scale and rapid in growth markets from growing
raising resource and scale product customer base
effectiveness development • Natura
• Kindred Healthcare • Poste Italiane • HSBC
• U.S. Defense • Natura • Great American
Finance and • U.S. Defense Financial Resources
Accounting Service Finance and
Accounting Service
Agility Delivering a scalable Deploying opera- Coordinating global Tailoring service
Managing the speed, platform to absorb tional and product resources and levels and products
scale, cost and risk new business changes at speed capabilities to meet segmented
of change efficiently and scale efficiently customer needs
• Ternium • Natura • HSBC • Channel 4
• Great American • Great American • Wärtsilä • Yorkshire Water
Financial Resources Financial Resources
Information Knowing where to Changing informa- Using experiments to Using internal
Moving with integrate processes tion to open new tailor offerings and knowledge of the
understanding across companies product and service operations to market to develop
in a changing and share informa- possibilities particular market new products and
environment tion with partners needs relationships
• Employees
• Ternium Retirement System • Kindred Healthcare • Great American
• Yorkshire Water of Texas • Wärtsilä Financial Resources
• Wärtsilä
Innovation Using innovation and Delivering the Going global to Building on technol-
Bringing new growth to build a information and tools maintain a unique ogy infrastructure to
business ideas to world-class partner needed to generate and distinctive deliver new sources
market successfully network new ideas experience of customer value
and performance
• Cirque du Soleil • Channel 4 • Cirque du Soleil
• Cirque du Soleil • HSBC
• Mediaset • Yorkshire Water

2
Case Study:
Yorkshire Water—Information, collaboration and innovation
Yorkshire Water is the U.K.’s leading utility. In Decem- Business performance in legacy replacement
ber 2006, the company won the ”Utility of the Year In 2006, Yorkshire completed YorBill, a major capital
Award” at the Utility Industry Achievement awards project that replaced the company’s billing system. The
for an unprecedented third year in a row. In doing so, prior billing system was 25 years old based on VME
Yorkshire Water maintained its position as the U.K.’s COBOL and needed to be replaced, as the hardware
most efficient water company while maintaining a and software were coming to end of life.
customer satisfaction rating of 93%. Yorkshire Water
achieved this result through innovation by breaking “We wanted a system we could move to directly
down barriers within the company and remaining without experiencing a major learning curve and the re-
focused on customers, service and effectiveness. sulting dip in customer service associated with learning
new processes and systems,” explains Harrison. “We
Direct collaboration—Leveraging information and wanted a billing system that fitted the water indus-
partners try—we had spent 20 years developing a best-in-class
product that gave us the lowest cost-to-serve in the
Yorkshire Water achieved its transformation by thinking
industry.”
out of the box and partnering for personnel-inten-
sive services such as infrastructure maintenance and YorBill went into production in December 2006, and
construction. Partnering enables Yorkshire to double its the early indications are that it will achieve its goals of
workforce without doubling its cost structure. Partner- reducing enterprise technology risk, business operating
ing also contributes to the community aspirations plac- costs and maintaining a low cost-to-serve. How does
ing Yorkshire Water at the hub of local companies, so the company know this? Harrison and his IT team are
it becomes an engine for local economic development. tracking YorBill’s leading indicators ahead of validating
CIO Alan Harrison says, “Partners give us access to benefits realization after the fact.
skills and innovations we would not normally have.
They give us flexibility to provide higher service levels at Harrison measures customer satisfaction with a daily
lower costs.” “YorBill Temperature Check” given to users. The
questionnaire (see figure opposite) concentrates on
For 2007, Yorkshire Water plans to enhance its partner user satisfaction, as well as measuring direct busi-
capabilities. “We want our partners to use our technol- ness benefits such as the ease of search, updates and
ogy in their business,” Harrison says. “Providing our speed of performance. Currently, employee satisfaction
systems and information helps eliminate an information with YorBill is running 8.0 to 8.5 out of 10, providing a
black hole where you do not have knowledge of the leading indicator that the system is achieving its ben-
up-to-date status when the job has been passed to the efits. Using these indicators, Harrison and his team are
partner. We can be more innovative when we and our able to measure the adoption of the new system and
partners can see the end-to-end business process.” its business performance.

Case Study:
Yorkshire Water—Information, collaboration and innovation (continued)
Leveraging the enterprise for competitiveness gain scale and efficiency. It has also led to increased
Yorkshire Water has leveraged IT in transforming the partnering and innovation, bringing new ideas to bear
company into a leader in the utilities industry. IT contin- on operational and customer service issues. The result
ues to provide leverage points within its operations— is a company working with a common mission, pro-
through YorBill and with customers and suppliers to cesses, issues and technologies that has been ranked
sustain and extend that performance. at the top of its industry for three years running.
Harrison and his team have broken down the walls that Based on an interview with, and material from, Alan
separate IT from the business. Demolishing these walls Harrison, CIO, Yorkshire Water, December 2006.
has led to greater use of information and technology to
A sample of the YorBill Temperature Check illustrates the questions

used to assess user satisfaction
YorBill Temperature Check
Name of your team manager:
Thank you for helping us launch YorBill. Please would you take a few minutes to complete this short questionnaire
and hand it to your team manager.
1 How do you feel today went?
Now please answer the following questions on a scale of 1 to 10, where 1= very poor and 10 = excellent.
Please circle your answer
2 How easy is it to search for accounts in YorBill? 1 2 3 4 5 6 7 8 9 10
3 How straightforward is it to do updates in YorBill? 1 2 3 4 5 6 7 8 9 10
4 How do you rate YorBill’s speed of performance? 1 2 3 4 5 6 7 8 9 10
5 Overall, how do you rate YorBill compared to ICL? 1 2 3 4 5 6 7 8 9 10

6 How do you feel about YorBill?

Creating enterprise
leverage changes
the roles of the CIO
and IT

3
Executives expect CIOs and IT to play greater
business roles. This will require the CIO to
lead IT outside of its traditional technology
box and engage the enterprise in new ways.

