TechInsights Report: The Changing Role of IT and What to Do About It

WHITE PAPER | March 2014

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Executive Summary

Today’s challenging and hyper-competitive business environment offers CIOs a unique opportunity to assume an expanded role as a strategic technology expert collaborating with the business toward greater success, more revenue and happier customers.

It’s in IT’s hands at the moment, but the window of opportunity is closing as lines of business get tech-savvy, spending more of their budgets on IT projects and re-examining the role that IT plays in advising them. IT can either define a new role for itself which embraces this change, or ignore it and risk becoming increasingly irrelevant to the business.

New research commissioned by CA Technologies and conducted by Vanson Bourne in May-July 2013 shows the role of IT is changing—and not to benefit IT leaders in many cases. The survey of 1,300 senior IT leaders worldwide revealed 39% of respondents now see IT as a service broker or consultant to the line of business rather than a full-service provider of all IT services; and 35% of IT spending is occurring outside of the IT department today—and that number is expected to grow to 44% in three years. Other disturbing findings show that just 11% see the role of IT as a developer of new, innovative services and only 14% consider IT as a driver of new business initiatives.

IT should want more than to be the keeper of others’ IT investments, on call to fix problems as they arise. IT leaders should use their knowledge, experience and technology expertise to guide the business toward opportunities that otherwise would not exist if not for IT’s innovation.

There has been some progress for IT, with more than 40% in 2013 (versus 35% in 2011) identifying IT as “very strategically important” to the business, but more must be done to solidify IT as the strategic technology leader within the business. The opportunity is now, and this research report will help IT leaders, including CIOs:

• Understand how their role is changing and how to plan for the future;

• Assess how the organization views IT and its contributions to the business;

• Set strategies for the investments required to re-position the role of IT;

• Use technology to measure, quantify and report on the value IT provides to the business;

• Provide guidance on disruptive technologies to drive competitive advantage;

• Evolve their position from IT support to technology strategist.

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Figure A.

Does the top IT executive in your organization report to the CEO or other most senior officer in your organization?

Total: 1,300

CIOs and IT Make Progress, But With a Catch The 2013 research shows that more CIOs are reporting directly to CEOs: 71% now compared to 36% found in our 2011 research (see Figure A).

And IT overall is considered more critical to the organization’s success than it was just two years ago, showing that more in the C-suite (CEO, COO, CFO) consider IT crucial to a successful business. When asked how strategically important the executive management team viewed IT, 41% said it was very strategically important versus 35% in the 2011 research.

Despite this endorsement from executive management, the research revealed that CIOs have less confidence in IT’s ability to deliver value than other IT respondents in their organization. Perhaps this is simply an acknowledgement on the part of the CIO of the technical and budgetary challenges that surround moving from an IT maintenance organization to a driver of innovation.

For instance, just 25% of CIOs think that IT is fundamental to the success of their organization, versus 41% of non-CIO IT respondents who think the same. CIOs are also having difficulty positioning their department more strategically. Only 7% of CIOs said that IT’s primary role is to develop new and innovative services, and just 10% of CIOs believe IT is critical to driving new business initiatives (see Figure B).

This lack of confidence and ambivalence on the part of the CIO could cause IT to miss the opportunity to take the technology innovation lead for their businesses. Since more CIOs are now reporting to CEOs, the time is right to drive better engagement with business stakeholders and increase transparency into IT investments and priorities.

2011

Yes No

2013

36%

64%

29%

71%

Does the CIO Report to the CEO?

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Figure B.

Multiple questions, 261 CIOs and 1,039 in other IT roles

Figure C.

What percentage of company-wide IT spending is controlled by the IT department rather than other LOBs currently and in three years?

Total: 1,300

Role of IT CIO Response Other IT Response

IT is fundamental to the organization’s success 25% 41%

Primary role of IT: develop new & innovative services 7% 12%

Primary role of IT: drive new business initiatives 10% 15%

IT provides all required services to the business 79% 56%

IT’s role won’t change in five years 43% 24%

Equally troubling is that this research shows CIOs are encouraging a complacency that is dangerous for IT today. While 79% of CIOs believe their IT department provides all required services to the lines of business (LOBs), only 56% of non-CIO IT respondents agreed. And 43% of CIOs said the role of IT in five years will be largely the same, while just 24% of non-CIO IT respondents believe that to be true.

The role of IT is indeed changing, whether CIOs are prepared to deal with it or not. IT leaders (including CIOs) need to understand how change will impact their organization and be proactive to secure their position as strategic technology advisor to the business—or risk being caught flat-footed as the landscape changes around them.

Follow the MoneyThe IT department is no longer the only one making sizable IT investments. In fact, more than one-third (35%) of IT spending is occurring outside of the IT department today—and that number is expected to grow to 44% in three years (see Figure C).

Today

SpendingControlled byLOBs

SpendingControlled by IT

In Three Years

65%

35% 44%

56%

Control of the IT Budget

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And the survey revealed 39% of respondents now see IT as a service broker or consultant to the line of business, rather than a sole-source provider of IT services (see Figure D).

