Cutting IT is not the same as cutting other functions.  IT spending is peculiar because it’s indirect.  Properly managed, IT spending changes performance disproportionality more than it costs. IT is particular to your firm resisting ‘best practice’ or ‘across the board cuts’.  This is not to say that IT budgets cannot be cut, but that blindly cutting IT saves pennies but locks in a legacy of inefficiencies sealed in silicon.

Maximizing the value of IT requires changing attitudes from administering an IT budget to applying IT to amplify business performance.  Leaders amplify their organization by concentrating on IT productivity’s numerator – value created rather than just denominator cost.  This helps them avoid the fantasy of ‘more for less’ by doing the following:

• Focusing on few projects.  Nothing focuses managers like a crisis and focusing IT on fewer, more important things creates results now rather than dissipating them by spreading resources like peanut butter.

• Shortening planning, project and governance cycle times to keep IT’s limited resources concentrated on the most important things and management agile to respond to change.

• Changing IT’s cost structure rather than the budgeted spend by adopting cloud and other light weight technologies, dropping underused systems, software and hardware to reduce the per unit cost of IT.

• Measuring IT value based on changes in business performance rather than costs.  IT has no value and no place in the budget if it does not raise performance.

• Managing IT productivity not projects.  Changing the way IT works to be more productive rather than choking off IT resources and expecting IT to muddle through.

• Stopping demand management and starting benefits realization.  Do not deny yourself the ability to improve, rather concentrate your attention on realizing improvements.

These steps lead to technology that amplifies business performance.  Sure it is easier to administer an IT budget but all that gets you is fewer activities with even less results.  It is better to think small about IT, in terms of how it can have short, sharp and focused impact rather simply lightening the weight of an already blunt IT organization.

Here is a test of whether you are managing IT budgets or managing business results.  The average IT organization spends 70% of its budget on running the business and 30% on changing the business.  Your CIO is able to cut the ‘run’ component by 10%, moving from 70% to 63%, what would you do with that money?  Do you save it? Or do you re-invest it in change by increasing change spending by 23% moving it from 30% to 37% of the budget?

It is not a test of IT.  Rather it is a test of your confidence in management and their ability to realize business benefits.  You take the 7% savings if you have no confidence in your management otherwise you know that the 23% increase makes sense because you can manage the business benefits.

It is natural to reduce budgeted cost in the face of a downturn.  That approach works best when costs are directly tied to business activity – sell less and you need to make less.  IT is connected to the cost structure of your operations.  Treat it as another administrative expense and you degrade performance across the board.  Combine limited IT resources with strong benefits realization and you amplify business performance and organization wide results.  The choice is yours.

Note this post appeared as an interview in the Financial Times.

Gartner Executive Programs runs an annual survey of CIOs that seeks to understand CIO priorities, plans and issues.  The survey is the best way for you as a CIO to have your voice heard and to listen to what other CIOs in your industry, geography and size have to say.  I would like to invite CIOs, only please, to contribute their thoughts by following this open link:

http://ciosurvey.gartner.com

The survey takes about 20 – 25 minutes and you will receive a peer report and electronic copy of the 2012 CIO agenda report in January for participating.

You may be asking why should I bother responding to yet another survey.

Good question and I would not be recommending taking even 2 minutes out of your day if it did not represent a good return on your time.

The Gartner CIO Survey seeks answers to specific questions that matter to CIOs.  We do not look to take the temperature of IT or the CIO to give you weather report type answers.  “IT is getting cloudy with a chance of SOA showers,” is something that we will not report.  That is the domain of others.

The specific questions we are testing this year include:

• What constitutes an effective IT strategy?  Its characteristics and how does having a strong strategy change IT and enterprise performance?

• Where are the major skill gaps in IT?  Which roles are performing and which need to step up their game in 2012?

• Is IT’s value being ‘held back’ by business management capability?  Are you creating value that the organization is not competent to realize?

• What are the most effective metrics for demonstrating IT’s value?  Which ones are used most often and to they really work?

• As IT moves more mainstream, how well does IT work with other organizational processes?  To what degree does IT value relate to performance in HR, Finance, Procurement, etc.

• Where do CIOs see their future?  What is their next role?  How are they preparing for it?

If someone said they had responses to these questions based on data you would immediately ask, well are they like me?  The only way to know for sure is to share your thoughts, your experiences and your opinions.