3
Creating leverage requires IT to work effectively
both in and on the business
Creating and sustaining competitive leverage require organizations to be
operationally effective in the short run and strategically agile as customer,
market and technology conditions change. CIOs report that effectiveness
comes from following a path that starts with execution of the current strat-
egy prior to innovating on that strategy (see figure opposite).
Many executives will claim that organizations can leap ahead with a single
burst of radical innovation. While the business press, solution providers
and others will always point to a few extraordinary situations, the majority
of leaders in the CIO survey deliver sustained and increasing improve-
ments that create the new and enhanced capabilities. This is particularly
the case with executive demands for innovation.
CIOs should exploit the relationships between enterprise IT, information

and innovation effectiveness (see figure opposite) as a road map for devel-
oping strategic plans and objectives to:
• Sustain IT service levels and improve as needed to meet business

expectations, as these form the foundation for credibility
• Validate that application development and maintenance projects
represent business expectations and priorities through IT governance
processes
• Build business skills across the IS organization to prepare it to deliver
business-driven innovations powered by information and information
technology
• Leverage project management and program management processes
for implementation
• Select a business partner to work with and deliver the first set of
information- or innovation-intensive solutions
• Use operational data to diagnose business performance requirements
and identify potential gaps in performance
• Propose and approve a joint project to deliver new sources of leverage

The path to leveraging information and innovation runs through IT; top
performers account for half of top information and innovation performers
Enterprise effectiveness Innovation effectiveness
Bottom 3rd 2nd Top Bottom 3rd 2nd Top
Top 26% of all Top The 26% are
Information effectiveness
enterprises 50% of top
are top performers
IT effectiveness
2nd performers 2nd
3rd 3rd
Bottom Bottom

3
CIOs expect significant changes in IT performance
during the next three years
CIOs recognize that current IT capabilities will need to improve to meet
future enterprise demands for on-the-business changes outlined in the busi-
ness priorities. Those demands call for new capabilities, expanding the use
of information and entering new markets—all at a faster pace of innovation.
During the next three years, CIOs indicate the need to improve the full
range of IT capabilities (see figure opposite). Particular areas based on
CIO expectations of future requirements are largely focused on the
business and include:
• Business process improvement to address the need to improve

and develop new information- and IT-intensive processes
• Enterprise architecture, a capability required to develop and integrate
new capabilities involving people, processes and technology
• Business intelligence capabilities, including data management
and information management
• Business relationship management, with responsibility for
collaborating with the business
Interestingly, CIOs see technology infrastructure and operations as an area
of relative strength and stability—only forecasting a 12% improvement.
Developing step-level improvements in IT capabilities does not happen

overnight, and the projected performance increases extend into 2010.
CIOs should begin now to plan for how to improve these capabilities and
invest in those improvements during the next three years.
CIOs must raise their own performance through concentrating

on the CIO essentials
• CIO leadership • IS organization
• Planning, alignment and strategy • IT finance and budgeting
• IT governance • IT performance management
• Program and project management

CIOs project the need to significantly raise IT performance to meet
future business demands
2006
Business process
improvement 2007
Enterprise architecture
Business relationship
management
Business intelligence
Program and project

development
Application development
IS strategy and planning
Sourcing and vendor

management
Security and risk

management
Customer service
and help desk
IS leadership support
Infrastructure and
operations
0 1 2 3 4 5 6 7 8 9 10
Lowest CIO performance assessment Highest

3
Leverage will continue expanding CIO
responsibilities outside of traditional IT
CIOs are gaining greater involvement in activities outside of IT (see top
figure opposite). In 2007, half the CIOs in the survey report having at least
one additional duty beyond running IT. Half of CIOs with outside responsi-
bilities, or 23% of the total, report having more than one additional respon-
sibility. This trend reflects IT’s deepening role in business processes and
activities such as:
• Enterprise strategic planning—represents the most common

additional responsibility for 22% of CIOs
• Procurement and enterprise vendor management—represents the
second most common responsibility, with 17% of CIOs leading pur-
chasing and vendor relationship management across the enterprise
• Management of customer call and contact centers, which are technol-
ogy and communications intensive—represents the third most com-
mon responsibility for 13% of CIOs
CIOs are balancing their time across the business

and IT
Time and attention are perhaps the most important CIO resources.
The CIOs surveyed are distributing their time and attention across multiple
activities to maximize interactions with the business and effectively lead
their IS organizations. Looking at CIO time in terms of in and on the busi-
ness, this equates to:
• Working in the business. The CIO spends 39% of their time working
with the IS organization on IT issues and 29% of their time working
with the business on IT issues.
• Working on the business. The CIO spends the remaining 32% of their
time working with business leaders on business issues, oversight or
other activities.
Another way to look at this is in terms of whom the CIO is spending time
with. In this case, CIOs report that the majority of their time, or 61%, is
spent with business colleagues, and the remaining 39% is spent working
within IT (see bottom figure opposite). Either way, the CIO manages their
time and attention across multiple constituencies.

