IT “VERY STRATEGICALLY IMPORTANT” TO THE BUSINESS:

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.

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.

We’ll help you verify the functionality of standardized interfaces and identify what you need to do to get your multi-vendor network in the best possible shape. We help consolidate, transform and evolve your service delivery platforms into a strong asset that lets you grow, reduce operating expenditures and offer new end-user services.

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CIOs need to decide how they will position the IT organization in relation to emerging digital business technologies, such as the Internet of Things, 3D printing, wearable technology, robotics and cognitive systems.

Regardless of your industry, every CIO will need to prepare for the upcoming digital business technologies and the impacts it will have on the enterprise.

CIOs should use this research to start forming their positions on digital business technologies, and to prepare their IT organizations with the right resources and skill sets.

Two key attributes will cause some CIOs to hesitate in making digital business technologies part of the IT organization's responsibilities:

1. Digital business technologies are operational in nature. The IT organization is used to owning and supporting "back office" and infrastructure technologies. Digital business technologies are aimed at supporting "front office" and operations.
2. Digital business technologies are emerging technologies. Drones, the IoT and cognitive systems are not commonly part of the IT agenda.

However, we encourage CIOs to understand how relevant these technologies are, and will be, in their industries, and to give them a fair assessment. There is much at stake — in both business value and technology investment.

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The Role of IT is Indeed Changing: IT needs to be the key advisor as technology becomes the business

Indian IT leaders expect to invest 65% of their IT budget in delivering new services, the highest in the world. As software-driven business transformation becomes the norm, and businesses use new applications to engage their employees and customers, this trend is expected to continue, and accelerate, in the years to come. With the focus on innovation, 71% of India Inc’s top management considers IT to be fundamental to the organization’s success or very strategically important, compared to 51% in the United States.

What IT should be doing Now?

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: Help the business understand how you can optimize resource utilization and spend across internal and cloud service providers, make sourcing decisions based on a true understanding of cost and value and minimize 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.

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Four sourcing strategies from automakers, companies will be better able to foster innovation and efficiency in their IT outsourcing

As many companies have discovered, much to their dismay, IT outsourcing doesn't always go as planned. In case after case, the lower costs, better service quality, and greater agility everyone was expecting turn out to be elusive. Looking for lessons in failed engagements has become a virtual pastime for the IT sector, yet the disappointments continue. Perhaps it is time to draw insights on outsourcing from another sector -- specifically from one that does a better job of it, the automotive industry.

By following four sourcing strategies from automakers, companies will be better able to foster innovation and efficiency in their IT outsourcing. Just as important, it will spur companies to manage IT as a core component of their business. 

1. Retain expertise: Rebuilding IT expertise will take time, so companies should get on their way. They can decide if any outsourced services could be taken back in-house, and add technical experts to their procurement teams. They can prioritize emerging key technologies, such as virtualization and the cloud, and gradually build skills by hiring or developing the necessary talent. Finally, sourcing and vendor management must become integrated parts of an IT career path and not treated as an end station, as is sometimes the case.

2. Pay attention to processes that provide an edge: In IT, all outsourced processes -- whether a "differentiator" or a more commoditized task -- tend to be handled in the similar, hands-off fashion, with the company relying on the vendor to get things right. The automotive industry approach would let companies' in-house IT teams focus their efforts where the payoff would be greatest. For instance, at a logistics company, one differentiating process might be the routing of trucks. The IT application that supports that routing should be flagged for special treatment, such as stepped-up collaboration or supervision. For here, improvements aren't just beneficial, they can bring competitive advantage. 

3. Challenge suppliers to deliver improvements: In many engagements, ambiguous contracts, hands-off management, and difficulty switching providers (or a reluctance to do so) give vendors little reason to focus on improvements. To get closer to the automobile model, IT organizations should move to standardized environments when possible, particularly in the cloud. They should also consider the "champion-challenger" model, where one provider does the bulk of the work, but another does some of it (and can step in further if necessary). Another approach is to assign one provider the execution of a task, but give another a quality control role, making sure the work gets done. 

4. Emphasize transparency: IT organizations, which typically pay for services on a volume-centric measure -- be it MIPS, terabytes, or number of transactions -- rarely have such an inside view. To gain such a view, they could devote procurement staff to better understanding costs, as well as promote more dialogue and information sharing with providers. As procurement staff members develop more expertise, they'll be better able to evaluate the pricing and quality of the services they are sourcing.

There is a reason IT organizations embrace outsourcing: It can really deliver benefits. But to see them, companies need to get back in the driver's seat, creating the right incentives, and balance, in their sourcing relationships. By embracing these four lessons from the auto industry, they can do just that -- and enjoy a smoother road ahead.

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