We all have to re-imagine IT or be relegated to making every year just like the last.  Frankly, finding new answers to old questions is one thing.  Understanding the leadership, organizational and operational issues for moving forward are much more exciting individually, rewarding professionally and valuable to your organization.

So give us 20 minutes and we will give you back the context that you need to

The realization is current benefits realization techniques just do not work.

The idea that one party creates change and hands it over to another to harvest has lost its effectiveness.   That approach worked when IT was young and its value potential could be measured in terms of the difference between paper-based and automated processes.  This created a tremendous and deep reservoir of business value that has taken almost 40 years to tap.

The problem is past sources of IT value are not the future sources of IT’s value.

It is a simple matter of market penetration. As IT solutions permeate business operations, the incremental value of additional technology declines.  This is happening as the automation, integration, internet-ization of information and technology is playing itself out.  The incremental and accretive value associated with adopting new technologies is changing from being broad and deep to being focused and requiring greater focus.

The opportunity to re-imagine IT’s role in benefits realization a real opportunity give IT the ability to create value.

While the value of traditional transaction processing technology faces as the challenge of declining value, other technologies such as mobile, social media, context computing, analytics and other lightweight technologies are opening new veins of future value.  Value that comes from changing behavior rather than applying traditional compliance based benefit approaches.

The nature of change is changinggas organizations and individuals grow tired of facing a future of burning platforms and change initiatives that tell them the best way to work.

Going forward CIOs and IT leaders need to re-imagine benefits realization by extending their approach to benefits realization to include:

• Recognizing and connect benefits with your organization’s commitment framework.
• Translating business case metrics into management and operational metrics used to manage the way the organization works and assess management performance.
• Transforming HR into an active tool for giving people the skills and abilities to work in new ways.

Each of these suggestions will be discussed in greater detail in subsequent posts, but notice what they all have in common.  Each focused on creating outcomes that change the way the business works rather than the way IT builds or deploys systems.  We already know how to create a supply of technology — now we need to connect that supply with mechanisms that raise business performance.

Related Posts:

The Three C’s of change

The nature of change is changing: a new pattern

Re-imagining IT’s value to the enterprise

Benefits realization is the responsibility of the business: one of the ways CIOs and IT Executives separate the business from IT.

A note, these resolutions are based on my own opinion and do not reflect the official position of Gartner, which often publishes its own resolutions.

1. I will invest more in my top performers and people on the verge of being top performers.

Do you have?

• A list of the top performers and those on the verge that is agreed upon between you and your direct reports?
• Does each of these performers have a plan for building their skills and has each executed at least one third of that plan?

You are falling behind if you have:

• Delegated this task to human resources and standard career development processes.  These people are special and require your active attention.
• Kept top performers and those on the verge too busy to take a significant part of their execution, project and skill building opportunities?
• Assume that having them work on important projects is the same as formally building their skills.

2. I will incorporate at least two business metrics into my performance reporting and share that report across all of IT.

Do you have?

• An expanded metrics report that incorporates changes in business performance in addition to your standard IT operational metrics?
• Have you calculated the value created through scale efficiencies in your infrastructure?

You are falling behind if you have:

• Continue to report its value based on how you manage cost, schedule, budget and scope.
• Have not met with your boss and CFO to discuss how to begin reporting IT’s contribution to raising business performance.

3. I will meet with my organization’s product and service development leaders and participate on a new development project.

Have you?

• Held at least three meetings with your product and service development teams?
• Is there at least one new product development project in process and scheduled for completion before October 2011?

You are falling behind if you have:

• Not established an ongoing relationship with product and service development.
• Have a project portfolio were there are few or no projects directly connected to launching new products or services.

4.  I will concentrate resources on implementing the top three projects supporting my organizations growth plans.

Have you?

• Implemented governance reform to get a clear demand signal and clear priorities for your projects.
• Applied those priorities to resource allocations to reduce the cycle time required to implement the organization’s top priorities.

You are falling behind if you have:

• Implemented projects according to their original or resource availability sequence regardless of when the business needs the solution functionality.
• Retained multiple governing bodies (e.g.: Steering committee’s) with overlapping or duplicate decision-making scope.

5. I will curtail investments in technologies that cannot be readily deployed to in a virtualized/cloud environment.

Have you?

• Identified the elements of your applications and infrastructure that cannot be economically virtualized and isolated them in
• Incorporated virtualization and cloud criteria into application, hardware and software evaluation criteria.

