From the Gartner files The Changing Shape of IT: What We've Uncovered, Where You Can Find It Businesses must transform IT organizations from simply service delivery into organizations that assist their enterprises in optimizing business processes, mastering information management, and exploiting relationships to fuel collaboration and innovation. Organizations that do this will spawn new disciplines that fuse business and technology to create new value. Gartner calls this organizational evolution the "changing shape of IT," which will affect businesses and individual career paths. This research summarizes Gartner's key findings on this theme and points clients to resources for further information. Key Findings
IT leaders and other IT professionals:
1.0 Introduction Globalization, consumerization, new competitors and new service models will radically reshape the IT environment and IT disciplines. Gartner's research on the changing shape of IT points to new business models, new technology opportunities and new leadership profiles. Our analysis paints a picture of IT frontier leaders and how they sustain the competitive edge. The changing shape of IT is not just about IT as technology, as an industry or as today's IT discipline. It is also about how enterprises will create new disciplines that fuse three essential business assets: information, processes and relationships. When combined with IT hardware, software and tools, as well as with OT and with business change, it will create new value. Figure 1 shows the elements of the changing shape of IT. Figure 1. The Changing Shape of IT 
Source: Gartner (May 2008) IT has evolved as a specialized discipline alongside other major functions in the business. As it matures and becomes pervasive, many traditional IT functions may be more effectively undertaken in line-of-business units or by new business functions that evolved from traditional IT. Remaining traditional IT responsibilities will focus increasingly on increasing efficiency and providing well-defined levels of service, as well as disciplines such as enterprise architecture (EA), strategic planning and vendor management. Power will realign among business users, IT organizations, hardware vendors, software vendors, communications vendors, technology service providers, IT professionals and consumers. The final pattern will not be clear for several years. This trend began to surface in 2005, and will continue during the next five to seven years. Although partly driven by changes in the underlying technology platforms and tools, this trend is not the same as the changing shape of technology. Instead, the changing shape of IT is about how the stand-alone management discipline of IT is evolving into a new business discipline centered on business information, processes and relationships. The domain of business issues addressed by IT continues to grow and change. As businesses address the new problem spaces (for example, ERP in the 1980s and 1990s, Web presence in the 1990s, and Web 2.0 and dynamic collaboration in the early part of this century), technical expertise will become important but rare. Previous generations of problems will become more commoditized in many, although not all, enterprises. However, in addition to the development of the new technology-related management disciplines, some elements of technology will remain leading-edge value sources. The rest of this research summarizes research that helps answer the five key issues outlined for the changing shape of IT theme in early 2007. Each section ends with a list of references related to those topics. 2.0 How Is the Shape of IT Changing, and What Will Be Its Effects? Growth is near the top of every CEO's priorities, and it is set to come from acquiring new customers and forming closer relationships with established customers. At the same time, globalization provides new opportunities for growth, but at a higher risk. IT will play a critical role in helping organizations achieve their goals, and capitalize on the opportunities present in the global economy. To support the evolving needs of organizations and new, IT-enabled business models, many IT organizations have already spawned new groups that reflect their focus on business processes and relationship management. In some cases, the CIO role has been expanded to cover domains such as strategic planning, supply chain management and innovation. In other cases, expertise that used to primarily reside in IT – such as project and portfolio management and strategic change management – is being subsumed into the business as a whole. Among IT organizations, there is a clear trend to become more focused on delivering business results and adding value to external customers. To achieve these benefits, IT organizations are reorganizing to create the necessary structures and competencies. They are also taking on more professionals who have a mix of business and technology knowledge. The evolution of IT is complex, varies substantially among enterprises, and relates to several factors, including enterprise size, central or local style, and the intended contribution of IT to the business. There is a definite trend away from a tactical IT organizational role to a strategic role and to the overall management of business processes. In general, Gartner research shows that the larger and more centralized an IT organization is, the less focused it is on business processes and the more focused it is on alignment and tactical issues. Enterprises with a significant innovation component in their IT portfolios show a strong trend of IT organizations based on information and process assets. Type Z enterprises (that is, enterprises in which community