There is no magic formula for determining how effectiveness is a function of what you do with
CIOs spend their time. Highly effective CIOs have that time, not how long you spend working with
similar allocations to those of their peers. So CIO the business or IT.
CIOs are expanding their responsibilities beyond traditional IT
22% Areas of CIO responsibility outside of IT
Percentage of
CIOs reporting
they have the 17%
following
responsibilities
13%
8%
6%
4%
2%
Enterprise Procurement/ Call/contact Property/ Enterprise Human Enterprise

strategic enterprise center facilities operations/ resources finance/
planning vendor management COO CFO
management
CIOs spend more than half of their time working with business executives
on a range of issues
4% of time on other issues
10% of time
with board and
oversight
18% of time 39% of time

with business with IS on
on business IT issues
issues
29% of time
with business
on IT issues

Make enterprise
leverage a focus
of your 2007 CIO
agenda

4
CIOs need to create results now by working
in the business to improve current capabili-
ties and build for the future by working on
the business to drive new capabilities,
innovations, projects and services—all while
executives shorten the time frames for when
they expect to see results. Both are required
for success in 2007 and beyond.

4
The IS organization is in a state of transition
An evolutionary pattern is emerging as IS organizations head toward
2010. CIOs are transforming their organizations to meet the demands for
greater business contribution and leverage (see top figure opposite).
While the majority of IS organizations are in transition from a functional

orientation to an IT services model, IS organizations will face pressure to
adopt a stronger process focus. Moving from IT services to business
processes requires concentrating on improving business efficiency
through integration, standardization and process management. CIOs
are subsequently repositioning the responsibilities of business-facing IT
resources, including relationship managers, architects and analysts on
end-to-end processes like order-to-cash or customer acquisition-to-ser-
vice (see bottom figure opposite).
Early adopters of a process-oriented IS organization face increased

demands for innovation and enterprise leverage. This leads the IS
organization toward an information orientation and concentration on
using operational information to identify and qualify business innovations.
Progress toward this evolution is neither smooth nor uniform, but CIOs
should be aware of how other CIOs are responding to demands for
greater efficiency, effectiveness and innovation.

Highly effective IS organizations are evolving toward a process and
information orientation
• Innovation • Quality of service
• Improved business efficiency • Controlled costs
Information
Operational • Improved business efficiency Enterprise

Process
excellence • Quality of service leverage
2002 2010
Service
Function • Controlled costs
CIO leadership can transform IT through leveraging people, plans

and technologies
Infrastructure
Strategy, plans and metrics

Quality and skills of IS personnel
IS processes
Technical excellence
2010
CIO
leadership
IT contribution
2007

4
IT yield—Expanding how CIOs measure business
contribution
The definition and measures of success change as IT evolves toward
greater business contribution. Measuring systems availability or help-desk
responsiveness remains important. However, it does not capture ade-
quately the business impact of IT. Incorporating a measure of IT yield—the
potential business value created for the resources applied to information
technology—gives the CIO a business-based metric for working with the
business (see top figure opposite).
This involves measuring the numerator in terms of the business value

realized, such as reductions in the cost structure and the potential value
of new development projects as defined in project business cases (see
bottom figure opposite). Using potential value measures IT’s contribution
to enterprise leverage and highlights the joint responsibility of the business
and IT to convert that potential value into enterprise change.
In effect, using IT yield helps build enterprise awareness of IT’s contribu-

tion to business results and enterprise leverage. Moreover, incorporating
IT yield provides an important counterweight to discussions of IT costs.
Initially, it is more important to use the measure to start the conversation of
IT’s contribution, than have the measure be 100% accurate. Accuracy will
come with time, while gaining acceptance of IT’s contribution represents
an important step in this evolution.

As IT evolves, there will be greater emphasis on increasing IT yield through
the connection of processes, information and innovation
Function Service Process Information
Quality
of Cost Yield
service
Application Data Innovation
Measuring IT yield establishes a business impact measure for IT resources

that goes beyond traditional quality-of-service metrics
Value created
Yield =
Resources applied
Yield: The return earned on an investment (financial)

Yield: The proportion of devices that function correctly (semiconductor)
Yield: The measure of output per unit (agricultural)
IT yield: The potential business value created for the resources applied to information technology

4
Creating leverage changes enterprise dynamics
The 2007 CIO agenda calls for finding and exploiting sources of enterprise
leverage within the enterprise. CIOs find effective sources of leverage
when they change enterprise dynamics: the assumptions and relation-
ships that determine enterprise performance.
CIOs change enterprise dynamics by introducing new capabilities that

offer significant value, or customer or operational improvement, without
requiring the company to reconstitute its strategy. For example:
• British Airways consolidated ticketing across multiple channels into

a single Web-based channel through its customer-enabled initiative,
resulting in significantly higher customer satisfaction and operational
efficiency.
• Kindred Healthcare used its technology effectiveness as an integral
part of launching a multibillion-dollar institutional pharmacy business.
• Yorkshire Water used partners to improve service levels and reduce
operating costs.
Creating enterprise leverage will challenge traditional business thinking
around issues as either tactical or strategic by also looking at dynamic
issues falling between the two types (see figure opposite). These dynamic
issues are often not explicitly recognized, so they represent an opportunity
for the CIO and IT.
Dynamic, strategic and tactical changes unleash

different sources of value
Leading CIOs are increasingly making deep changes in enterprise perfor-
mance by changing how their company works and its use of tools and
information. These changes often rely on technical excellence, agility,
information or innovation—the sources of enterprise leverage.
Enterprise leverage changes business expectations for value and results.

The different business expectations—for dynamic, strategic and tactical
changes—form the “terms of value” that establish executive views on the
business value of IT.