You are falling behind if you have:

• Continued to invest in non-virtualized infrastructure components beyond normal maintenance and replacement.
• Do not have an infrastructure transition plan that calls for greater than 50% of your transactions running via cloud technology by 2015.

6. I will identify the most important project to the organization’s success and look for ways to complete it as soon as possible.

Have you?

• Established which project is the most important and have that recognized across the senior leadership team.
• Secured business sponsorship to delay other projects in order to focus resources on doing the ‘first thing faster’.

You are falling behind if you have:

• Continued to treat all projects equal or assign relative importance based on the project’s size, expenses, or duration.
• Maintain a staffing strategy that relies on ‘multi-tasking’ critical resources in the belief that this makes them more productive.

7. I will make my job expectations visible to all if IT so they know how I and by extension all of us are being judged.

Have you?

• Published your personal goals and objectives as the CIO to the entire IT organization?
• Connected and continuously communicated the top three priorities for the IT organization in every meeting so people can naturally align their decisions and actions with what is important.

You are falling behind if you have:

• Do not have faith in the IT organization to deliver on your personal objectives.
• Your job expectations are not clear enough to communicate to your people.

8.  I will complete virtulizing and consolidating IT in order and reallocate savings and people into business contributing role and projects.

Have you?

• Virtualized and consolidated data centers or are well along on your plans to complete consolidation by September 2011?
• Kept the money saved from consolidation and redeployed it to develop new solutions or further reduce IT’s operating cost structure.

You are falling behind if you have:

• Postponed virtualization and consolidation because business does not want to give up control of their data center assets.
• Cannot demonstrate the additional business value associated with projects that would be funded through consolidation savings.

9.  I will consolidate at least four redundant applications to reduce cost and complexity.

Have you?

• Consolidated at least two redundant applications?
• Identified and budgets for consolidation of the others?

You are falling behind if you have:

• Avoided consolidation, as you cannot get an accurate list of your applications.
• Avoided breaching the subject with your business peers, particularly if the applications scheduled for consolidation are infrequently used.

10.  I will not act out if fear, nor will I fail to act out of uncertainty.

Have you?

• Augmented your opinion, expert judgment and debate with clear facts and operational data.
• Sought peer experience, examples and lessons learned regarding the major decisions you have faced and will face for the remainder of 2011.

You are falling behind if you have:

• Continued to make decisions based here say evidence, the most recent failure, or based only on what the budget will afford.
• You avoid developing positions and plans because you are waiting for others to address the issues before you take action.

Benefits realization is one area that is in need of re-imagination.

According to more than 2, 000 CIOs responding to Gartner’s annual CIO survey, an IT business case is among the most frequently used technique for realizing business benefits. These CIOs also rank an IT business case as among the least effective at supporting the organizations realization of business benefits.  Here is why?

IT business cases, in practice, concentrate on justifying an IT project by demonstrating that its projected benefits outweigh implementation costs.   These cases are the object of intense focus at the start of the project and in the early stages of governance.

Ask a team about the business case and its influence on their work and you find out that the solution is engineered to meet its specification rather than solve a specific problem or enable an opportunity.

Discuss how the business case is translated into operational metrics and management goals and you can see that the traditional case concentrates on one thing – justifying the project.

We need to replace a business ‘case for investment’ with a business investment plan.

It may sound like semantics but a ‘case for investment; is exactly that a case to support a decision, whereas a plan is a set of decisions that commit the organization to operate in a different way.

Characteristics of a business investment plan include:

• An actual expected return, measured in terms of specific changes in cost, capital, cycle time, revenue and capabilities.
• A business performance model outlining the current and future operational metrics for the process or capability undergoing change.
• A set of new management metrics that define how the organization should operate its processes and the solution.
• The new commercial relationships, inter-company activities, service levels , commitments, job designs and the other elements required to sustain the intended higher level of performance.

A business plan should have a similar weight as a P&L budget as the returns from the investment determine the organization’s performance.  Fail to make the investment plan work and it will impact their bonus.

A business plan should be a basis for making commitments and assuming responsibility for the business result.  That is the test of a solid business investment plan.   If you are not willing to put your career and job on the line then you have a plan.

Many organizations have IT business cases that function as proof of the validity of the project.  That is useful in getting a project approved, but is not the best basis for benefits realization.   That is what CIOs are saying when they say that they use business cases but they are not particularly effective at benefits realization.

