News

Gartner to CIOs: Weigh on Euro crisis

With the Eurozone crisis threatening to bring the world into another global recession, Gartner is advising CIOs to be on guard as the responsibility to ensure business continuity is in their hands.

In a report titled “CIOs Should Address the Impacts of the Euro Crisis on Their Enterprises Now,” the research and consultancy firm said that among the key executives in the company, the CIOs are in a better position to see the overall operations of the company. And with technology, CIOS can also help address the challenges posed by the crisis.

But while the burden is seen to fall on the CIOs, Gartner said this could be an opportunity for CIOs to prove their business case to the chief executives.

“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 fellow, Gartner.

“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.”

Key challenges

Gartner also identified four areas where CIOs can help address the challenges posed by the crisis: market volatility, capital costs, human capital management, and risk management.

To address market volatility, Gartner said CIOs can help organisations be more agile in reacting to market conditions.

“Market conditions require CIOs to help develop a working environment that promotes speed, agility and adaptability – without sacrificing accountability,” Andrea Di Maio, vice president and distinguished analyst, Gartner. “Change management capabilities will be critical. The foundation to achieve effective change management will demand information, analytics, HR flexibility and a more decentralised command-and-control management structure.”

When an economic crisis strikes, companies can expect budgets not to grow and CIOs, working with other top executives, are tasked to help keep capital costs low. Gartner said management must make contingency plans in case critical resources and supplies are at risk.

Human capital issues

Another challenge that companies face during an economic crisis is dealing with the human resources – retaining and motivating them, funding for separation or retirement pay in case they need to be let go, etc.

Gartner said companies must plan for possible retention of foreign workers as millions of workers are expected to be out of work in Europe. Di Maio said: “They must also plan for retention issues of foreign workers moving to better opportunities or the removal of non-EU work permits and visas in response to political backlash from rapidly rising unemployment, resulting in a ‘brain drain’.”

On the fourth challenge that companies are facing because of the Eurozone crisis – risk management – Gartner said the crisis is making CIOs and CFOs rethink their risk models.

“Prior to the crisis, enterprises were already challenged to identify enterprise-wide 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.

He added: “Now, the CIO – and corporate treasurer, head trader, CFO and others – need to ask questions such as, ‘Can existing risk models accommodate alternatives to the lack of historical data (in many cases, as much as three years of back data is required) necessary for regression testing/yield curve analysis of hedges, and for stressing asset and liability portfolios in the event of a redenomination in all or part of their asset and liability portfolio?”

“Unlike recent economic difficulties, today’s crisis has the potential to totally undermine the Eurozone, the whole EU and beyond,” said Di Maio. “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.”

Previous ArticleNext Article

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

GET TAHAWULTECH.COM IN YOUR INBOX

The free newsletter covering the top industry headlines