CIOs and IT will change enterprise dynamics as they increase
enterprise leverage
Dynamic
Tactical Strategic
Focus Current-year budget Change enterprise capability Strategic plan

performance to drive growth
Management Operational Realize new capabilities and Sustainable competitive

objective effectiveness and transform current capabilities to advantage, long-term growth
efficiency deliver the strategy
Goal Delivering current Create sources of sustainable Communicating the enterprise’s

top/bottom line competitive advantage long-term potential
Responsibility CFO/COO, business CIO, corporate development, CEO, corporate development

unit heads product development
Information Transactions Combine information analytics Market dynamics

and business processes trans-
formation and product/service
delivery
IT role Deliver high-quality, Use operational knowledge, Support implementation

cost-effective data and operational capability of strategic plan; enable
services; deliver to create new capabilities enterprise agility
accurate information

4
The enterprise capability organization—A possible
future for professionals now working in IT
The future of the IS organization is the subject of speculation and debate.
Given changing business expectations for enterprise leverage through
improved performance and new capabilities, it is possible to propose a
future for the professionals now working in IT.
Executives need to organize the enterprise to achieve the following basic

functions:
• Deliver on current commitments to investors, constituents and
customers, which is often the responsibility of the business or
operating units.
• Manage financial, human capital and intellectual assets, which is the
responsibility of the various oversight organizations such as finance,
human resources, compliance and legal. These organizations are
often referred to as internal or staff organizations.
• Evolve the organization to sustain its success in a changing environment.
Currently, these responsibilities are distributed across the enterprise.
A possible future for professionals working in IT is to become part of a new
organization that concentrates on the evolution of enterprise capabilities.
Such an organization would have the goal of delivering new capabilities
through a comprehensive solution governed by a managed process that:
• Develops new capabilities that integrate business process, informa-

tion, information technology and workforce competencies (see top
figure opposite)
• Delivers improvements to raise the performance of current capabilities
and respond to incremental changes
• Structures and deploys activities to facilitate both improvement and
enterprise transformational change
In essence, it would be an organization with the mission of working on
the entire enterprise to give it the tools needed to achieve its strategy (see
bottom figure opposite).

An enterprise capability organization combines process, information
technology and workforce responsibilities to support transformation
Organization Description Where is it currently What are the reasons for integrating
located in the enterprise? this organization?
Capability A team responsible for monitoring the operational Rare, as enterprise Customers experience service through the
simulation and performance of the enterprise as an integrated whole performance is fragmented interaction of capabilities rather than the
architecture and designing improvements in the interactions along organizational, performance of individual functions; this
between capabilities product or functional lines team can reduce operational friction across
the enterprise
Capability A team that works with business leaders to monitor May reside with individual The enterprise is a complex system requiring
performance individual capability performance and develop process owners who have focused domain knowledge including
modeling and requirements and designs for new or improved clear process performance process, information, technology and
requirements capabilities targets workforce requirements
Enterprise Responsible for the development of improvements to Fragmented, with business Integrating business process design and
business business processes and application systems; units responsible for management into a single organization
process working either with suppliers or directly, they develop processes and IT creates clear lines of responsibility with the
management integrated process and technology solutions responsible for application authority to improve business process
systems performance
Enterprise A center of excellence responsible for providing Does not exist at the Information comes from across the
analytics and information and analytics services in support of enterprise level, as analytics enterprise and is used across the enterprise;
information innovation, and strategic experiments using support specific tasks such a center of excellence creates a critical mass
information from across the enterprise as marketing of analytic resources to support enterprise
needs
Enterprise Teams responsible for the multisourcing relationships Currently in IT operations This group gives the chief capability officer
technology and captive teams delivering technology services to and infrastructure (CCO) a critical mass to support their
services the enterprise organizational power and influence; the CCO
needs operational responsibilities to have
credibility with C-level peers
Workforce A team that monitors workforce performance, Currently in the training Improving workforce skills is the fastest way
competency identifies skill and competency gaps and provides department of human to raise performance at the point and time of
management resources to raise workforce skill and performance resources, managed by need; this requires being proactive and
levels adherence to a competency focused rather than executing a standard
model training curriculum
Capability A team responsible for managing the change process Ad hoc, often created Customer and market demands require a
transformation and deploying new solutions and improvements during a transformation continual stream of improvements both
across the enterprise program, then disbanded large and small; a team responsible for
deploying ongoing change supports greater
adaptability
Integrating process, information, technology and workforce transformation

creates an organization responsible for enterprise capability
CEO
Capability Capability Capability
owners Chief Enterprise governance owners
capability capability
officer organization
Office of the CIO
CFO
Capability Capability Capability

development information & performance
services management &
improvement
Create Operate Transform
Capability Capability Enterprise Enterprise Enterprise Workforce Capability

simulation & performance business analytics & technology competency transformation
architecture modeling & process information services management
requirements management

4
Recommendations for your 2007 CIO agenda
The baseline recommendations for 2007 concentrate on the actions CIOs
should consider in strengthening the core of IT and its role in the enter-
prise (see figures opposite and following):
• Understand executive expectations for IT in 2007. Executives will

judge CIO and IT success based on their expectations. Report on the
information required to prove that IT is meeting those expectations.
• Evaluate your current IT governance arrangements and re-establish
them as necessary. Get a clear demand signal from the business.
Make sure that your governance arrangements will produce the de-
sired behaviors in both the business and IT for 2007.
• Increase your focus on building business skills in IT. Executives are
asking more for innovative business solutions to business problems
than just applying technology. Meeting that request is difficult if your
team does not know the business.
• Grow your business process management and business process
improvement capabilities. Eighty-four percent of CIOs see improving
business processes as having a significant impact on IT.
• Focus on solutions that raise enterprise workforce performance by
giving personnel the right information and business rules to support
their responsibilities.
• Start building an information management capability in your enterprise.
Use operational performance data as a leading indicator of business
and financial performance, and use information and analytics in your
operations.
• Establish innovation as a structured process that focuses on new ap-
proaches to business issues rather than relying on inspiration. Com-
bine innovation with information to prove the potential of new ideas.
• Expand your IT metrics to include results measures in addition to
measures of cost.
• Get serious about pending retirements in IT and develop a workforce
strategy to get started. This is an urgent issue; just like Y2K, it will not
get better with time.

