Suagatuck Technology released a Strategic Perspective entitled Five Key Issues for CIOs in 2009 that considers the broad management challenges facing CIOs in the coming year: 

Balancing act: CIOs must balance radical, immediate, operational cost-cutting requirements from the CEO, who will be looking to protect precious cash through the economic downturn. At the time, there will be demand to improve IT services to internal and external users, retaining customers and growing revenues. Critical Issue: Scope of cost cutting and shift to self-funding projects. 

Strategic Planning Position(s): 

·         The global economic downturn will result in flat-to-modest IT budget growth in 2009, across most industries (0-2%), with IT budgets rebounding in 2010 into the 4-6% range. 

·         Through 2010, to continue to deliver existing service, CIOs will renegotiate contracts and seek dramatic operational efficiencies, while accelerating outsourcing initiatives and cloud/software as a service (SaaS) investments that do not require substantial upfront capital. 

Cloudy future. Saugatuck believes that CIOs will turn to cloud computing to meet the twin objectives of reduced costs and improved service. But with cloud still in its infancy and standards still evolving, selecting cloud solutions may seem to be a gamble. Critical Issue: Avoiding vendor lock-in and “operationalizing” with broader enterprise. 

Strategic Planning Position(s): Through YE 2009, less than half of enterprises adopting cloud computing will see cost savings of 20% or more – especially when considering not just compute resources, but total IT management costs. 

Managing a hybrid environment. Virtualization and cloud computing don’t necessarily mean that systems management personnel have less to do. In fact, they will likely have more complicated jobs. Further, SaaS and cloud computing necessitates that systems management shift from managing assets to managing provider processes and contracts. Critical Issue: Skills/staff retaining. 

Strategic Planning Position(s): Through 2010, two of the biggest challenges associated with managing hybrid environments are fully addressing the data, process and workflow integration challenges, and shifting the focus from an asset to process management framework. 

Vendor viability and consolidation: Saugatuck expects the longer-term trend toward industry consolidation to continue, now impacting a new round of emerging players who have been largely funded since the last IT downturn. In particular, Saugatuck anticipates that 2009-2010 will be a period when a number of category leaders will emerge across a variety of SaaS segments, via a combination of organic growth and aggressive M&A activity. Some of the biggest winners will be pure-play SaaS providers extending their brands into complimentary segments, and/or where they have a common buying center. At the same time, we anticipate significant investments from Microsoft, IBM, SAP and Oracle, among others, as they attempt to transition their businesses (and retain their customers and developer/channel networks). Critical Issue: Portfolio risk mitigation. 

Strategic Planning Position(s): By YE 2010, 30% or more of SaaS and open source start-ups that currently have annual subscription revenues streams of $5 million or less will fail, along with 50 percent or more of those focusing on enterprise social computing. 

Skills, skills, skills. Saugatuck has been hearing for years how CIOs cannot get the skilled workers they need to make systems work efficiently and effectively. While this applies to legacy skills, the emerging cloud computing era demand a significantly new skills mix – and not all existing staff with transition easily to this new world. Critical Issue: Managing skills transition during period of downsizing. 

Strategic Planning Position(s): Through 2012, one of the biggest inhibitors to the adoption of cloud computing will be the retraining or sourcing of IT management skills – as the focus shifts from managing assets to business processes.

Five Key Issues for CIOs to Manage

Being aware of realistic, important management challenges just over the horizon is important for any successful (and cost-effective) management strategy. And being aware of peer/colleague concerns and challenges promotes the spread and implementation of best practices, and enables improved collaboration between business partners. It also enables improved collaboration between users and vendors, so that vendors can better serve and support (and profit from) user concerns.

Any discussion of “top five” technologies, CIO challenges, or other aspects of business and technology management is of course open to debate. What’s most important is that CIOs – and their CEO, COO and CFO colleagues – do not fall into reactionary modes of operation and management.

Doing so is easy in the best of times. But during times of such economic uncertainty, it is even easier to react rather than to plan and execute – and reaction-based management is a trap to avoid at all costs – even when it seems less costly.

This BeyeNETWORK news item contains information from a recent press release by the company mentioned.