This research analyzes why business demand for agility, technology obsolescence and demand for tight integration across many portfolios has created a new challenge for the IT planning function at the highest level. Because Gartner research shows that most CIOs admit that their teams are unable to devote sufficient time to long-term planning, this research is a "call to arms" for the whole IT management team to put modernizing strategic planning at the core of their 2008 objectives and immediately to apply this capability to IT modernization efforts.

• The combination of vendor consolidation, technology obsolescence and reduced availability of skills for legacy technologies creates a potentially hazardous situation for IT teams because many assets risk losing viability, particularly in the face of increasing demands for business agility.
• The focus on short-term initiatives has caused many IT management teams to lose the capability to perform long-term IT planning.
• Modernization will demand bold strategic planning. Thus, an organization's first act is to modernize its strategic planning capabilities and immediately focus these competencies toward IT asset modernization.
• Urgent action is advised to scope the problem and to acquire or develop new planning skills to drive the IT agenda in the future.

• Assess the extent to which slow response to business drivers is caused by an inherent lack of agility in established IT systems.
• Make a frank evaluation of your current investment and focus in long-term planning.
• For key asset groups, such as business applications, generate some sample seven-year life cycle plans, including retirement and replacement, and then identify the extent to which these plans would modify the active project portfolio.
• Identify the best individual planner in the IT organization and allocate him or her the task of driving the transition to long-term planning.

Everything in the IT universe is becoming progressively more tightly connected with everything else — and losing agility and responsiveness to business demand at the same time. However, most IT management teams lack the focus to develop and manage an integrated plan for all the IT assets, defaulting to "silo planning." Such an approach is deeply damaging to effective IT management. CIOs need to evaluate their strategic planning capabilities and should develop and nurture integrated planning as a key competence of the CIO cabinet.

IT modernization is a movement that includes the market forces, strategies and approaches to manage the ongoing, coordinated evolution of the business process, application and supporting technology portfolios to achieve an optimized value, cost and risk objective. The key element here is "manage the ongoing coordinated evolution." This is not a one-off event; it is a substantive shift in focus. The core competency required for IT modernization is professional and holistic IT strategic planning. Modernization should first focus on re-engineering strategic planning as a key central function of the IT management team. This incarnation of IT strategic planning is not a one-off exercise, but a continuous, persistent value system that will inform and underpin all IT decisions (see Note 1).

To deliver effective services to the business, CIOs must coordinate investments across a wide set of asset portfolios. These asset portfolios include networks, telephony, server hardware, storage, system management tools, process maps and workflows, applications and skills. Each of these portfolios comprises a number of individual artifacts, each one at a particular point in its life cycle. Within any individual portfolio, one might hope to find some comparatively new artifacts, some mature artifacts and some that are ready to be retired as they reach the end of their useful lives. Thus, in an ideal world, one might hope that each portfolio would contain a balance between old and new, and that the set of all portfolios would have, at any point in time, approximately the same balance between old and new.

However, the world is not ideal. Gartner research with thousands of clients across many geographic locations and industries shows that most CIOs are struggling to cope with a set of portfolios in which an overwhelming percentage of the artifacts needs to be retired and replaced within a comparatively short period of time — between 2008 and 2015. The scale of obsolescence in the set of all portfolios is a major problem in its own right, but it is compounded by the lack of integrated planning capability within many IT management teams. Thus, it is common to find the data center silo planning to refresh the portfolio of operating systems by eliminating older versions of Unix that are moving out of support, but failing to integrate the plan with the application management teams responsible for the business applications that run on these old systems — or application managers who are planning to migrate an application to a later version or different system, without synchronizing their plans with network infrastructure or business process owners.

Why is this becoming a problem now? There are three major contributing factors:

• The first factor driving CIOs toward IT modernization is, in most cases, the forcing factor — the lack of agility of IT systems and services in responding to business requests for change. As the IT environment becomes more crowded and more complex, it simultaneously becomes less able to respond in a timely manner to business demand for change. The volatile nature of the global economy, the increasing demands of regulators and the highly competitive nature of the business environment combine with a relentless focus on cost efficiency to generate thousands of demands from hard-pressed business managers for adaptations to established services and the introduction of new or updated services. Every CIO struggles with this backlog of demand, which cannot be addressed simply by working harder with the artifacts that constitute the IT environment. The IT architecture was not designed or built for agility, so working harder is not going to close the agility gap. What is needed is a plan to increase the agility of the IT delivery systems — a plan that will require a modernization approach. This is not a quick fix. There are no quick fixes.
• The second factor pushing IT modernization into the IT management consciousness is the increasing integration among portfolios. Integration is good and valuable — it is capable of delivering real value to the business, reducing latency and increasing the throughput capacity of the organization. However, these benefits come at a price of increased complexity in managing service delivery and maintaining the portfolios of assets needed to support the integrated organization. So one reason that IT modernization is moving to the top of the CIO agenda is simply the consequence of the success in delivering more integration into services during the last few years.
• The third factor that makes IT modernization a current imperative for the CIO is the increased obsolescence of deployed assets. Although there have always been technologies moving toward obsolescence, this is becoming an increasingly common phenomenon. This is a partly a consequence of the pace of change in technology and in the IT industry that delivers technology solutions, and partly a consequence of the effective "asset sweating" employed by businesses during the early part of this decade. The recession in 2000 and 2001 caused many enterprises to take a hiatus for a year or two from investing in IT. Updates and upgrades were delayed. IT teams learned the disciplines of placing systems on life support, squeezing the last possible value from sunk costs. This reduction in innovation and investment fueled a major consolidation in many sectors of the IT market, weakening many vendors to the point where they were acquired by competitors or simply ceased to deliver effective solutions. The net effect of these market consolidations is that many businesses are running on solutions that are no longer mainstream development vehicles for their owners. Although IT management teams may well be able to keep such systems on life support for some time, there is a finite limit to the willingness of business users to keep on using solutions that fail to deliver modern standards of functionality and agility. It is perfectly acceptable to keep such systems alive as long as possible. It is unacceptable to have no plan as to the potential alternatives to the dying asset.