How is this possible?

Well it all depends on your point of view and how you look at IT finance.

The IT financial management regime in place in many companies work something like this:

• Capital investment in IT is determined at the enterprise level where they allocate enterprise funds for IT.  A business unit may have to prioritize its own capital before it is allocated, but it does not have the option to skip investment in order to inflate earnings
• Capital expenditures are recouped by depreciation charges to the business unit.  So it comes out of the business unit budget not as expense but as depreciation.
• The same business unit leaders are measured and receive bonuses based on their EBITDA performance.  EBITDA stands for earnings before interest, taxes, depreciation and amortization.

Under such a regime, traditional IT projects are essentially free to the business unit leader.  Free in the sense that CAPEX is allocated at the enterprise level and therefore are not spending real money, from the BU perspective of course.  Free in the sense that depreciation charges for that CAPEX do not count against their performance bonus because they are below the EBITDA line.

Compare that to a cloud based services model.  True there is no capital expenditure.  But there is also no depreciation.  That means that the cost of cloud services comes out of the business units sales and operating expense which is ABOVE the EBITDA line.  In this context cloud services cost real money to the BU because it has an impact on their performance and performance bonus.

There are some ways to get over this hurdle.  The company could expense their entire IT investment and operating budget to remove this distortion.  This is called going from accrual to a more cash based accounting approach.  Many companies already do this now.  However, expensing IT, particularly large transformation initiates can distort earnings as the company invests current dollars ahead of future expected benefits.

Another approach is to move IT onto a cost accounting style of financial management.  Activity based costing and other techniques raise the transparency of IT costs, their Allocations and the like This is a tact being taken at a number of companies where that have business based CIOs who are frustrated by IT’s in ability to understand their cost structure, cost drivers or manage from a cost basis.

These approaches recognize that current CAPEX/OPEX/Accrual based approaches to managing IT finances are running out of steam.  They worked well when IT’s primary job was to build out the company’s technology base.  Now that that base is laid and new service based models are available, its time to upgrade IT financial management to reflect actual costs and not those distorted by accounting.

Otherwise we can easily make decisions based on perfectly inaccurate financial information — such as the cloud point made in this post.

So let propose a potential metric that can address the question for most but not all organizations.  That metric is:

EBITDA / IT Headcount

The first thing you will notice is that this metric is not IT based it’s a measure of overall enterprise productivity.  That is because productivity is the central source of the business value of IT.

The measure – a measure of core productivity

The numerator of Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) is a common measure of the health of your operations.  It is also the metric most frequently used for measuring senior executive performance from an earnings perspective.  It defines your core earnings potential and IT is an essential part of the processes, work, collaboration etc that drives core earnings.  It is the financial measure of productivity value that counts.

The denominator, IT Headcount, is the full time equivalents who are employed in IT. This is a measure of the efficiency and leverage the enterprise gets from IT.  By concentrating on headcount, and not budget, the CIO can show that they are managing the cost structure of IT and that investments are made with an eye to creating a disproportionate impact on the enterprise.

This metric is similar to others that look at revenue per employee, or profit per employee, but they recognize the unique role that IT plays in creating leverage across the enterprise.  Like that metric, it is a measure of productivity and one that smart executives use to realize the need to get more value out of the workforce (increase the numerator) rather than cut costs and productive capacity (decrease the denominator)

Do not count contractors

A suggestion is to leave out headcount that is outsourced or contract labor in the IT headcount number.  Its true that this can artificially inflate the number and hid the fact that IT service levels may be requiring more people, but the more people they require are not people you control.  They are people your outsource provider controls and you want that provider focused on quality of service and contracted price rather than participating in gaming the IT FTE number.

CFO’s will want to see that number, they will say that you are hiding productivity in it.  Point out that these people are counted, in terms of the cost of their services in the EBITDA number, so its not like we are hiding them.  Then simply ask that, then the company should also count all of its contract services, all of the people in their supplier organization that provide value to customers in their headcount when calculating EBITDA/Employee.  After all that would only be fair.  That should lead to an interesting discussion and support for a measure of the IT FTE’s you control and manage.  You should measure productivity the same way, everywhere.

Why single out IT Employees?