As technology becomes more important to the LOBs and they get more skilled with technology in their own right, IT needs to maintain a proactive stance in driving technology adoption strategies for their organization, or risk becoming irrelevant to the business.

The research also shows that today’s IT organizations are not quantifying the value they provide to the business, further lessening the importance of their role. While LOBs turn to IT for its technology expertise and guidance on investments, IT is not relaying its success metrics back to the business. IT organizations are too inwardly focused; they are not actively promoting the value they provide, perhaps because they lack the right tools or business acumen or skills to do so.

For instance, this research found that too few respondents are frequently using software and other tools to measure their performance and report those metrics to LOBs and the C-suite. While the majority of respondents (53%) are frequently tapping ‘what, if’ analysis tools for IT planning, the numbers drop when the metrics pertain to measuring the benefits of current IT investments (39%) and understanding how a shift in investment impacted the business (27%). This type of information could show the business how IT saved money, increased revenue, and more (see Figure E).

Figure D.

Which of the following best describes how IT interacts with the line-of-business departments?

Total: 1,300 29%

10%

61%

IT provides all the required apps/services via on-premise and/or cloud resources

IT acts as a service broker and advisesthe business on the recommendedvendors and then negotiate terms

IT acts as a consultant to the business deparments but they do their own sourcing

The Role of IT and the LOBs

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In one way, IT is considered the expert consultant to provide guidance to other LOBs on their technology investments, but at the same time, IT is no longer the sole controller of technology and isn’t adequately communicating its expertise in the area.

This scenario represents both a challenge and opportunity. IT needs to recognize that loosening controls on all IT decisions isn’t a complete loss of power; IT can capitalize on its expertise within the LOBs to help drive the groups and the business overall toward the strategic technologies needed to succeed. By tracking, measuring, quantifying and reporting IT’s success back to the organization in business terms, IT can enhance its profile and better secure its position at the decision-making table in the future.

Change is Inevitable; Capitalize on ItMore than 72% anticipate the role of IT changing—the majority see IT becoming the technology specialist within their organization, or consulting when needed and providing guidance when necessary. One in five (21%) see IT either vanishing as a separate department or outsourced completely in five years. Only 28% think it will not change at all (see Figure F).

Figure E.

How often does IT management use software tools to perform each of the following activities?

Total: 1,300

Frequently Sometimes Rarely/Never

31% 29%Sharing key performance metrics with the business

37% 25%Evaluating whether IT is achieving their keyperformance metrics

Looking at the impact of shifts in investments

Assessing current investments and understandinghow resources are being deployed across projects

Scenario planning an ‘what if’ analysis

38%

37%

39% 12%48%

53% 11%35%

27% 23%48%

Leveraging Software Tools in Support of IT Planning

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IT leaders today can take advantage of this anticipated role change. Respondents recognize the need for IT, and CIOs can elevate the position to a more strategic role if they put their IT organizations at the forefront of strategic decisions and lessen the perception of IT as a support organization.

Today, while most respondents position IT in traditional technical roles rather than in strategic roles critical to growing the business, this will change in the next three years (see Figure G). Survey respondents expect IT’s role to advance in three years when it comes to being a strategic business partner (35%), improving the customer experience (35%), driving new business initiatives (25%) and being a developer of innovative new products and services (11%). Traditional, more technical roles won’t go away, but they all drop in importance.

Again these findings exemplify the opportunity before IT today: take control of driving new business projects, improving customer experience and developing innovative new services, and IT can better mold the shape of its new role.

Figure F.

Which one of the following best describes how you anticipate IT’s role in your organization in five years’ time?

Total: 1,300

How Will IT’s Role Change in Five Years?

Stay the same as today

Some IT functions will move to otherdepts but IT will remain a separate specialized dept

Most IT functions will move to otherdepts but IT will remain a separatespecialized dept

All IT functions will be incorporatedinto other depts and IT specialistswill report into LOB management

All IT in the organization will be outsourced

13% 28%

34%

17%

8%

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Primary Role of IT Today In 3 Years

Technical Roles

Ensuring the organization’s critical data is secure 50% 43%

Maintaining the organization’s infrastructure and apps 41% 35%

Providing technology support to employees 40% 32%

Fixing problems as and when they arrive 35% 34%

Business Roles

Strategic business partner and advising the business 30% 35%

Improving the customer experience 29% 35%

Broker for IT services supporting the business 20% 17%

Driver of new business initiatives 14% 25%

Developer of new, innovative products/services 11% 17%

Along with these increasingly strategic roles comes a re-allocation of IT spending in favor of new business initiatives. The amount of IT spending on new products and services is expected to grow in the next three years from 49% to 59% of the total IT budget (see Figure H). That means that IT is recognizing the importance of strategic investments in becoming a better partner to the business.

Figure G.

Which of the following best describes the primary role of IT within your organization currently and in three years’ time?

Total: 1,300

Figure H.

Approximately what is the IT spend on maintenance versus delivering new services currently and in three years’ time?

