Boosting IT’s Role in the Enterprise

Laurie M. Orlov

VP and Research Director

Forrester Research

Agenda

• Making the most of IT’s Innovation Capacity

» What are the current IT spending patterns across industries?

» How much is spent on new initiatives versus ongoing maintenance and operations — what Forrester calls IT’s innovation capacity?

» What is IT Innovation?

• Marketing IT

» How good is IT at communicating with the business?

» What are the core elements of marketing IT?

» How is marketing of IT related to IT’s role in business transformation and innovation?

Typical CIO’s View Of IT Spend

Valuable investment in

promising blue skies technologies

Patchy detail on the 75% of IT budget

spent on ongoing IT operations

Problem contracts & projects pushed into

the background

Typical CEO’s View Of IT Spend

Cloud of IT cost hanging over the business

Hard-to-spot risk that IT projects

will fail

Typical CFO’s View Of IT Spend

Inability to shed light on project ROI or IT ROA

No visibility into cost attribution by project

or service

Bad news on the way

IT’s role in the enterprise has changed…

IT Spending As A Percentage Of Revenues, 2005 Benchmark

May 2005, Best Practices “US IT Spending Benchmarks For 2005”

Why The Overall Ratio Of IT Spending To Revenues Is A Bad Benchmark

May 2005, Best Practices “US IT Spending Benchmarks For 2005”

2005 IT Spending On Ongoing IT Operations As A Percentage Of Revenues

May 2005, Best Practices “US IT Spending Benchmarks For 2005”

IT’s innovation capacity:

► The amount of available funds that IT can spend on new initiatives in any given year — typically total IT spending minus IT spending on ongoing operations and maintenance.

With total IT spend constant, Innovation Capacity can still grow

Innovation capacity

Operations & maintenance

2.6%

0.6% 0.7% 0.8%

2.5% 2.4%

Year 1 Year 2 Year 3

IT spend as a percentage of total revenue

3.2%

Year of IT spend

How vital is the IT organization to the success of the following efforts at your company?

How satisfied are you with the level of support that the IT organization provides to each of the following

efforts?

IT Assets Are Key Ingredients For Business Innovation

What is IT-enabled business innovation?

►Transforming a business process, market offering, or business model to boost value and impact for the enterprise, customers, or partners

Characteristics Of IT Innovation

Examples Of IT-Driven Innovation By Type

12 Steps To Recovering IT’s Role In Business Innovation

Agenda

• Marketing IT

» How good is IT at communicating with the business?

» What are the core elements of marketing IT?

» How is marketing of IT related to IT’s role in business transformation and innovation?

Theme

Marketing helps IT take charge of its own destiny

Yet lack of marketing keeps IT as a cost center, with:

• Invisible contributions

• Regrettable projects

• Interminable rollout cycles

• Underused applications

IT and marketing – like a fish and a bicycle

• Why should we market? We have too much work!

• Marketing is not a fit with our personalities!

• Marketing is the wrong word – it’s communications!

But if it’s communications, they’re mediocre: Not enough business focus…

IT doesn’t talk much, waits to be called, depends on e-mail…

…And is close-mouthed about what else it’s working on

Does a tree fall in the forest?

Theme

Marketing helps IT take charge of its own destiny

What is the marketing of IT?

The business activity of presenting IT’s products, services, and capabilities to constituents

in such a way that makes them eager to fund and utilize

Marketing moves IT up the enterprise value chain

IT’s Marketing Plan — The 4 P’s applied to an IT organization

Planning IT marketing campaigns

Boost IT brand equity

• Use brand to create awareness

» Genesys Health’s PDA123 written up in local press

• Use brand to build lasting trust

» JM Family’s transaction dashboard

• Use brand to attract interest

» 7-11’s technology scholarship

Tactics that are part of IT’s value campaign

Theme

Marketing helps IT take charge of its own destiny

The marketing of IT is a journey – not a miracle

• Market to organizations; sell to individuals

• Get the marketing skills

• Hire a VP of IT marketing – for big shops

• Go public with the “M” word

• Label yourself before the business labels you…

• Be wary of over-marketing

What kind of IT organizations get this first?

• High exposure with end customers

• A need to convince constituents to engage

• Already armed with process discipline

Laurie M. Orlov

lorlov@forrester.com

617-613-6086

www.forrester.com

Thank you

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