Gartner today warned chief information officers (CIOs) to act now to assess the impact of economic crisis currently gripping the European Union (EU) economic zone and its single currency.
The analyst's report also outlines four broad challenges that the euro crisis raises, where enterprise IT decision makers can help safeguard organisations from the risks of government or bank default, euro break-up, counterparty bankruptcy and employee or customer distress.
If a market meltdown occurs, then critical resources and supplies may be at risk.
The challenges include market volatility, capital costs, human capital management (HCM) and risk management, which Andrea Di Maio, Gartner vice president and distinguished analyst could become factors for any company doing business in or with the eurozone.
"Unlike recent economic difficulties, today's crisis has the potential to totally undermine the eurozone, the whole EU and beyond," Di Maio said. "Spurred on by the pervasiveness of the internet, the crisis negatively affects every organisation or individual doing business in or with the region. The CIO's top responsibility is to guarantee business continuity."
David Furlonger, Gartner Fellow and vice president added that CIOs were in a unique position within their organisations to mitigate the effects of current economic instabilities.
"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," Furlonger said.
To manage market volatility, the analysts urged a radical restructuring of business practices. From an IT perspective, this will make change management capabilities critical, according to Di Maio.
"The foundation to achieve effective change management will demand information, analytics, HR flexibility and a more decentralised command-and-control management structure," the Gartner Fellow added.
As 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 organisations, Furlonger said CIOs faced "zero-growth budgeting at best."
"If a market meltdown occurs, then critical resources and supplies may be at risk," he added. "CIOs and other executives must develop contingency plans to ensure multiple backups."
Both HCM and risk management should also figure highly on the CIO's radar, where Gartner said IT departments must plan for retention issues arising from the potential removal of non-EU work permits and assess the viability of existing risk models.
"Now the CIO and corporate treasurer, head trader, CFO [chief financial officer] 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?'" Furlonger added.
The last time Gartner offered CIO survival tips was after the original global meltdown at the end of 2008, which now threatens to overtake the eurozone itself.
Furlonger and Di Maio will be discussing the report during a free webinar, taking place today at 5pm UK time.
