Wrenching changes to how companies can operate globally, combined with massive investments in fibre optics and other technologies, have paved the way for a truly transformational period in IT, according to Warren McFarlan, a professor at the Harvard Business School.

But while some leading companies will be able to leverage new business opportunities now opening up under a shifting global economy, most IT organizations will continue to be hampered by day-to-day systems repairs, compliance demands and other mundane requirements, said panelists and attendees at Cutter Consortium's Summit 2005 conference.

2005 is transformation time

"Of the nearly 50 years I've been in IT, 2005 is probably the most exciting, transforming time for business applications," said McFarlan, the Albert Gordon Professor of Business Administration Emeritus at the Harvard Business School.

McFarlan noted that the emergence of global business process outsourcing - where companies can transfer entire functions such as accounting and human resources to third-party companies on another side of the world - has led to "the death of distance." Such developments, along with massive changes in IT-enabled business activities, reflect how the industry is moving from the "cow path" created over the first 40 years of IT to a more transformational environment, he said.

Other speakers who joined McFarlan in a panel discussion at the conference said those opportunities won't come easily for most firms. "As transforming as the technology can be, it's not preventing our clients from doing stupid stuff" with IT, said Tom Bugnitz, a consultant at Cutter.

Control systems in focus

Another problem is that some organizations want to outsource nonstrategic operations "but what you're leaving behind is in disarray," said Lou Mazzucchelli, another Cutter consultant who is also a venture partner at Ridgewood Capital Management. He agreed with McFarlan that the corporate community may be entering the "mastery phase" of executing on the IT groundwork laid over the past 40 years.

In the health care industry, a majority of IT projects fail because they're poorly aligned with business strategies, said John Halamka, CIO at the Harvard Medical School and Beth Israel Deaconess Medical Center. Halamka advocated "wrapping" legacy applications with middleware to help drive new business functionality and then replacing systems later on "when you have the luxury of time."

Big business and governance

One conference attendee who works for a telecommuncations company, complained that Sarbanes-Oxley Act compliance requirements have led to additional checklists and sign-offs that are slowing down IT projects for her organization and frustrating business sponsors.

McFarlan acknowledged the challenges to organizational transformation cited by the conference attendees. Still, he contended that the "technology friendliness" of a company's CEO "goes a long way towards achieving these types of things."