Living in a Volatile IT World

By Samuel Greengard Print this article Print

One in five companies expects to experience a sustained level of volatility over the next few years.

By Samuel Greengard

Over the last few years, the pace of change in business and IT has been nothing short of remarkable. According to The Hackett Group, coping with this “new normal” requires a different outlook and approach.

A January study, “2012 IT Key Issues: Coming to Terms with the 'New Normal,’” found that one in five companies expects to experience a sustained level of volatility over the next few years. Traditionally, companies have based their planning assumptions on scenarios of 5 to 10 percent potential variation from key inputs, such as energy costs. Today, the figure can run as high as 25 percent.

Within this environment, accuracy and timeliness of information are critical for improved decision making. Overall, 69 percent cited the importance of business intelligence and analytics; 64 percent mentioned a need to establish data stewardship and standardize master data; 61 percent said there’s a need to move more functions to a common ERP platform; and 57 percent believe it’s important to roll out Web-based and self-service tools.

In addition, geographic barriers to doing business have all but disappeared, the study notes. Consequently, there’s a growing need to focus on global issues, including international standards.

Unfortunately, “The data shows that finance, HR, IT and procurement have lagged other aspects of the business, such as product development, customer strategies and supply chain, in becoming more global,” notes Erik Dorr, senior enterprise research director at The Hackett Group and co-author of the report.

The Hackett Group recommends that organizations adapt their business models and priorities in response to economic changes in regional global markets. It projects that a typical large organization will triple its level of globalization within two or three years, but it will likely take the same organization up to 10 years to fully adapt and reach desired goals.

During this period, organizations and their IT departments will be asked to produce better results with fewer resources. Enterprises must exceed the historical average of 1 to 3 percent annualized productivity gain and reach between 5 and 6 percent, Dorr notes.

“Getting the right information to permit quick action can only be accomplished when mechanisms are in place to gather high-quality data, conduct rigorous analysis and make decisions with confidence,”  he says.

This article was originally published on 2012-03-13
Samuel Greengard is a freelance writer for Baseline.
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