the strategies, challenges and implementation priorities of us it

Copyright ©2012 CBS Interactive Inc. All rights reserved.

The Strategies, Challenges and Implementation Priorities of US IT Leaders and Professionals

IT Priorities 2012 United States

Version: 1.1, 10 March 2012Authors: Angus Macaskill, Rob O’NeillSurvey programming and management: Kita Dittavong, Erin Magers, Curtis Bendt

Executive Summary


2 IT PRIORITIES 2012 • UNITED STATES

The challenges faced by IT professionals have principally been centered on managing rapid change and enabling users to more effectively do their jobs. But since the global financial crisis emerged in 2008, with the collapse of Lehman Brothers, IT management challenges have multiplied.

Some have succumbed to organizational and financial pressures, seemingly forced to accept they are a cost center that needs to be cut back, trimmed and contained. Others, however, have reasserted their centrality as part of a solution to the crisis. These IT organizations are offering a way forward, a plan for difficult times – strategic advantage.

The warp speed of new technology development and adoption, the profusion of ICT service delivery models and pricing, and the volatility of global financial markets together magnify the challenges facing IT executives and practitioners. New business delivery models that extend IT systems to customers and partners outside organization boundaries only add to the complexity.

Organizations are focused on making the best use of their capital in today’s low interest rate environment. Smart organizations are looking again at transformational projects that will deliver medium and long-term returns, investments that may not have crossed the investment bar in other times.

Respondents to this year’s IT Priorities study, the first embracing US organizations, help us better understand this difficult environment. We sincerely thank our respondents for providing the information on which this report and the following summary is based. Now let’s take a look at what that information had to say.

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More than twice as many organizations report increased IT budgets in 2011 as report budget decreases.



IT budgets are mostly increasing or stable

Despite the constraints of an underperforming economy, more than twice as many organizations report increased IT budgets in 2011 as report budget decreases. 38.7% of organizations say their IT budgets have increased, while just 16.7% report lower budgets. 44.6% say their budgets year- on-year were flat.

Over 20% of organizations report budget increases of more than 10%. We will call these “budget winners” and call those that have faced cuts of more than 10% “budget losers”.

Together these results paint a picture of a two-speed IT market in which some organizations are pushing ahead aggressively with transformative projects based on new technology or new delivery methods while others are bunkering down and looking inside for cost cutting opportunities. The danger for the latter group is they may find it increasingly hard to compete against leaner, more agile, more modern and more automated competitors.

Budget winners are grinners

The survey shows budget winners (those reporting budget increases of 10% or more year-on-year) are typically more focused than budget losers on IT priorities that directly create value for their businesses through productivity and efficiency gains. As ICT budgets continue to devolve to management outside the core IT group, for example marketing, it seems likely that these managers are deploying that budget into areas that more directly benefit the business, such as CRM.

Of the key verticals we examine, the Telecommunications, IT and Technology and Healthcare sectors have the largest proportions of budget winners. Far more organizations in Government are finding their budgets are being cut than in other industries, but the Education and Media/Publishing/Advertising sectors are also significantly challenged. Budget winners and losers are not confined to a particular size of organization, but organizations in the mid segment (100 to 499 staff) have the highest proportion of budget winners at 25.2%. Organizations with more than 500 staff have the highest proportion of budget losers – 13.4%.

Our hypothesis, that the budget winners have won because they are doing things better and are more customer focused than their peers who have lost resources, is strongly supported by another finding – budget winners are generally ahead in the deployment of modern, externally focused business technologies. If they are behind in some more traditional application areas the difference is marginal, and their intention to invest in these is much stronger than among budget losers.

Budget losers, therefore, are not just taking a pause from investment or reaching the end of a project cycle – they are under investing now as they have at least in the recent past. They are also investing in solving legacy problems that add cost to the business, but are generally invisible to customers. We do acknowledge in all of this that economic impacts and special circumstances in industry verticals are also likely to play a part.

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All this raises a question: how do budget losers break the cycle and win the trust of senior leadership teams to do better in the next budget round?

Business leaders demand business benefits before loosening IT budget purse-strings

IT initiatives that directly deliver efficiencies and productivity improvements to the business are priorities for American IT executives in 2012. The top three IT priorities are improving business process and efficiency (a “top priority” or “major priority” for 69.1% of businesses), aligning IT priorities with business growth (61.1%) and increasing overall productivity with new technologies (59.5%).

These value-adding activities are prioritized at the expense of activities that are either internally focused or, while they may make life easier for IT teams, have a lower direct impact on business performance (e.g. ease of deployment, ease of IT management).

Budget winners are prioritizing value-creating and client-focused activities. They therefore have a better chance to contribute to their organization’s financial performance. Their IT management is better placed to point to effective outcomes from IT investment and to argue for more.

Budget losers, meanwhile, are caught in a spiral of focusing on and achieving cuts in IT spending, but they are falling behind more inspired and committed peers. Tackling expensive legacy is vital for transformation. Money must be spent to migrate to virtualized and cloud environments to strongly shift the organization towards a streamlined datacenter model.

