Digital economy tops agenda but problems ahead
CIOs feel overwhelmed by the prospect of building digital leadership while renovating the core of IT infrastructure and capability for the digital future.
- 51 percent of CIOs are concerned that the digital torrent is coming faster than they can cope
- 42 percent don't feel that they have the talent needed to face this future.
"2014 must be a year of significant change if CIOs are to help their businesses and public sector agencies remain relevant in an increasingly digital world," said Dave Aron, vice president and Gartner Fellow.
"2014 will be a year of dual goals: responding to ongoing needs for efficiency and growth, but also shifting to exploit a fundamentally different digital paradigm. Ignoring either of these is not an option.
"CIOs are facing all the challenges they have for many years, plus a flood of digital opportunities and threats. Digitalization raises questions about strategy, leadership, structure, talent, financing and almost everything else.
"All industries in all geographies are undergoing digital disruption. This is both a CIO's dream come true and a career-changing leadership challenge."
In order to deliver on this bimodal future, CIOs are planning for significant change in 2014 and beyond:
- A quarter have already made significant investments in public cloud, and the majority expect more than half of their company's business to be running over public cloud by 2020.
- Seventy percent of CIOs plan to change their technology and sourcing relationships over the next two to three years, and many are seeking to partner with small companies and startups.
- Forty-five percent of companies have implemented agile methodologies for part of their development portfolio, although most need to go further to create separate, multidisciplinary teams, with lightweight governance and new, digital skillsets and alternative sourcing models.
To exploit new digital opportunities and ensure that the core of IT services is ready, there must be clear digital leadership, strategy and governance, and all business executives must become digitally savvy. The 2014 CIO Survey shows that the CEO's digital savvy is one of the best indicators of IT and business performance.
"IT spending, portfolio balance and the choice of technologies, talent, sourcing options, leadership, structure and governance must all be designed to make the business win. However, despite the need to grow, there is pressure on IT budgets," said Aron. "The survey showed CIOs expect their IT budgets to remain essentially flat (increasing 0.2 percent on average) in 2014. This is especially challenging since there is a need to both renovate the core of IT systems and services, and exploit new technology options."
The worldwide survey was conducted in the fourth quarter of 2013 and included 2,339 CIOs, representing more than $300 billion in CIO IT budgets in 77 countries.
"The behaviours mastered in the second era of enterprise IT, like treating colleagues as customers, are potential hindrances to exploiting digitalization," said Graham Waller vice president and executive partner for Gartner Executive Programmes.
"In 2014, CIOs must face the challenge of bridging the second and third eras. They have to build digital leadership and bimodal capability, while renovating the core of IT infrastructure and capability for the digital future."
CIOs report that a quarter of IT spending will happen outside the IT budget in 2014. "There is an inherent tension between doing IT right and doing IT fast, doing IT safely and doing IT innovatively, working the plan and adapting," said Waller. "The second era of enterprise IT has been all about planning IT right, doing IT right, being predictable and creating value while maximizing control and minimizing risk.
"However, to capture digital opportunities created by the third era, CIOs need to deal with speed, innovation and uncertainty. This requires bimodal capability — operating two modes of enterprise IT — conventional, or "safe and steady" IT, and a faster, more agile nonlinear mode."