Business Transformation Requires Transformational Leaders
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Insight
Abstract
The global financial crisis and the oil spill in the Gulf of Mexico highlight the significance of risk in business and the need to embed capacities and capabilities for the management, mitigation, and response to risk.
The global financial crisis, the Iceland volcanic ash events, and the oil spill in the Gulf of Mexico have alerted us once again to the nature of risk, including both the opportunities and the potential impacts it can have on the business. In response to the demands of the modern dynamic business world and to general uncertainty in a global environment, businesses are seeking to formalize a risk-based approach to business (also called enterprise risk management -- ERM) because of the importance of risk to profit and cash flow.
The market momentum behind cloud computing continues to grow. Many organizations will likely move some of their IT operations into the cloud, some at greater risk than others. This movement cannot be stopped, but organizations should head into the cloud with their eyes open. Viewing migration to cloud computing solely as an exercise in cost cutting may blind organizations to other risks.
In these five years of charting IT budgets and the budgeting process, we have documented the roller-coaster ride that IT shops around the globe have been on as things went from good times to perhaps the greatest economic crisis ever to strike the global economy to now slowly and gingerly climbing back out of the recession. Because we have been able to keep our team of experts intact and to maintain the core set of survey questions we ask of the respondents, we have learned quite a bit about the manner in which modern organizations react (and should react) to these kinds of events. We have learned, for example that the knee-jerk reaction typical of past crises whereby the firm would slash IT budgets seeking to "trim the fat" and "reduce overhead" wasn't exactly the case. In last year's survey, we found that "while organizations are indeed cutting projects and limiting their exposure by reducing investments in IT, they are also limiting reductions in the IT shop as much as possible knowing that IT assets and knowledge lost during a downturn cannot be readily rebuilt and scaled once the economy turns. As a consequence, the shape that this downturn has been taking for IT and IT professionals is likely different than the historical pattern of deep cost-cutting measures."
In these five years of charting IT budgets and the budgeting process, we have documented the roller-coaster ride that IT shops around the globe have been on as things went from good times to perhaps the greatest economic crisis ever to strike the global economy to now slowly and gingerly climbing back out of the recession. Because we have been able to keep our team of experts intact and to maintain the core set of survey questions we ask of the respondents, we have learned quite a bit about the manner in which modern organizations react (and should react) to these kinds of events. We have learned, for example that the knee-jerk reaction typical of past crises whereby the firm would slash IT budgets seeking to "trim the fat" and "reduce overhead" wasn't exactly the case. In last year's survey, we found that "while organizations are indeed cutting projects and limiting their exposure by reducing investments in IT, they are also limiting reductions in the IT shop as much as possible knowing that IT assets and knowledge lost during a downturn cannot be readily rebuilt and scaled once the economy turns. As a consequence, the shape that this downturn has been taking for IT and IT professionals is likely different than the historical pattern of deep cost-cutting measures."