IT is dispersed in the business) are still largely unrecognized; IT leaders are mostly unaware of this model and do not expect to manage one. 3.0 What Are the Main Drivers of the Changing Shape of IT? 3.1 Business Models and Systems Companies and public-sector enterprises are fundamentally changing their business models to compete on a global stage, changing strategies, structures and processes as they do so. Collaborating outside the enterprise brings innovation, "ecosystem" efficiency and effectiveness, and thus is critical to enterprise performance. However, collaborating is difficult to get right, and few IT organizations are well-versed in this. Leading enterprises are building this capability and driving growth. An emergent leading approach is to plan business and IT from the outside in. Starting from the needs of customers, owners, suppliers and other stakeholders, enterprises can recognize and exploit the developing ecosystem, competitive risks and opportunities; then, they can strategize and deliver enterprise change. Another way of looking at this trend is to recognize that the emphasis of IT is shifting from the "T" (technology) to the "I" (information). IT is no longer a separate and distinct business activity, but intertwined with business intelligence, business process management, resource management, strategic planning and operations management – just to name a few. In some industries, the amount of money spent on "operational" technology is similar to the traditional IT budget. Virtual worlds and consumerization of IT (that is, technologies and models that originate in the consumer space, rather than from enterprise IT) are generating insights about possible new business models, as well as new demands from new and current stakeholders using different styles of interaction. The concept of a "flat world" is an important part of the evolving business models. In the book, "The World Is Flat: A Brief History of the Twenty-First Century," Thomas Friedman described how globalization has provided a level playing field for businesses. Business process networks (BPNs) are the key infrastructure for success in a flat world, where every enterprise will need an increased ability to sense and respond to market conditions. Firms must decide whether this capability is value-added in terms of having their own physical, internal enterprise information and process capabilities (sometimes called an "enterprise nervous system" [ENS]). Then, they must decide whether they should outsource their infrastructure and gain the capability virtually via a BPN. The BPN's critical consequence to the IT organization is that it will have to develop externally collaborative methodologies to design, develop, implement and manage shared business processes. Similarly, strategic information management is growing in prominence as enterprises recognize the need to generate insights and synergies from information assets. Enterprise information should be managed strategically and holistically by reviewing information-related IT investments, engaging business peers to identify relevant strategic information management questions, and finding answers through experimentation. EA, a business discipline that is not technology-centric or technology-driven, creates the linking framework between the three sets of business assets: information, processes and relationships. We're seeing growing synergy, for example, between business process management (BPM) and EA. The evolution of BPM and EA has led to powerful complementary capabilities derived from different origins. By employing a common methodology and notation to business process modeling, benefits are delivered to each discipline for a highly synergistic relationship. Similarly, links are developing between EA and enterprise information management (EIM), which maximize benefits. Today's connected world is awash with information, which, ironically, can obscure and delay its use. As a result, information must be architected and managed across the enterprise, within the context of the enterprise's business strategy. EA provides the strategic context for EIM, including an analysis of the business strategy and its implications for EIM. EIM implements the enterprise information architecture and provides information management services and support. EA has become an integrative discipline that recognizes that information, business processes and technology components interoperate to deliver capabilities that the business needs. The EA team, although not owning many (or often any) of these components, is responsible for ensuring that the different constituencies of the enterprise work together in a holistic fashion to design architectures that support the business strategy. 3.2 Technology Capabilities and Delivery Models Advances in key technical areas (for example, networking, computing, application delivery and virtualization) have the potential to transform the efficiency of business foundations, because they enable new, richer relationships and market styles. Alternative delivery models have the potential to dramatically change how IT is obtained, developed, supported, managed, licensed and accounted for. Gartner has identified 14 new alternative delivery models primarily about delivering IT as a service, in addition to at least 12 current delivery models. This group of drivers includes all the connected developments in the technology that underpins almost all that most modern enterprises do. In some ways, technology itself doesn't matter. Communities, consumers, politicians, peer groups and children will determine which technologies succeed or fail. The networked society generates new behaviors, opportunities and demographics, while virtual worlds and the consumerization of IT generate new possibilities and new demands. IT operations management professionals have been working hard, investing in Information Technology Infrastructure Library (ITIL) and process maturity, and becoming more customer-centric and business-centric. These efforts are paying off in greater credibility with business customers and in higher levels of service quality at lower costs. However, with new platforms and architectures that are more dynamic and virtual, the technology foundation is shifting beneath them, threatening to shake the very foundations of the operations architectures they have built. 