Why this measure?  Few will argue that IT people are different than other employees.  They are, but not because they are technical or introverted, or like things more than people.  Rather because they and the technologies they support are a fundamental source of core productivity in your organization.  That is what this metric is trying to capture — that relationship between core productivity and IT resources.

How to manage to this measure?

CIOs and IT executives need to show this metric and its progression over time, rather than at a point in time.  Just staying that your EBITDA/IT employee is $300,000 means nothing, because, in any one year, you can ‘game’ the number in terms of outsourcing, etc.

An external benchmark is also not particularly meaningful.  Saying that you are at $300,000/person where others in the industry are at $200,000/person does not say much and may only say that you are more outsourced than others.

What says everything is the progression of that metric over time.  See my prior post:  The value of IT exists over time not at a point in time for more details.  That shows that IT is well managed, has a business impact and has meaning to the enterprise.

Getting started

A suggestion, go back over the past five years and calculate the number.  Make adjustments as needed for contracts and outsourcing, but get an idea where you stand.

Add that metric to your metrics pack; make sure to show it over time in a control chart.

Share it with your people, so they get an idea of their value to the company and its bottom line

Consider it in your planning for 2011 – recognize that if there is going to be growth and you need IT people to support that growth.

Good Luck, and please let me know if there are other measures that you use.  IT is difficult to measure, so we will all benefit from each other’s experience.

Saying that this year is a repeat of last year neither sets direction nor is particularly helpful and here is why.

2009 was a singularly tough year for IT, with significant real budget cuts, wage freezes and management attempts to cut expenses faster than falling revenues.  Most CIO took drastic steps to survive the recession including:

• Stopping all but the most critical IT investment projects
• Renegotiating contracts and gaining concessions from suppliers
• Freezing IT wages and employment levels

All of these things were temporary measures, one-time fixes that were part of a survival strategy for an extra ordinary year.

They are ‘hold your breath and hope for better times’ responses that cannot be sustained for long.

Anyone how believes that 2010 is simply a repeat of 2009, is in deep trouble like a baseball pitcher who is going to throw their third fastball in a row under the assumption that the batter will not know what is coming.

The reason is simple your 2010 baseline budget started based on 2009 levels.  The benefits of the 2009 approaches are already baked into your 2010 budget.  Repeating last years these draconian measures will not define success for the coming year for the following reasons:

• Business cannot wait forever for the capabilities they need to compete, but are delayed because of an IT investment freeze.
• Suppliers will be reticent to renegotiate contracts that they just renegotiated last year.
• The people you need most, your best, most productive people will move on as soon as the economy opens up.

2010 is a tough year as 41% of CIOs expect their organizations to continue to lose revenue in the coming year.  However, 50% in the same group see the need for IT to change and be different than the way it was in 2007/2008.  Both figures are according to the 2010 Gartner Executive Programs CIO Survey.

These CIOs, the ones who see the need for change, have it right.  The only way to survive a structural change in the economy is to make a structural change in the enterprise and IT.  Those structural changes go beyond the ‘holding your breath’ approaches used for 2009.

CIOs are being asked to transform IT, its cost structure, productivity, skills and services in response to structural change.

Enterprises need information intensive products and services to attract, serve and retain customers.  Those capabilities change in a competitive environment and IT has to change to deliver them with greater productivity rather than simply say that we cannot afford them.  This is leading CIOs to concentrate on reducing cycle time and resource requirements for developing and deploying new solutions.

Enterprises need lower and more variable operating cost structure to lock in efficiencies and drive scale.  This requires concentrating on infrastructure and operations with increased virtualization, data center and application consolidation.  This is particularly important as transaction volumes continue to grow even while revenues have fallen.

Enterprises need a responsive IT organization that delivers what they need and recognize that everything beyond that is at best unnecessary or at worst waste.  This is part of the rational behind applying lean principles to IT.

CIOs get these things when the restructure IT around a clear set of enterprise priorities, reorganize the IT organization for greater flexibility and implement process and infrastructure changes that drive productivity.  Such changes are difficult to make, require thoughtful leadership and will create a new type of IT in the enterprise.  They are hard to do because they require thinking rather than mindlessly following last year’s management recipe.

The good news is restructuring IT establishes a new foundation for the IT budget and services organized around the things the enterprise needs going forward rather than a continuation and support for the legacy that was last year in 2009.

• The number and structure of your customer sales and service channels
• The size and composition of your sales force
• The breadth of access to your systems
• The core value propositions behind your offerings.

