IT management teams must place modernizing strategic planning at the core of their 2008 objectives and immediately apply this capability to IT modernization efforts, according to Gartner. 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.

"Our research with thousands of clients across multiple 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 need to be retired and replaced within a comparatively short period of time -- between 2008 and 2015," said Dale Vecchio, research vice president at Gartner.

"The scale of obsolescence in the set of 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," said Andy Kyte, vice president and Gartner Fellow. "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."

Gartner defines IT modernization as a movement that includes 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.

There are three major contributing factors to why IT modernization is needed now:

  • 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. 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.
  • Increasing integration among portfolios. Integration is capable of delivering real value to the business, reducing latency and increasing the throughput capacity of the organization. However, there is increased complexity in managing service delivery and maintaining the portfolios of assets needed to support the integrated organization. These benefits come at a price with increased complexity in managing service delivery and maintaining the portfolios of assets needed to support the integrated organization.
  • Increased obsolescence of deployed assets. The recession in 2000 and 2001 caused many enterprises to take a hiatus for a year or two from investing in IT. IT teams learned the disciplines of placing systems on life support, squeezing the last possible value from sunk costs. Although IT management teams may well be able to keep 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.
  • Skills crisis. Enterprises worldwide are operating under circumstances in which a significant portion of the people who understand their mission-critical systems are eligible to retire during the next five years. Organizations should not be surprised to find that 25 percent to 30 percent of their employees with legacy skills will be eligible to retire in the next three years.

What CIOs Can Do

"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," Vecchio said. "CIOs 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."

Gartner recommends that CIOs identify the key asset portfolios across the IT domain, and