3.3 Trends and Developments in People Strategies and Leadership The true role of leadership – clarifying new directions and taking people and organizations in those directions – gains great significance as the shape of IT changes. As we said earlier, as IT becomes more critical to the operations and strategies of many enterprises, business leaders must have a closer understanding of what IT does and how it can change the characteristics and operating pattern of markets. On the other hand, some enterprises see IT simply as a commodity, necessary but not strategically critical. In both situations, the management of IT continues to extend beyond the IT organization. The management of IT is not only within the IT organization; it's all through the business and part of today's work, culture and society. All this demands transformation of leadership, management, people, skills and organizations. Amid changes in business, technology and innovation, CIOs and IT leaders must focus on a few critical, enduring issues. Interaction through social networks will become the engine for innovation. Competitive rule breakers will disrupt every industry, so it's essential to work outside and inside the business. Technology ownership will not be a sure thing, so it's vital to concentrate on outcomes, not inputs – that is, leaders must clarify the intended endpoint in business terms, rather than start from technology and organizational capabilities and attempt to work forward. The enduring contribution of business technology will live in information, processes and relationships. 4.0 What Other Disciplines Are Related to IT, and How Are the IT-Business Boundaries Changing? We observe several deep changes in IT organizations, as a result of the blurring boundaries between IT and the rest of the business. Here are several examples:
In addition to the melding of IT and the business, key technology trends are impacting the traditional relationship between IT and the business. One of the most significant of these technology trends is IT consumerization. Examples include instant messaging, PDAs and social networking sites. Some IT leaders are still attempting to fight the consumerization trend, seeing it as a battle of wills between the IT organization and the user community. Organizations should look at consumerization as a way to enrich the flow of information, discover new ideas and reach new markets. 4.2 A Flat World Demands New Management Approaches Just as the consumerization of IT is disrupting traditional models of IT service delivery, global business trends are impacting the business models that organizations will use to win during the next few years. Several challenges are emerging for organizations looking to compete in a flat world, and all of these have substantial implications for IT organizations:
5.0 What Are the Implications of the Changing Shape of IT for IT, OT and Business People? The roles and skills that organizations require to deliver IT-enabled services today are different from what they were just a few years ago. So, too, is the kind of leadership today's IT organizations demand. Specifically, new challenges are emerging in managing people, teams and organizations. IT managers can no longer rely on past experience and disciplines to lead their organizations into the future. Regardless of the organization's culture, IT managers will steadily be expected to behave and inspire like business leaders. They will have to champion change, spur innovation, unify people across disparate constituencies and be role models of adaptability. Those who cannot reach that higher level of leadership will lose their way in the 21st-century business. 5.1 Leading Extended Teams Becomes Critical Using IT to fuel enterprise transformation will become a competitive competence, but business performance outcomes will depend on people and parties outside official business perimeters. As businesses embrace global markets, consumerization and extended markets, their pursuit of innovation, design, service and quality will impel them to look outside as often as they look inside. People will be a gating factor for growth. High demand and changing professional profiles will cause the availability, qualifications and development of people to be unpredictable. The following should be considered in the context of how the changing shape of IT impacts the makeup of IT professionals. 5.2 Finding the Right Skills Gets Harder Converging forces will render the quest for talent a permanent part of the competitive landscape and force new approaches. The rising demand for business growth and business change will be poorly met by the traditional supply of IT professionals. People who are prepared, willing, and able to lead and understand business challenges and business change will be in short supply. The requisite profile of an IT professional – a hybrid mix of business, technology, and professional knowledge and versatility – will not be easily taught, acquired or learned. The gap between burgeoning demand and inadequate supply of qualified people will spur the introduction of market alternatives – such as global service delivery, industrialized IT services, alternative delivery models, and IT process automation and outsourcing. The demand-supply imbalance will cause short-term pain for all but the most competitively aggressive companies. In the long term, it will introduce structural change in the problems that are attacked, the IT solutions that are defined, and the makeup of application and technology portfolios. 