Total: 1300

Today

IT budget spent ondelivering new services

IT budget spent onmaintenance

In Three Years

51%

49% 59%

41%

IT Budget: Maintenance Versus New

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The Disruptive Technology AdvantageIT can use its technology expertise to shine when the business is faced with adopting disruptive technologies. Cloud computing, mobility and Big Data analytics, just to name a few, require fundamental changes in how business gets done. These technology trends are more than a one-off product investment. They mandate consideration from concept through development and into production, as well as an assessment of the impact on the broader culture of the organization. As older technologies become more mainstream and challenge the business less, IT can provide the guidance needed to take advantage of emerging trends (see Figure I).

But even IT leaders recognize they need to get better at working with the business, aligning projects with business goals and getting executive support for their initiatives. They need to understand how to capitalize on the expertise within their organizations and cement their role as critical players in any technology decisions for the business.

For instance, 43% of survey respondents say that IT needs to be more closely aligned with the business, and 42% say that IT needs to strengthen its relationship with executive management. Further, this study shows that IT decision makers recognize they need to shift their budget dollars from maintenance to new initiatives and find the right talent to drive new technology projects (see Figure J).

Big data

Business intell/analytics

Mobility

51%54%

34%40%

31%25%

31%37%

28%27%

26%18%

24%30%

21%26%

16%11%

Cloud computing

Social media

Virtualisation

Th Internet of Things

DevOps

SaaS

Today In Three Years

Most Impactful Trend Today and in Three YearsFigure I.

What are the biggest trends impacting IT in your organization currently and in three years’ time?

Total: 1300

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What IT Should Be Doing NowThe role of IT is changing, and the opportunity to lead the technological direction of their businesses is before IT leaders today. CIOs can make this opportunity a reality for their IT organizations, and IT leaders can work with CIOs to better communicate IT’s value to the business from the top down to the end-user desktop.

Here CA Technologies offers guidance based both on the findings of this research as well as the experience experts have gathered from IT customers taking a proactive stance as the landscape and expectations change around them. Managing the changing role of IT isn’t about control; it’s more about embracing what could become of today’s technology experts and how they can evolve into strategic business partners.

Drive better engagement with business stakeholders. IT needs to define strategic initiatives in the context of business goals and communicate performance against strategic metrics so the business can understand IT’s value. IT should move beyond internally-focused metrics to external business metrics such as revenue and customer satisfaction, and routinely measure and report on key performance metrics in the language the business will understand.

Gain business support for the IT organization. Now that more CIOs are reporting directly to their CEOs they have the opportunity to become an equal, strategic partner who delivers clear value to the business and in return garners the budget and support needed to implement the strategy.

Build trust with the business by increasing transparency into investments and priorities. Be a true advisor and consultant. Help the business understand how you can optimize resource utilization

Provide more training on new technologies 45%

Align closer with the business to understand key priorities 43%

Strengthen relationship with executive managementto secure more support 42%

Hire new people with expertise in these trends 41%

Shift budget from maintenance to new initiatives 30%

Educate executive management on the opportunitiesthe new technologies can open up 27%

Obtain tools to better enable IT to assess their overallportfolio and the impact of changes 18%

Required IT Actions on Disruptive TechnologiesFigure J.

What key steps does IT need to take to be better prepared to leverage these disruptive technologies?

Total: 1300

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and spend across internal and cloud service providers, make sourcing decisions based on a true understanding of cost and value and mminimize budget variance and schedule uncertainty.

Identify the key roles that drive innovation and invest accordingly. IT organizations will always have to maintain existing technology investments and support end-user needs, but that shouldn’t be the primary role going forward. Search for the IT rock stars in the organization, give them time and resources to deliver new products and services, and truly innovate. As you shift more of your energy and focus to new services, over time your budget balance will shift from maintenance to innovation.

Educate the business on disruptive trends. IT organizations should understand how new technologies can drive business success. Stay on top of the latest technologies and invest in the required skills, talent and training. Don’t wait to be asked by the business about cloud computing, Big Data or mobility, for instance; look for ways to collaborate with the business in developing a proactive plan to leverage them.

Evolve IT from support to strategist. Today IT is the “problem fixer”; IT is the go-to for customer complaints; and IT maintains systems. But tomorrow IT needs to be the strategy expert. IT needs to be the key advisor as technology becomes the business.

Methodology This global study was conducted online by Vanson Bourne in May-July 2013 with 1,300 senior IT leaders at enterprise organizations across five industry verticals of financial services, healthcare, manufacturing, public sector and telecommunications. The survey was conducted in the following geographies:

Americas: United States, Brazil

Europe: U.K., France, Germany, Italy, Switzerland, Iberia (Spain/Portugal), the Netherlands, the Nordics, Israel

APAC: Australia, China, India, Japan, Singapore, South Korea

Respondents were required to hold IT executive, management, project lead or enterprise architect titles at enterprise organizations with revenues (or equivalent) of at least $100M.

Connect with CA Technologies at ca.com

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For More Information For further information on this TechInsights Report as well as the latest news and research on other key technology trends, visit ca.com/techinsights.