Incorporate specific actions into your 2007 CIO agenda based on
combinations of strategy and enterprise leverage
Strategy
Getting bigger Getting faster Getting wider Getting closer
Acquiring or partner- Introducing new Expanding into new Deepening current

ing with others products or services markets or customer
Leverage sources geographies relationships
Technology • Increase standardization • Establish product data • Develop or review your • Support multiple
Reducing cost of technology to reduce management multi-country approach channels with a common
the time and cost of • Get involved early in and plan back-office system to
structures and acquisition product development • Take advantage of lower costs and reduce
raising resource • Invest in scalable processes to reduce high-science/low-cost channel arbitrage
effectiveness infrastructure time-to-market opportunities • Reduce technology-
• Incorporate system • Integrate program • Add proximity to growing generated disruptions to
costs into due-diligence management office with markets in sourcing customer-facing
processes product development decisions processes
• Integrate program and deployment • Consider captive off-
management office with shoring of resources
M&A processes
Agility • Reduce technology • Avoid creating new • Evolve sourcing • Match sales and service
Managing the speed, complexity to manage systems for new decisions toward gaining efforts with potential
points of change products, to reduce access to the best talent market profitability
scale, cost and risk • Standardize APIs and complexity and cost rather than looking for • Review and remove
of change services within the • Use parameter-based labor arbitrage outdated applications
company, partners and systems in back-office • Promote a single, and business rules in
customers processes enterprisewide back- systems
• Apply communications, office platform across all
training and portal geographies
technologies to sales • Reject fragmented sales
and service processes and service from global
suppliers
Information • Build fact-based • Evaluate and conduct • Avoid using local data • Align products and
Moving with acquisition models for strategic experiments and process definitions services in accordance
understanding operational and financial based on actual for standard business with customer value
costs customer data processes and practices • Apply actual customer
in a changing • Model the operational • Use the same measures, behavior in marketing
environment impact beyond but different targets, to decisions
extrapolating current gain a consistent view
costs across all geographies
and markets
Innovation • Inventory the portfolio of • Extend your knowledge • Identify performance • Engage customers and
Bringing new operational capabilities into your customers’ best practices and suppliers in the
business ideas to to be able to exploit internal processes and deploy them across innovation process
strategic capabilities to activities to identify geographies • Establish challenges
market successfully consolidate common potential new products • Access new ideas from within the company to
operations across your global address persistent
• Re-evaluate operational operations/customers business issues
and technical integration • Assess local supplier
plans to identify capabilities and business
approaches to gain rapid practices
scale efficiencies

4
Specific recommendations for the top 10 CIO strategies in 2007
2007 Top 10 Technology Agility Information Innovation

ranking CIO strategies
1 Delivering projects that Increase business Implement service-oriented Use current customer Establish an innovation
enable business growth involvement in require- projects that increase the information and knowledge process that concentrates
ments definition, design adaptability of business to model the business on addressing defined and
and testing to increase the and IT systems impact of new products, measurable business
business relevance of IT systems and services that needs
work are expected to drive
growth
2 Linking business and IT Apply tactical project Eliminate a separate and Incorporate operational Identify enterprise-level
strategies and plans governance that reviews distinct IT and business data and knowledge into business needs (problems
the connection between IT strategy by having a single enterprise operating and opportunities) that are
projects and specific enterprise strategy that strategies the target of innovation
project requests on a identifies and projects processes and projects
monthly basis sources and areas of future Identify key business
change metrics and targets and Staff innovation projects
model strategic initiatives with blended teams
to those metrics
3 Improving the quality of Align IS services and Standardize the technology Extend IS services to Incorporate technology
IS service delivery service levels with and application platforms include analytics and data innovation processes with
business expectations to reduce the cost and consistency business innovation
complexity of operations processes to establish a
Establish and invest in a Build the case for process clear connection between
program of IT process standardization as a means new technologies and
improvement of improving information business needs
accuracy and value
4 Attracting, developing Formally assess and plan Build project management Emphasize and build skills Extend your IT workforce
and retaining IS for succession in key jobs and leadership skills as in understanding business plan to attract and hire
personnel and technical knowledge core competencies across information and the personnel without prior IT
domains; establish IT capabilities that drive experience, either from the
retention and transition operational performance business, from university
programs as appropriate Build skills and conduct IT or from other disciplines
process improvement
projects to raise IT Reward lateral thinking by
performance and quality of paying attention to new
the working environment ideas
5 Demonstrating the Start communicating IT Connect business systems Express the business value Quantify results of new
business value of IT yield in IT metrics and technical infrastructure of IT projects in terms of capabilities by concentrat-
investments and business operational ing on the connection
Review and update IT operations with changes to metrics and their between process, systems
performance metrics to products, processes and improvement and workforce
communicate in business services competencies
terms
Increase IT’s sensitivity to Improve enterprise visibility Incorporate analytics, Bring customer and
6 Providing new types of the importance of by incorporating technical process management and operational information to
information consistent information and operational informa- other related disciplines bear in strategic
definitions and meanings tion transparency into into the IT curriculum experiments and
by reviewing for it in assessments of current simulations of innovative
business process operational and technical Adopt information solutions
improvement and IT platforms orientation practices
projects within IT and across
the enterprise
Strengthen IT governance Increase use of services Evaluate technical Expand the reach of
7 Developing or managing of IT infrastructure and IT and service-oriented infrastructure support for innovation processes to
a flexible technology architecture domains architecture principles, common and consistent consider fundamental
infrastructure to incorporate adaptability primarily in areas of high information definitions in changes in technical and
into infrastructure variability applications; review business infrastructure to
decisions; encourage reuse potential for information achieve performance goals
and parameter-based access layer (information
systems bus) as a means to link
legacy and new systems
consistently

