IT computerization worsen shift in tech expenditure
A worldwide review of more than 1,000 C-level executives shows that IT group are losing power over new technology acceptance at their companies but are still held responsible for integrating the technologies securely into their company’s communications.
Increasingly, expenditure and control of technology budgets are moving out of established IT organizations, the survey commissioned by technology consulting firm Avanade found.
Non-IT division control more than 37% of project technology costs, and that number is likely to grow over the next few years. Some 71% of C-level executives believe they can make technology decisions more quickly and effectively than IT organizations, the survey found.
The movement, driven by the growing availability of cloud services, mobile technology and the overall computerization of IT, is fueling some real worry between IT organizations and the broader business.
“What’s interesting about the survey is that people still trust IT,” said Matt Joe, chief technology innovation officer at Avanade. Business units still want to partner with the IT group and would like to tap into its skills and expertise when adopting new technologies.
However, what they clearly do not want to do is wait around for IT, Joe said.
The survey was conducted by Wakefield Research for Avanade, a managed service provider owned by Accenture and Microsoft. The research firm, which used an email invitation and an online survey of C-level executives, business unit leaders and IT decision makers, was conducted between Feb. 10 and Feb. 26.
One in 5 corporations already have a boss digital officer who is divide from the CIO. At some companies, chief promotion officers are just as likely to be considered for the role as a technology expert.
“It really is a patience thing. Do you want to wait for IT or do you want to light up Azure yourself? Is it going to be faster and easier going to a [third-party] to build a mobile app, or do you do it in house?” Joe said.
The situation poses some tricky challenges for IT organizations. While many would like to innovate, they continue to be bogged down with the need to keep the existing infrastructure running. The survey found that IT staffs spend some 36% of their time managing and maintaining legacy systems. Not surprisingly, fewer than one in four of the respondents said IT suggested new or innovative technology projects of their own.
What has emerged is the need for a sort of two-speed IT organization — one that manages the legacy work while also being nimble and innovative enough to accommodate technology change at the speed of business, Joe said.
The best way for IT to remain relevant in the rapidly transforming enterprise is to become technology adviser and services broker.
“IT needs to up their game,” Joe said. The goal should not only be on keeping the lights on, but also on lending IT best practices and consulting expertise to business stakeholders.
Many IT organizations already have the experience and the expertise with technology integration, vendor management and contract management that business units will likely struggle with on their own, he said.
Importantly, most C-level executives are already comfortable with the idea of the IT staff interacting directly with their customers and partners in a consultancy role, Joe said. In more than one-third of the companies surveyed, IT departments have already begun serving primarily as service brokers to solve specific business requirements.
The responses in the Avanade survey reflect a trend that has been going on for sometime but appears to be picking up speed with the emergence of new mobile and consumer technologies.
In a survey of 119 CIOs by Constellation Research earlier this year, about 44% said they would like to spend more time on innovation but were stuck maintaining infrastructure. Meanwhile, tech-spending patterns have shifted. While companies are spending more on technology overall, IT organizations have seen little of that increase.
In 2014, technology spending by line of business will grow between 17% and 19% compared to last year, said Ray Wang, principal analyst at Constellation Research. Meanwhile, IT budgets will grow by a modest 5% at best after dropping by about 5% last year, he said.
“A lot of the tech budget has shifted to the line of business. That’s marketing, HR, operations, supply chain and logistics,” Wang said.
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