|By David H Deans||
|January 31, 2014 02:00 PM EST||
2014 will likely be a year of dual business goals for forward-thinking senior executives. Responding to ongoing needs for business efficiency and growth, but also adapting to exploit a fundamentally different digital commerce paradigm.
Commercial digitalization, based upon the latest and most effective business technology advances has already begun, but most chief information officers (CIOs) do not feel prepared for this next era, according to a global survey of IT leaders by Gartner, Inc.
Their latest market study showed that many CIOs feel overwhelmed by the prospect of building digital leadership while renovating their core of IT infrastructure. The Gartner survey found that 51 percent of CIOs are concerned that the digital transformation is coming faster than they can cope -- and 42 percent don't feel that they have the employee talent 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.
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.
Gartner says that during the first era of enterprise IT, the focus was on how IT could help do new and seemingly magical things -- automating routine operations to create massive improvements in speed and scale, and providing business leaders with management information they never had before.
Preparing for the Next Era of Business Technology
The last decade has represented the second era of enterprise IT, an era of industrialization of enterprise IT, making it more reliable, predictable, open and transparent. However, while this second era has been necessary and powerful, tight budgets and no appetite for risk left little room for meaningful innovation.
Entering the third era of enterprise IT technological and societal trends -- such as the evolving Internet of Everything phenomenon -- is transforming what savvy business leaders do to make there operations faster, cheaper and inherently more scalable.
In 2014, CIOs must face the challenge of bridging the second and third eras. They have to build digital leadership and bi-modal capability, while renovating the core of IT infrastructure and capability for the digital future.
Most businesses have established IT leadership, strategy and governance but have a vacuum in digital leadership. 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 survey showed CIOs expect their IT budgets to remain essentially flat -- increasing 0.2 percent on average -- in 2014. CIOs report that a quarter of IT spending will happen outside the IT budget in 2014 -- and that is the spending they know about. Meaning, the reality may be significantly higher.
This re-assignment of budget is a direct result of the new digital opportunities that are more entwined with customer and colleague experiences, and may reflect concerns that the traditional IT organization is not prepared for more digital opportunities.
CIOs Must Prepare for Significant Change in 2014:
- 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 agile small companies and start-ups.
- 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, new digital skillsets and alternative sourcing models.
"If this transition succeeds and CIOs and their businesses 'tame the digital dragon,' massive new value for businesses can be created, and with it, a renewed role and greater credibility for the CIO and the IT organization," concluded Aron. "However, if the dragon isn't tamed, businesses might fail and the relevance of the IT organization will almost certainly disappear."
Software AG helps organizations transform into Digital Enterprises, so they can differentiate from competitors and better engage customers, partners and employees. Using the Software AG Suite, companies can close the gap between business and IT to create digital systems of differentiation that drive front-line agility. We offer four on-ramps to the Digital Enterprise: alignment through collaborative process analysis; transformation through portfolio management; agility through process automation and integration; and visibility through intelligent business operations and big data.
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