Specific recommendations for the top 10 CIO strategies in 2007 (continued)
2007 Top 10 Technology Agility Information Innovation

ranking CIO strategies
8 Improving IT Gain clear decision rights Incorporate greater Extend IT governance to Create enterprise
governance for business application business involvement in include decision rights innovation governance
needs and IT investment decisions regarding IT regarding business covering principles,
and prioritization principles and IT process principles and business needs,
infrastructure strategies information principles investment prioritization
and deployment
prioritization
9 Building business skills Establish a basic business Build on the basic Build skills in the Build skills and competen-
in the IS organization curriculum concentrating curriculum to concentrate information management cies in enterprise
on business model on key metrics and how practices of the business innovation processes using
operations and service current operations and and their connection with the same process across
systems deliver to those business performance all departments in the
metrics enterprise
10 Leading change Strengthen the business Extend the IT program Strengthen operational Connect enterprise
initiatives (involving skills of IT professionals management office into an performance measurement performance goals and
more than IT) and business participation enterprise program capabilities to identify best business needs to an
in technology development management office practice performance innovation process
projects
Gartner EXP reports aligned with the 2007 top 10 CIO strategies
2007 Top 10 Gartner EXP Premier Gartner EXP CIO Signature

ranking CIO strategies (Includes all Premier reports, plus
the following)
1 Delivering projects that enable business • Changing Business Processes • Collaborating for Advantage: How Far Can
growth • Playing to Your Advantage: Proven You Go?
Practices of Midsize-Enterprise CIOs • Growth and Innovation
• Timing Is Everything in Mergers,
Acquisitions and Divestments
• Emerging Markets: A “Lite” Touch
• 20 Smart Strategies
2 Linking business and IT strategies and • Creating Enterprise Leverage: The 2007 • Strengthening the Information Value Chain
plans CIO Agenda • Completing the IT Strategy
3 Improving the quality of IS service • Spend Less, Get More: 25 IT Cost • Show Me the Money: Advanced Practices
delivery Containment Techniques in Benefits Realization
• Success With Standards • Maneuvering an IS Turnaround
• IT Risk Management: A Little Bit More Is a
Whole Lot Better
4 Attracting, developing and retaining IS • Building the Next-Generation IT Workforce (see Gartner EXP Premier reports)
personnel • Building Business Smarts in IS
• The New Shape of IS
5 Demonstrating the business value of IT • Upgrading the IS Scorecard • Driving Customer-Centric IT

• The New Math of IS
6 Providing new types of information • Growing IT’s Contribution: The 2006 • Strengthening the Information Value Chain
CIO Agenda • From Value to Advantage
7 Developing or managing a flexible • High-Value, High-Risk: Managing the • Get Real: The Future of IT Infrastructure
technology infrastructure Legacy Portfolio • Driving Enterprise Agility
• Applying Enterprise Architecture
8 Improving IT governance • IT Governance • Tailor IT Governance to Your Enterprise

• Working With the Board of Directors
9 Building business skills in the IS • Building Business Smarts in IS (see Gartner EXP Premier reports)
organization • Making Time: The Office of the CIO
10 Leading change initiatives (involving • Overcoming Change Obstacles • Leading Enterprise Change
more than IT) • Working With the Board of Directors
• Taking Your PMO to the Next Stage
• Perception Is Reality: Communication
Strategies for Public Sector CIOs

4
The 2007 Gartner EXP CIO research agenda
The year 2010 represents the next critical milestone for the business and
IT—since the last major milestone, the year 2000. Leaders in IT will look to
external events to rally their organization, set new goals and targets, and
measure and recognize success.
Why will 2010 be so important? Because executives faced the last mile-
stone under a cloud of potential technology-related business failures and
risk, which limited their enthusiasm for it. They are now free of that cloud
and can look forward to new potential.
CIOs should use 2010 as the next milestone to rally their IS organizations
around setting new goals for transforming IT performance and strategic
positioning in the business. To this end, they should be proactive and start
the conversation about the future of IT. This means making sure their 2007
CIO agenda strategy and board presentation briefing contains at least one
slide that talks about longer-term goals for 2010 and what achieving those
goals means to the enterprise. CIOs must begin setting the tone for the
future; otherwise, the business will set the tone.
The working titles for the 2007 Gartner EXP research reports reflect the
needs and priorities of CIOs
Gartner EXP Premier reports Gartner EXP CIO Signature reports
Creating Enterprise Leverage: Enterprise Dynamics:
The 2007 CIO Agenda Putting the “I” Back in CIO and IT
Portfolio Management: Exploiting the Relationships Value Dialogues: A New Language for the
Among Its Members Business Value of IT
Information Management Changing the Business Model
Strengthening the IS Organization Achieving Market Leadership and Growth
Street Smarts in Corporate Planning IT in Product Development
Matching the Right Issues, Decisions Anytime, Anyplace—Location Independence
and Results

