According to research firm Gartner, CIOs must act immediately to protect their enterprises, with extreme uncertainty plaguing all enterprises operating in the Eurozone. CIOs also need to safeguard their enterprises from the risks of government and bank default, euro break-up, counterparty bankruptcy and employee-customer distress.
"Uniquely positioned within their enterprises, CIOs are at the fulcrum of business and technology, and they are the only executives with sufficient visibility and potential capability to address the challenges posed by today's Eurozone crisis," said David Furlonger, vice president and Gartner Fellow.
"Business leaders are crying out for CIOs to demonstrate more effectively the capability of IT and, specifically, to add value to the business. Therefore, this crisis also presents CIOs with an opportunity to make substantial and bold steps to meet CEO demands, and demonstrate the importance and true value of IT," he added.
"Unlike recent economic difficulties, today's crisis has the potential to totally undermine the Eurozone, the whole EU and beyond," said Andrea Di Maio, vice president and distinguished analyst at Gartner. "Spurred on by the pervasiveness of the Internet, the crisis negatively affects every enterprise or individual doing business in or with the region. The CIO's top responsibility is to guarantee business continuity."
Gartner analysts said there are four broad challenges that the euro crisis raises, and they examined how the CIO is best positioned to provide enterprise leadership on addressing those challenges. These challenges include:
Market volatility - Most enterprises and their IT departments are burdened with significant numbers of bureaucratic processes and latent decision-making mechanisms. Today's market conditions require business and government executives to radically restructure their business practices.
Capital costs - The costs of and access to capital across Europe will likely continue to worsen until there is a significant redress in structural imbalances between countries and organizations. Unwillingness or inability to write off debt and restructure public- and private-sector balance sheets is a substantial barrier to market efficiency.
Human capital management - Millions of people are out of work in Europe. Formal government austerity packages and informal corporate restrictions on salaries, benefits and working conditions, combined with high costs of living, are stressing workforces. This situation is compounded by retirement funding shortfalls, extensions in the working age and loss of benefits.
Risk Management - The capital markets (and many corporations) believe that the risk of government and counterparty default is substantial. Receivables management is being stressed, and the likelihood of internal and external fraud rises. From an IT standpoint, operational risk is heightened via issues such as changes in contractual obligations and business continuity.
"Prior to the crisis, enterprises were already challenged to identify enterprisewide risks in a holistic fashion to link those risks to the performance of the business and to manage risk in a time-effective manner," Furlonger said.
Sign up for CIO Asia eNewsletters.