5.3 IT and OT Professionals Who Do Not Change Risk Being Bypassed In industries such as utilities, where traditional IT and OT are being fused, CIOs and IT leaders must be mindful of the risk of being marginalized. For at least 10 years, utility companies have managed IT with specific overall architecture and governance plans. In parallel, the operational technologies that support power delivery have evolved functionally, but without a common technology strategy and architecture. This will change as organizations seek to manage IT and OT in a more integrated way. In any organization where OT is significant, IT leaders should recognize that, although integration of IT and OT makes sense, the rules of governance and the infrastructure of OT systems are currently unsuitable to such realignment. This means that the scope of CIO authority will change, or a new authority will arise in the business to cater to the needs of planning and coordinating a new generation of operational technologies (and to a lesser extent, administrative technologies). 6.0 How Will the Outcomes and Road Maps Vary? 6.1 Multiple Roads and Multiple Destinations It's clear that there is no single destination for the changing shape of IT. That's because the ways that businesses use technology vary, the drivers don't affect them in the same ways, their starting points aren't the same, and, very importantly, their strategic choices and capabilities are all different. All this reinforces the importance of careful and continual alignment of technology and the business as a whole. Nor is the necessary alignment only from business strategy to IT strategy; there are times when it needs to work the other way, too. Increasingly, the business strategy and even the business model can be influenced by the emerging capabilities of technology and related management disciplines when applied to the assets of information, processes and relationships. How IT aligns with a business can vary with the business's market position and strategic intentions and the extent to which IT can be leveraged to support them. IT leaders must identify the multiple requirements of the businesses they serve and adopt appropriate operating policies and guidelines for each business. 6.2 Extended Partnerships and Value Chain Strategies and Architectures A notable characteristic of leading-edge enterprises' use of IT (and therefore of their leading-edge IT organizations) is that they tend to work on as much of the value chain as they can. They certainly don't confine their business strategies or their architecture of information, processes, relationships and technology just within their own boundaries. That makes good sense in an increasingly connected world, because no value chain starts and stops entirely in a single enterprise, however large and complex it may be. The Gartner Develop-Extend-Maintain-Optimize (DEMO) model examines how IT approaches must connect with the ways the business uses partnerships. A business-strategic focus on external relationships and agility is used to build growth, while a focus on internal issues and efficiency manages costs and maintains existing activities. The DEMO model enables enterprise and IT leaders to clarify their positions on these issues and to align their resources and strategies accordingly. Business intentions for IT to deliver efficiency or agility and the internal or external focus drive four possible overall IT approaches. Most enterprises require more than one approach simultaneously. The model thus shows through another lens how the outcomes and road maps vary in the changing shape of IT. 6.3 Evolving Types of IT Organization As we've discussed, the IT organization landscape will have changed substantially by 2010, moving from a technology focus to a focus on business outcomes and brokered solutions. IT managers who wait until change has occurred run a serious risk of marginalizing their organizations in the enterprise. Worse, from the enterprise's point of view, failure to anticipate the transformation will diminish the value that the enterprise gets from technology. However, the scale and pace of that move differ between and even within industries, and have no specific correlation to enterprise size. By 2012, at least half of large IT organizations will split into two parts: one focused on technology sourcing and delivery, the other on architecture and change. Developing a strategy for dealing with upcoming IT organization changes is contingent on understanding the enterprise's business position and intended use of IT. 7.0 Future Outlook Successful IT organizations, regardless of the specific types, have trained their people and developed themselves to be skilled at solving problems collaboratively and systematically, integrating technology and business disciplines. As enterprises embrace global challenges, consumerization and extended markets, they will highly value such a group. This will be a vital continuing characteristic of any IT organization in the future, regardless of its new shape or name. Source: Gartner RAS Core Research Note G00157495, John Mahoney, Barbara Gomolski, 27 May 2008
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