Are we completing IT’s lost decade?

I pose the following questions because as the first decade of the second millennia is coming to a close. This will lead to a cascade of analysts and pundits asking what happened at the beginning of the Internet age. Look for cover stories emblazed with 2010 coming to a publication near you.

The Wall Street Journal announced on 12/21/09 that for investors the first 10 years of the 21st century were a lost decade. (Link, subscription to WSJ required). During that decade investors lost money (-0.5%) for the first time since the 1930’s (-0.2%).

To borrow a phrase from Ronald Reagan:

Are you better off today than you were 10 years ago?

Personally, probably yes as you have had 10 years more work experience, promotions etc. But what about IT as a whole? Did we have a lost decade?

The decade of the ‘noughties’ pronounced naughties has been a tough one for IT in general and IT investment specifically. One would think that successfully saving the world fromY2K, moving the European Union to a single currency, and driving the growth of the Internet would have been sufficient to keep IT front and center in the economy. While at a deep level IT is front and center, you cannot change your business without changing IT – one thing is clear:

Executive and commercial views on IT have changed

During the last decade executives have been told, “IT does not matter.” Executives cut the IT budgets in 2002 and 2009 without the company coming to its knees. In the other year’s, executives have kept average IT budget increases small in line with changes in inflation rates. This is based on looking at IT budget changes over the last 10 years from the Gartner Executive Programs CIO Survey.

While there have been new technologies that change the way we live, work and play, these technologies have not driven the IT industry the same way as their predecessors. Technologies such as Cloud Computing, Virtualization and Web 2.0 are asymmetric in that they have a different investment profile and return than traditional enterprise IT. More about that in the coming days. IT has been experiencing a lost decade or resource growth. CIOs struggling to attract the right people into IT and low university registrations in IT provide further evidence. The falling potency of IT based metrics to attract business attention and other factors could be interpreted as signals of the lost decade.

2000 – 2009 has not been a lost decade particularly for CIOs and IT leaders who have investing in enhancing IT’s governance and financial management capabilities. Many CIOs did this following the dot.bomb recession in 2002 and 2003 and those CIOs are seeing the results this go around. They are better able to focus IT in the things that matter. They are better able to manage their costs. In the next decade they will face the need to raise productivity of the enterprise and IT.

For IT organizations that have muddled through, concentrated on doing more with less, and looking for a return to budget growth as the answer, they have experienced a lost decade moving from year to year. These are the organizations that will be most significantly challenged in the coming years as the indications are that the type of IT budget growth in this decade is more of the norm than the exception.

When I have asked CIOs is they see IT budgets going back to an average of double digit growth, the response is no. Particualrly parts of IT, yes, but IT in general no.

When asked why, they say that it is because it is not necessary

Organizations that do not recognize that IT is fundamentally changing will experience more than a lost decade.

What have you seen, to repeat, Are you better off today than you were 10 years ago?

Recent columns by Mark McDonald

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