Business leaders talk about the importance of IT and business alignment. In the realm of application development, that means maintaining an obsessively business-centric focus.

Abstract: Innovation. In recent years, it's been a hot topic for everyone from market analysts to politicians to arbiters of pop culture. As globalisation continues to bring more and more players to the table, product and service innovation are increasingly important. But they're not enough. CEOs with an eye on creating lasting competitive advantage are looking to transform their companies at the core, through business model innovation. And it's an approach that pays off. Companies with an emphasis on business model innovation have demonstrated better financial performance, greater strategic flexibility and lower operating costs than their peers.

What does this mean for CIOs and other IT leaders? Now more than ever, CEOs are looking to IT to serve as a critical agent in helping to enable innovation and drive business value for the enterprise. Business leaders used to talk about the importance of IT and business alignment. Now they're taking it one step further-it's about total integration. And in the realm of application development, that means maintaining an obsessively business-centric focus and working hand in glove with lines of business within the enterprise to deliver differentiating innovation.

To meet the accelerating needs of the business, the operating model of today's application development organisation is changing. And it will continue to change. In this white paper, we'll look at five aspects of application development -- delivery models, technology, people, processes and governance -- and talk about how they are likely to evolve over the next five to 10 years.

IBM has developed and refined its approach to IT optimisation through numerous client engagements and our own internal experience.

Abstract: Over the last ten years enterprises worldwide have transformed the way they do business by investing trillions of dollars in IT. They've expanded their marketplace reach while working more closely with customers and suppliers. The most innovative of these companies have created a substantial competitive advantage in the marketplace.

Paradoxically, while IT investment has been repaid many times over in accelerated times to market, improved customer relationships and faster supply chains, it has precipitated an exponential growth in IT assets that threatens future gains. The proliferation of assets has increased the complexity of the IT environment, raising operational and administrative costs and reducing infrastructure productivity.

These three trends are seriously constraining the ability of CIOs to deliver new applications, support business expansion and align IT with overall business strategy. There is increasing concern that IT investment is approaching the point of diminishing marginal returns.

This concern is justified. Rising operational expenses threaten to completely overtake IT budgets. In just eight short years, operational labor expense has risen from less than 40 percent of IT labor budgets to nearly 70 percent.1 With application development labor being squeezed out, CIOs are under increasing pressure to justify their budgets.

The question confronted by those companies that have leveraged IT to secure a competitive advantage is how to make their competitive advantage sustainable. This white paper highlights the costs of IT asset proliferation and the advantages of the IBM view of IT optimisation as a strategic, ongoing process. It describes the holistic and practical IBM approach and shows how it is helping organisations realise greater initial savings and higher returns going forward.