Gartner Highlights the Complexities of IT Organizations Moving From a Cost-Cutting to an Entrepreneurial Mind-Set

Ambition and Resource Leverage Are Crucial to Becoming an Opportunity-Focused Business

STAMFORD, Conn. - IT organizations are facing a critical challenge in 2010 as they tackle the need to shift gears from a cost-cutting to a revenue growth mind-set, according to Gartner, Inc. Gartner analysts said the recession of the past two years has had virtually every IT organization operating in “keep the lights on” mode — and many organizations are ill-equipped to support and drive revenue growth opportunities.

“For IT leaders, entrepreneurial growth, and the shift from a ’problem-focused’ organization to one that is ’opportunity-focused’ requires more planning and execution than simply changing the organization chart,” said Jorge Lopez, vice president and distinguished analyst at Gartner. “Entrepreneurial IT organizations must maintain a dual focus: achieving ambitious growth, while running the current business. Both are critically important to the mission of the organization.”

Gartner maintains that the building of new sources of revenue and positioning the business for dominance in the new venture is an entrepreneurial task and one that requires an entrepreneurial organization with an equally entrepreneurial CIO to seize the opportunity. Analysts have identified two key tools that the CIO must employ to satisfy ambitions for entrepreneurial growth. These frameworks define the agenda for change and the key actions required to fulfill it:

* The Entrepreneurial Scope Assessment Framework: This tool enables CIOs and other business executives to evaluate the magnitude of the opportunity for an entrepreneurial organization. It is a requisite assessment to understand the scope of the task facing IT, as well as other business units.
* The Strategic Change Road Map: This level-by-level tool provides a clear-cut assessment of the tasks that must be performed by an organization in moving from the current mind-set and behaviors of cutting costs to a mind-set that is entrepreneurial. It delineates today’s situation, compared with the desired future and identifies the changes that will transform today’s organization, infrastructure, processes and mind-sets into tomorrow’s state.

Mr. Lopez explained that to best understand the scope of the change facing an organization, it is important to evaluate two factors that were first defined by Gary Hamel and C.K. Prahalad in the book “Competing for the Future.” They challenged the concept that to win in business, one must first have superior amounts of resources. They observed that, when starting out, resource positions were very poor predictors of future performance, and that the businesses that seemed to win were those that had two key capabilities — ambition and resource leverage.

“Ambition is the animating entrepreneurial vision that redefines the rules of competition for an industry,” said Mr. Lopez. “It deliberately sets out a compelling picture of the future that will outstrip existing resources to challenge incumbent competitors to match the magnitude of their vision.” Mr. Lopez said that examples of companies that have demonstrated high levels of ambition include: Apple, with its ecosystem around the iPod and iTunes; Amazon, and its ambition to unseat Wal-Mart, using the Web; and thousands of bloggers, who daily compete for attention with established outlets, such as the New York Times.

The concept of resource leverage is based on the premise that great differences exist between different industry rivals and the competitive impact they are able to generate with a given amount of resources. The ability to create greater distance between the required efforts and the results is an important distinction for the entrepreneur and, in doing so, establishes new levels of competition. Examples of advances in productivity leverage include the work of HP in radically reducing its IT cost structure before a recession had emerged as a reality, as well as the move by pharmacies to provide very-low-cost retail healthcare in the U.S. and, thus, to restructure that industry.

Nevertheless, the move from a problem-focused organization to an opportunity-focused organization presents many risks for a business.

“The greatest conflict faced by entrepreneurial CIOs will be the tension between the team that is focused on the entrepreneurial opportunities and the team that is focused on ’keeping the lights on’,” Mr. Lopez said. “Both must function effectively in an environment of elevated risk. Failing on either responsibility is unacceptable and highly dangerous for the business.”

Additional information is available in the report “Moving IT From a Cost-Cutting to an Entrepreneurial Mind-Set” which is available on the Gartner website at http://www.gartner.com/resId=1331074.

About Gartner:
Gartner, Inc. (NYSE: IT) 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 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.