Appendix
CIO responses are from all regions
Latin America (4%)
Asia/Pacific (10%)
North America
Europe (47%)
(39%)
CIOs responded from companies of different sizes

(by number of employees)
12% greater than 20,000
22% less than 750
25% between 5,000

and 19,999
18% between 750

and 1,999
23% between 2,000 and 4,999

Appendix (continued)
CIO responses by industry
Agriculture and mining 1% Government 15%

Construction 1% Retail 5%
Education 5% Services 9%
Energy (oil and gas) 3% Telecommunications 3%
Financial services 19% Transportation 5%
Healthcare 7% Utilities 4%
High-technology 2% Wholesale trade 3%
Manufacturing 18%
CIOs project that reporting relationships will evolve toward working for the
CEO by 2010
Other
Other CEO (17%)
(26%) (32%)
COO CEO
(15%) (53%)
COO
(17%) CFO CFO
(25%) (15%)
2007 (reported) 2010 (projected)

Further reading
Gartner EXP reports Tucker, C. and Nunno, T., Spend Less, Get
More: 25 IT Cost Containment Techniques,
Aron, D. and Meehan, P., Driving Enterprise
G00144356, Gartner EXP Premier report,
Agility, G00127380, Gartner EXP CIO Signature
October 2006
report, April 2005
Aron, D. and Powell, R., Timing Is Everything Core research

in Mergers, Acquisitions and Divestments,
Kitzis, E., “CIOs Need to Close Performance
G00142558, Gartner EXP CIO Signature report,
Gaps,” G00144929, December 5, 2006
August 2006
Mahoney, J. and Raskino, M., “CIO New Year’s
Berry, D., Mok, L., Walker, A. and Tucker, C.,
Resolutions 2007,” G00145211, December 8,
Building the Next-Generation IT Workforce:
2006
Focus on Synergies, G00144922, Gartner EXP
Premier report, November 2006 McGee, K. et al., “Gartner’s Top Predictions for
IT Organizations and Users, 2007 and Beyond,”
Blosch, M. and McDonald, M., Strengthening the
G00144544, December 1, 2006
Information Value Chain, G00139561, Gartner
EXP CIO Signature report, April 2006
Books
Broadbent, M. and Weill, P., Effective IT Gov-
Davenport, T. and Harris, J., Competing on Ana-
ernance. By Design, G-11-2709, Gartner EXP
lytics: The New Science of Winning, Boston, MA:
Premier report, January 2003
Harvard Business School Press, March 2007
Nunno, T., Blosch, M. and Mok, L., Emerging
Hagel III, J. and Seely-Brown, J., The Only
Markets: A “Lite” Touch, G00137946, Gartner
Sustainable Edge, Boston, MA: Harvard
EXP CIO Signature report, February 2006
Business School Press, 2005
Rowsell-Jones, A. and McDonald, M., Changing
Business Processes, G00127735, Gartner EXP
Premier report, May 2005
Tucker, C. and Agopian, H., Taking Your PMO to

the Next Stage, G00138608, Gartner EXP
Premier report, March 2006
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completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or
for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed
herein are subject to change without notice.
© 2007 Gartner, Inc.

january2007
january2007
Gartner Headquarters Gartner EXP Premier Reports

Corporate Headquarters Building the Next-Generation IT Workforce:
56 Top Gallant Road Focus on Synergies
Stamford, CT 06902-7700 November 2006
U.S.A. Spend Less, Get More:
+1 203 964 0096 25 IT Cost Containment Techniques
October 2006
Europe Headquarters
Tamesis High Value, High Risk:
The Glanty Managing the Legacy Portfolio
Egham
Surrey, TW20 9AW
September 2006
Working With the Board of Directors
Creating Enterprise
Leverage: The 2007
UNITED KINGDOM July 2006
+44 1784 431611
Success With Standards
ay 2006
M
CIO Agenda
Asia/Pacific Headquarters
Gartner Australasia Pty. Ltd. Taking Your PMO to the Next Stage
Level 9, 141 Walker Street March 2006
North Sydney
Growing IT’s Contribution: The 2006 CIO Agenda
New South Wales 2060 Contents
January 2006
AUSTRALIA
Building Business Smarts in IS Executive summary 4
+61 2 9459 4600
IOs report that 2007 business expectations for information technology will concen-
C
November 2005 trate on providing new enterprise capabilities in the face of increasing competition.
CIOs must keep current operations moving while creating future sources of enterprise
Japan Headquarters Overcoming Change Obstacles in the Public Sector leverage. Success during the next three years will require CIOs to find and develop
Gartner Japan, Ltd. October 2005
points of enterprise leverage.
Aobadai Hills 6F Section 1 Enterprises seek leverage in an increasingly

