What is Happening?
Our research and fieldwork continue to indicate that enterprise business leaders expect digital business enablementnow, with substantial, strategic business transformation over the next few years. And we know from decades of working with them that enterprise IT leaders feel the pressure, and are working to provide what the business needs.
But analysis of data from our latest global survey of IT leaders indicates that this transformation is much more challenging than expected. That analysis shows us that enterprise IT as a concept and as an organization are still bound by traditional enterprise thinking, structures, and processes that limit their ability to transform themselves. This limits IT’s ability to transform the business. And this is leading enterprise IT toward changing its core strategy and role faster than previously indicated.
This insight is developed from analysis of the topline survey data from our July 2016 global survey of IT leaders, published this week for clients of our research Views. The 32-page report includes analysis of global survey data from 352 large-enterprise senior-level IT leaders and decision-makers (e.g., CIOs / CTOs, VPs). The report lays out and examines survey data and insights regarding 11 areas of enterprise IT transformation, including the following:
- Enterprise IT workload transformation and migration plans and activity
- Expectations and reality of hybridized IT environments
- Challenges and inhibitors working against IT organizational investment in its own transformation
- Drivers and inhibitors for modernization of IT infrastructure and business applications
- Planned and current use of outsourced services for IT transformation
Further analysis of each of these areas will be developed and provided, with tactical and strategic guidance, to ISG Insights clients over the next several weeks.
At the bottom line, the IT organization and its leaders understand that business transformation is expected by business leaders, and it is expected to be achieved soon. And IT leaders also know that their own organizations must transform even more, and faster than the business. But the story that most tell right now is one of continued traditional thinking and approaches that inhibit or prevent that change from happening as quickly as it could. We see this inability actually pressing greater change on the IT function very soon.
Why is it Happening?
Being required to change what you are and what you do is difficult. Being required to accomplish these changes while also being required to understand and enable change by and for those you support makes the situation more difficult.
IT leaders understand that they and their organizations must adapt. Our survey results, however, indicate that very traditional productivity improvement and cost-management concerns (including budget, re-investment, and investment ROI) still dominate IT leadership thinking and expectations at most enterprises. We see this happening because the IT function is still required to adhere to traditional roles, structures, budgeting, and metrics.
Meanwhile, widespread inability to measure current IT costs and value delivered prevents accurate forecasting of necessary transformation budgets. This in turn focuses IT leadership (and budgeting) on short-term goals, and limits most project investment to the most pressing and typically the least cutting-edge. This reduces the ability of the enterprise IT organization to directly enable and support digital transformation. Figure 1 uses survey data regarding IT infrastructure upgrade inhibitors to illustrate the situation.
Figure 1: Topline Data – IT Infrastructure Upgrade Inhibitors
Source: ISG Insights global web survey; n = 352 IT leaders
We see IT leaders reporting that they are consistently under-budgeted, and are challenged to prove ROI on the investments that they do make, which leaves many unable to justify investments in new resources which would help to enable the new capabilities needed to drive digital transformation – of the IT function, and of the business.
Net Impact
One of the two key impacts of this situation is that enterprise digital transformation is unlikely to be fully enabled by most enterprise IT organizations. Most can provide at least some strategic and tactical help. But between one-third and one-half report to us that they plan to engage with, or are already engaging with, third-party IT services providers to assist with – or to lead – enterprise digital transformation initiatives. This includes both strategic transformation planning as well as a range of deployment, implementation, and managed services.
This suggests widespread IT leadership realization of a significant lack of internal capabilities to satisfy both IT and business transformation demands, at least in the timeframe expected. That leads to our second key impact: Reliance on third parties for strategic enterprise and IT change will further call into question the traditional enterprise IT concept, organization, and role. The shift toward enterprise business and IT digital transformation will accelerate the shift of the IT function toward that of being a services provider and services manager to the enterprise.
And as clients will see in the survey data report, more than 60 percent of IT leaders believe that relying on Cloud provider APIs will serve the enterprise better than building in-house services, with more than that indicating that automation and autonomics will help reduce enterprise staffing by at least 25% over the next three years. That indicates to us that we are already seeing the shape and role(s) of enterprise IT shifting – and the rest of the data indicate that this shift will be accelerated due to the business pressure to transform.
This Research Alert was originally published by ISG Insights, our ongoing globally-focused premium subscription research service. To learn more about ISG Insights, go to http://insights.isg-one.com where you can register for a Research ID that will provide access to some of our complementary content.