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CIOs urged to prepare for possible Euro break-up

Computerworld Philippines staff | Dec. 16, 2011
With extreme uncertainty plaguing all enterprises operating in the eurozone, CIOs must act immediately to protect their enterprises, according to Gartner, Inc. CIOs need to safeguard their enterprises from the risks of government/bank default, euro break-up, counterparty bankruptcy and employee/customer distress.

With extreme uncertainty plaguing all enterprises operating in the eurozone, CIOs must act immediately to protect their enterprises, according to Gartner, Inc. CIOs need to safeguard their enterprises from the risks of government/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."

"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:

Challenge 1: 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.

"Market conditions require CIOs to help develop a working environment that promotes speed, agility and adaptability -- without sacrificing accountability," Mr. Di Maio said. "Change management capabilities will be critical. The foundation to achieve effective change management will demand information, analytics, HR flexibility and a more decentralized command-and-control management structure."

Challenge 2: 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. Lines of credit will likely become uncertain or removed, forcing corporations to reduce inventory.

"In this situation, CIOs will face zero-growth budgeting at best, and substantial reductions in both the investment capital and the operational budget made available to run the business at worst," Furlonger said. "If a market meltdown occurs, then critical resources and supplies may be at risk. CIOs and other executives must develop contingency plans to ensure multiple backups."

Challenge 3: Human Capital Management

 

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