4-7-7 Aobadai, Meguro-Ku Applying Enterprise Architecture demanding market 10
Tokyo, 153-0042 September 2005 IOs report that competition is increasing as more enterprises look to expand their
C
mission. As a result, executives expect IT to provide leverage to make the enterprise
JAPAN The CIO’s Personal Contribution Scorecard unique in ways that matter to the overall market and individual customer.
+81 3 3481 3670 July 2005 Section 2 CIOs create enterprise leverage through focused
leadership 34
Changing Business Processes IOs should focus on specific points of enterprise leverage to deliver the new or
C
Latin America Headquarters
May 2005 improved capabilities required for growth. CIOs create leverage by concentrating
Gartner do Brasil resources on technical excellence, agility, information or innovation. Experiences of
leading CIOs provide road maps for delivering leverage in these areas.
Av. Das Nações Unidas, 12.551 – 9º andar Perception Is Reality: Communication Strategies
for Public Sector CIOs Section 3 Creating enterprise leverage changes the roles of
World Trade Center – Broklin Novo the CIO and IT 68
04578-903 – São Paulo – SP March 2005 xecutives expect CIOs and IT to play greater business roles. This will require the CIO
E
BRAZIL Playing to Your Advantage: Proven Practices
to lead IT out of its traditional technology box and engage the enterprise in new ways.
+55 11 3443 1509 of Midsize-Enterprise CIOs Section 4 Make enterprise leverage a focus of your 2007
March 2005 CIO agenda 76
For more information, IOs must create results now in the business and build for the future in terms of new
C
visit gartner.com. Delivering IT’s Contribution: The 2005 CIO Agenda on-the-business capabilities, innovations, projects and services. Both are required for
January 2005 success in 2007 and beyond.
Appendix 91
Making Time: The Office of the CIO
November 2004 Further reading 93
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Creating Enterprise Leverage: The 2007 CIO Agenda

Aobadai Hills 6F Section 1 Enterprises seek leverage in an increasingly

© 2007 Gartner, Inc. and/or its affiliates. All rights reserved.

Aron, D. and Powell, R., Timing Is Everything Core research

Tucker, C. and Agopian, H., Taking Your PMO to

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Creating Enterprise Leverage: The 2007 CIO Agenda 93

Programs is the world’s largest membership

organization specifically for CIOs.

Designed to enhance senior-executive productivity

and professional development, Gartner Executive

Programs provides a single source of research

expertise, one-to-one counsel and the shared

intelligence of thousands of senior IT executives.

Creating Enterprise Leverage: The 2007 CIO Agenda 

to CIOs and IT to deliver the capabilities to meet

those demands. CIOs will need to find sources of

enterprise leverage to raise performance and make

their companies stand out in a crowded market.

 Gartner EXP Premier

Creating Enterprise Leverage: The 2007 CIO Agenda 

share, and executives expect CIOs and IT to

contribute to that growth and performance. CIOs

have responded by reducing IT and enterprise

costs. To reach the next level, CIOs will need to

create new sources of enterprise leverage.

 Gartner EXP Premier

CIO and IT strategies

Creating Enterprise Leverage: The 2007 CIO Agenda 

Top 10 business priorities: CIOs see executives expecting IT to play a

Controlling enterprisewide operating costs 2 2 3

Attracting, retaining and growing customer relationships 3 3 **

Improving the effectiveness of the enterprise workforce 4 * *

Need for revenue growth 5 8 6

Improving enterprise competitiveness (bottom-line profitability) 6 5 **

Expanding use of information/intelligence in products and services 7 6 7

Entering new markets, new products or new services 9 * *

Faster innovation (shorter product/service life cycles) 10 9 10

* New question for 2007 ** New question for 2006

 Gartner EXP Premier

Top 10 CIO strategies: CIO strategies recognize the need to support

Linking business and IT strategies and plans 2 2 2

Improving the quality of IS service delivery 3 7 7

Attracting, developing and retaining IS personnel 4 5 **

Developing or managing a flexible technology infrastructure 7 8 **

Building business skills in the IS organization 9 3 9

Leading change initiatives (involving more than IT) 10 * *

* New question for 2007 ** New question for 2006

Creating Enterprise Leverage: The 2007 CIO Agenda 

Highly effective IS organizations are evolving toward a process and

Operational • Improved business efficiency Enterprise

Function • Controlled costs

 Gartner EXP Premier

Timing will tighten during the next three years

Creating Enterprise Leverage: The 2007 CIO Agenda 

10 Gartner EXP Premier

Creating Enterprise Leverage: The 2007 CIO Agenda 11

Competition increases the need for implementing distinctive and diversified

• Getting bigger: growing by acquiring or partnering with others

Distinctive strategies bring clarity to CIOs and greater direction in terms

While enterprises are following more distinctive strategies, CIOs by and

12 Gartner EXP Premier

Three out of five CIOs report that their enterprise expects to

Executives follow a diverse set of strategies to support growth, while those

Acquiring or Introducing new Expanding into Deepening

Total responses 17% 31% 22% 30% 100%

Creating Enterprise Leverage: The 2007 CIO Agenda 13

Channel 4—Unique among the crowd

14 Gartner EXP Premier

Channel 4—Unique among the crowd (continued)

Creating Enterprise Leverage: The 2007 CIO Agenda 15

• Executives expect IT to play a significant role in the value the business

In-the-business priorities center on improving

On-the-business priorities point to results now

Aobadai Hills 6F Section 1 Enterprises seek leverage in an increasingly

Creating Enterprise Leverage: The 2007 CIO Agenda

Gartner EXP Premier

Creating Enterprise Leverage: The 2007 CIO Agenda

Gartner EXP Premier

Creating Enterprise Leverage: The 2007 CIO Agenda

Gartner EXP Premier

Creating Enterprise Leverage: The 2007 CIO Agenda

Gartner EXP Premier

Creating Enterprise Leverage: The 2007 CIO Agenda

• Getting bigger: growing by acquiring or partnering with others

• Executives expect IT to play a significant role in the value the business

• 51% of CIOs reporting planned IT budget increases at an average