Considering all the portfolios of deployed assets, one that is most frequently cited by CIOs as being a major driver for IT modernization is the skills portfolio (see "The Quest For Talent: You Ain't Seen Nothing Yet" and "Impact of Generational IT Skill Shift on Legacy Applications"). The baby boomers — the generation of children born in the aftermath of World War II — are approaching retirement age. The people who designed, developed, nurtured and maintained the founding applications of the Information Age, exploiting programming languages such as Assembler, COBOL and PL1, using pre-DBMS storage modes such as IS files and hierarchical database — these people are preparing for retirement in the near future. IT management teams that believed that they would be able to continue to support and maintain these applications by outsourcing these tasks have frequently found that IT service providers are unable to resource such activities because their "older and wiser" heads are also retiring, and the current generation of technology specialists is decidedly unwilling to commit to acquiring dead skills. The issue of obsolescence is so pervasive that Gartner confidently predicts that, by year-end 2010, more than one-third of all application projects will be driven by the need to deal with technology or skills obsolescence.

Research with CIOs across a wide range of industries and geographic locations shows clearly that a substantial majority freely admit, when asked, that they do not devote sufficient time to long-term integrated IT planning. For most CIOs, the reason is clear — there are too many short-term pressures on the precious time of the IT management team to allow time out for more-holistic planning exercises. But, of course, managers know that failure to invest in longer-term planning leads to a proliferation of short-term crisis situations. Despite this knowledge, managers admit that it is still difficult to plan to plan.

There are many ways in which a CIO could start to build an empirical model of the enterprise exposure to the imperatives for IT modernization. For example, having a comprehensive inventory of assets would be helpful; identifying which assets do not have plans beyond the current budget planning horizon would be good. But the problem with these measures is that they all take time to collect and collate — time that will not be allocated unless there is a belief in the validity of the problem in the first place. So a simple rule of thumb that CIOs and IT management teams can use to determine exposure to the IT modernization imperatives is given:

"The need for urgent action on IT modernization is in inverse proportion to the focus on long-term IT planning during the past five years."

In other words, if the IT management team has strong processes associated with long-term IT planning and has been exercising these processes during the last five years, then there should be no need at all for new action. By contrast, if the IT Management team has weak or nonexistent processes associated with long term planning, the need for urgent action will great.

So what can the CIO do? IT modernization cannot be addressed as a short-term panic-response project, because it is large and complex, and it requires the wholehearted commitment of all the IT management team and many of the business clients as well.

• First, be clear: The scale and complexity of the issues involved means that IT modernization is a CIO agenda item and will remain a CIO agenda item for the near future. This means that, as a CIO, you should expect to drive the IT modernization agenda directly, using the full resources of the IT management team. This issue is far too important and pervasive to be delegated to a side-office function.
• Second: Gather information. Identify the key asset portfolios across the IT domain, and assign management responsibility across the IT management team for each asset portfolio. Have each portfolio owner create an asset inventory, and get them to create thumbnail sketches for the probable life cycle of each asset, including the availability of the skills necessary to support and maintain the asset (see "Application Portfolio Triage: TIME for APM" for a useful template for portfolio reviews). As CIO, you need to ensure the completeness of cover and consistency of approach: Your staff should be absolutely certain that you will hold them individually and severally responsible for wholehearted participation in the activity.
• Third: Identify the best individual available to you to take responsibility for comprehensive IT planning across all portfolios, and make this individual a direct report. IT planning is too important to be taking place at arm's length from the CIO.
• Fourth: Organize an off-site planning session, probably initially for at least two days, where all the asset owners can explain the maturity and modernization issues inside their own portfolios to all the other asset owners. This will expose literally hundreds of opportunities for either synergy or confusion in all the interactions between each of the portfolio strategies. Use this activity to kick-start the strategic planning process as a central concern of the IT management team to corral the resources needed to change behaviors and develop new ways of working that will migrate from inadequate silo planning to integrated asset planning.

Gartner analysts' experience with clients undertaking such comprehensive reviews is that the CIO and the whole IT management team emerge from these exercises with a much clearer understanding of the need for integrated planning across all the asset portfolios. IT modernization is not so much a journey as a change to the value system of IT management. Once managers have fully grasped the value of the portfolios that they manage and the interconnectivity of all portfolios, they change their agendas so that they spend a lot more time focused on the key activities of asset life cycle planning, ensuring maximum value can be derived from every investment.