Gartner Says CIOs Must Communicate Risk and Return in Business Terms

In the recently released book "The Real Business of IT: How CIOs Create and Communicate Value," published by Harvard Business School Press, Richard Hunter, group vice president and Gartner fellow and George Westerman, research scientist at MIT Sloan's School of Management's Center for Information Systems Research (MIT CISR), examine how businesses can balance IT risk and IT return. The authors highlighted key findings from the book at Gartner Symposium/ITxpo, which is taking place here through October 22.

"If the economic meltdown of 2008 shows us anything, it's that you can't talk about return without talking about risk," said Mr. Hunter. "Over five years of joint research have shown us three things: firstly, companies that communicate effectively about IT value create more value; secondly, companies that communicate effectively about IT risk reduce enterprise risks; and thirdly, CIOs who communicate about risk and return in terms of business outcomes and performance find it easier to achieve an effective balance."

Mr. Westerman said that IT professionals are often unaware how deeply IT is embedded in their thoughts and words, but said that many are now finding that colleagues respond far better when ideas are framed in terms of business performance.

"Many general managers and CFOs believe that their organizations spend too much on IT or wish that they could get better returns from their IT investments," he explained. "However, more often than not, this 'cost-mind-set' results, at least in part, from the IT leaders' inability to communicate about the business value they create."

Mr. Hunter maintains that IT leaders can turn this situation around. They show how the CIO can use information technology to create three forms of value that are vitally important to leaders throughout their organization:

-- Value for money when the IT department operates efficiently and effectively

-- An investment in business performance evidenced when IT helps divisions, units and departments boost profitability

-- Personal value of CIOs as leaders whose contributions to their enterprises go well beyond their area of specialization

CIOs need to more effectively communicate these forms of value with non-IT leaders. In this way, peer executives have a better grasp of how their organization is benefiting from IT.

The book's authors have devised four next steps, designed to set CIOs on the path to value by enabling them to communicate both risk and return in business terms:

Monday Morning: Begin training yourself and the rest of the IT organization to communicate risks and returns in terms of business outcomes and business performances.

Next Week: Examine the value for money provided by the IT organization. Identify opportunities to improve risks and returns alike by improving the foundation: infrastructure, applications, skills and IT management processes.

Next Month: Assess your ability to execute the steps of the virtuous cycle. Focus on those parts of the cycle that are least capable in order to improve solutions.

Next Year: Take advantage of high-risk, high-return opportunities that your highly capable organization can handle, and competitors can't.

Copies of the book "The Real Business of IT: How CIOs Create and Communicate Value" are available at Gartner Symposium/ITxpo at the Gartner Bookstore on the ITxpo show floor. The book can also be purchased online at http://www.amazon.com/Real-Business-Create-Communicate-Value/dp/1422147614/ref=sr_1_1?ie=UTF8&s=books&qid=1250202411&sr=1-1. Additional information about the book is available at http://www.gartner.com/it/products/research/media_products/REAL_IT/home.jsp

Gartner YouTube Channel

Additional comments from Mr. Hunter are also available on the Gartner YouTube channel at http://www.youtube.com/user/Gartnervideo#p/u/1/3s2olGnEASc. A digital file of the book cover is available at: http://www.gartner.com/it/products/research/media_products/book/resources.jsp. Additional videos are available at http://www.youtube.com/gartnervideo.

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Gartner, Inc. (NYSE: IT | Quote | Chart | News | PowerRating) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.

SOURCE: Gartner, Inc.

Gartner 
Christy Pettey, + 1 408-468-8312 
christy.pettey@gartner.com