Changes in your go to market strategy change IT costs beyond just rewriting marketing and customer reports.  Here are some examples of how these decisions influence the IT cost structure.

The core value proposition behind your offerings sets the context for customer and market driven IT cost structures.  Value propositions that are based on having the right product in the right place and the right time require complex logistics and supply chain capabilities.  Many organizations need these systems and directly leverage them to deliver value.

Value propositions that are based on customer intimacy, knowing the customer, tailoring to their needs, applying context in service delivery are more expensive because they add new sets of customer information systems on top of logistics and supply chain activities.  If you offer services across multiple channels, then the potential cost of similar systems goes up.

The number and structure of sales and service channels has a direct effect on the IT cost structure, particularly if individual channels are supported by individual systems.  The more channels that larger the number of applications to support, the more things that need to change when you change offerings and the greater degree of channel conflict reconciliation needed.  These factors have led organizations to unify back office channel processing around a single fulfillment engine which helps manage costs.

The size and composition of the sales force is a hidden factor in the IT cost structure, particularly when companies change this aspect of customers and markets.  Organizations building sales coverage, often through by hiring and turning over the sales force create higher support costs for IT in provisioning, security administration, and other areas.

Hiring junior people requires learning management systems to raise sales product knowledge and support capability.  Churning through sales people involves reassigning accounts increasing customer service calls as people seek help.  All of these costs are often carried as part of doing business, but they influence IT’s scope and cost structure.

The breadth and access of your systems is one of the larger and indirect impacts on IT cost structures.  Recently this cost has come to light as the connection between changes in revenue and transaction volumes is creating a capacity gapthat is unaccounted for in the IT budget.  Open your systems to customers, suppliers and prospects via portals and recognize that you have further decoupled transaction and storage volumes from changes in business activity requiring ongoing investment in infrastructure capacity.

IT professions tend to take customer and market requirements as a given, something that needs to be developed and supported at all costs.  Revenue and the satisfied customers that deliver it are a critical element in enterprise success.  However its helpful to understand the structural impact on IT costs driven by these decisions so you can look for opportunities to create additional value.

Too often IT budgets seek to answer the question in terms of what do we need to meet capacity and quality of service requirements.  Surely those issues constitute IT’s resources.  Using this logic the IT budget reflects the need to delivery technical services.

If you are what you measure, then it is easy to see IT as an operating function as IT budgets support operational and performance requirements.  However, IT is more than this but it is hard to see when IT budgets in a functional way.

The IT budget is strategic and therefore needs to be driven by more than just operational requirements.  This means that IT budgets need to dig deeper to connect IT with the business drivers that really influence the IT budget.

Making that connection establishes the business basis for IT.

Here are four drivers that CIOs should think about when considering the business decisions that drive the IT budget.  They will be introduced here and discussed in detail in subsequent posts and links created within this post.

Customers and markets – How you organize to address the market and serve customers determines the structure of your customer sales and service channels, the structure of your systems, who has access to your systems, how you store and retain customer data and a number of other drivers. Changes in your go to market strategy create change and costs for IT beyond just rewriting marketing and customer reports.

Products/Services – The number, complexity and scope of your products and services drives IT costs in terms of the requires support systems, overall system complexity, the duplication of information systems, data and operations.  Product and service needs determine process requirements and therefore systems functionality and performance requirements.  Adding products, increasing variation and enabling customer co-creation drive IT costs and complexity.

Processes – the enterprises approach to business processes in terms of enterprise wide and local processes influences system complexity, proliferation and requirements.  Too often organizations support multiple operating project versions with specific systems implications and costs.

Organizational – the distribution of responsibilities, resources and reporting requirements drive both core transaction and business intelligence requirements.  A change in an organizational structure requires an IT response and a cost structure.

These are the business decisions that drive IT’s cost structure.  They become readily apparent whenever the enterprise changes direction in these areas.  An example is an organization change such as moving from a country/geography structure to a regional/product structure.  This seems a simple issue of drawing a new org chart, but for IT it requires resetting accounts, reports, report distributions, etc because it introduces a new structure.

Connecting these drivers to IT resource requirements reminds the enterprise that IT has a central and strategic role in the enterprise.  Without these connections the IT budget just looks like another operational functional group.  That is a view that is incomplete.  Having a full view of IT requires incorporating business drivers in you expectations and budgets.