When setting objectives for IT improvements, improving business processes is the key goal, but better access to data for more informed decision-making, and improved security also feature prominently

Improved applications that better fit business processes and improved access to data feature as a top IT improvements targeted by US organizations, closely followed by improved security and improved availability of IT infrastructure. There is little between these four priority IT improvements, all scored mentions by between 57.1% and 60.4% or respondents. Together these paint a picture of organizations searching for seamless performance from their IT systems, systems that fit the business, that talk to each other and that are secure and available when needed. These are fundamental and timeless requirements in corporate IT management – the bottom line, if you like, which enables ICT to be a key contributor to the service delivery capability of the organization.

Improved business processes and efficiency, alignment of IT with business growth, increasing productivity through the use of new technology and meeting customer and partner expectations are much stronger improvement objectives for budget winners than budget losers, whose budget pressures make them much more intent on cutting IT costs.

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Budget winners are consistently more involved in developing IT capabilities that push their businesses’ services outside organizational boundaries to connect with customers.

Large businesses have some disadvantages in terms of IT cost

Large businesses have been implementing IT over a longer time period than smaller and newer competitors (both in the US and, increasingly in APAC economies). They consequently have a range of legacy IT infrastructure that cost more, sometimes much more, than more modern offerings based on virtualized and consolidated architectures and pay-as-you-go service models. Changing this is an important focus for them.

The larger the business, the more focused they are on lowering IT infrastructure costs. 66.2% of the largest businesses (>500 staff) are lowering IT infrastructure costs, but this proportion declines for smaller companies until it represents only 44.4% of the smallest businesses (1-49 staff).

Government organizations are far more intent on cutting overall IT costs (70%) than others, followed by financial services organizations and firms in the Media/Publishing/Advertising industries. All three industry groups are famously facing extreme financial pressures.

New technologies and application delivery models are leveling the playing field, and helping smaller organizations

Other than in seeking to lower the cost of legacy IT, company size is no longer a clear predictor of the likely IT strategy of an organization. However it is a predictor of technology adoption.

It is now commonplace to say smaller companies who adopt technology imaginatively can outperform larger businesses in some areas through the use of cloud computing and software as a service, self-service portals, multi-channel marketing initiatives and product co-creation via online communities. But it is large organizations targeting cloud and web applications most strongly, almost certainly as a way to escape lock-in to expensive legacy environments and to unleash capital to drive change.

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Budget winners are consistently more involved in developing IT capabilities that push their businesses’ services outside organizational boundaries to connect with customers.



Mobility and web applications are hot, hot, hot!

There will be a strong focus in 2012 and 2013 on projects to introduce mobile applications, but over the next year web applications have priority. Organizations will also prioritize access to integrated data across the organization to support improved decision-making.

US organizations will seek to extract value from existing staff and technologies through IT training initiatives, and continue to pursue virtualization and consolidation efforts to simplify architecture, centralize management and reduce IT costs while not disempowering front line staff.

Secure, responsive, 24/7 services designed for customer satisfaction and intimacy set challenges for IT teams

Protecting/securing the network is the most common challenge, keeping exactly half of this year’s respondents awake at night, while 47.4% rate optimizing and controlling costs a “top” or “major” challenge.

Improving service responsiveness is what taxes 38.9% of this year’s respondents.

However, reducing headcount in IT, outsourcing and offshoring, are not significant challenges for US IT professionals.

Competitive IT vendor pricing, service quality and financial stability float IT customers’ boats

There are no magic tricks for IT vendors looking to win new business. They will not get past first base with prospective customers unless they offer a price advantage, are willing to go the extra mile to deliver high quality outcomes and have a stable financial foundation. We strongly believe these criteria should be the core of any vendor or partner’s corporate strategy.

Assuming the top three considerations are met, the key things vendors can do to win business is use relationships, referrals, offer great technology and ensure they are established as an approved supplier.

Having started with the IT users’ perspective, it’s fitting to complete the cycle from the vendors’ perspective. They too are challenged by the complexity of current markets, and the spiraling demands of customers. As large users of IT themselves, they share their customers’ challenges.

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ort About this Report

About IT PrioritiesThis is the first North American installment of IT priorities, an annual survey from CBS Interactive about the strategies, challenges and implementation priorities of IT leaders and professionals across the globe. In addition to this report, CBS Interactive is releasing reports covering IT markets in ASEAN, UK, France, China, India and Australia and New Zealand in coming months.

You may access the complete IT Priorities 2012 US report at: http://www.techrepublic.com/whitepapers/it-priorities-2012-united-states/4089397

About ZDNet and CBS Interactive ZDNet (www.zdnet.com) is where technology means business. The site attracts an enthusiastic and interactive audience of business technology influencers, many of whom visit for the latest coverage and analysis of how technology impacts business.

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http://www.techrepublic.com/whitepapers/it-priorities-2012-united-states/4089397

http://www.techrepublic.com/whitepapers/it-priorities-2012-united-states/4089397

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