We recently polled more than 400 CIOs worldwide as part of our third annual Global CIO Survey, which seeks to assess the changing role of CIOs and IT departments as businesses worldwide increasingly view technology as a business enabler, rather than an essential cost centre. One of the key findings was that IT leaders are under growing pressure from Shadow IT. Are CIOs losing the battle to retain the balance of power in IT decision-making?
Shadow IT: a fact of life
This phenomenon of Shadow IT – where line of business executives bypass the IT department in procuring their own IT resources – is now a reality for a staggering 90 per cent of CIOs worldwide. The likelihood that CIOs will be left out of the IT purchasing loop has grown every year since 2013. In 2014, 72 per cent of CIOs worldwide held the balance of power over IT decision making (controlling more than 50 per cent of decisions), but this year, that figure has fallen by 6 per cent. Currently, only two thirds of 66 per cent hold the balance of power over spending – making more than 50 per cent of purchase decisions.
According to Mark Rogers, CEO at Logicalis Group, “These results suggest CIOs are at a tipping point. They are just about maintaining overall control of IT spend, but with the democratisation of IT through technology consumerisation, ubiquitous mobility, growth in the cloud and business transformational technologies such as analytics, line of business colleagues’ power in decision-making is only going to present increasingly tough challenges for the CIO and the wider business executive. Unchecked and often unseen by IT, this has serious implications for IT governance and security, especially from solutions designed to directly fire the imagination of line of business executives to the possibilities that technology could have on their business.”
Shift to services
However, the survey found that IT leaders worldwide are redefining their roles in the face of pressure from line of business executives and Shadow IT, with the balance between technology and services continuing to shift. CIOs are seeking to regain control of IT – not by eliminating Shadow IT but embracing it. The threat from line of business driven IT choices is forcing CIOs to re-align their IT strategy to better serve the needs of their line of business colleagues, and transforming IT to become the first choice for all IT service provision.
The way they are doing this is by transforming their IT departments into internal service providers – lean organisations managing service portfolios, not technology, that are able to respond quickly to line of business demand. Its role is to offer the choice of services their organisation needs – whether those services are built and operated internally, come from managed service partners, or are consumed from the cloud. This transformation of the IT department was identified 12 months ago and continues apace, with CIOs increasingly focused on delivering service portfolios that directly respond to the needs of line of business executives.
IT transformation underway
There’s no doubt that line of business is assuming more and more control of IT spending and direction, but this is a trend that CIOs are clearly responding to. CIOs are more focused than ever on strategy, and spending more time on activities that are characteristic of a CIO at the head of an internal service provider.
To read more about the key findings of the 2015 Global CIO Survey, and to see how Australian CIOs are performing compared to their global counterparts, download the full report here.