We recently polled more than 700 IT leaders worldwide as part of our fourth annual Global CIO Survey, which seeks to assess the changing role of CIOs and IT departments as the digital transformation of business gathers pace.
The overall takeaway from last year’s survey was that IT leaders were under growing pressure from shadow IT. CIOs were losing the battle to retain the balance of power in IT decision-making as the line of business bypassed the IT department in procuring their own technology. This democratisation of IT presented tough challenges for CIOs in 2016. How have they handled these in an age of digital transformation?
In just one year, the CIO’s mindset around shadow IT has shifted dramatically. While last year’s respondents generally viewed the shadow IT phenomenon as a threat, CIOs are now encouraging the line of business to bring about innovation in this way. As the enterprise faces increased competition from digital disrupters, IT leaders recognise the value employees can bring to the organisation in terms of improving the efficiency and effectiveness of business processes.
Interestingly, this trend is reflected in the frequency with which CIOs are bypassed altogether. The likelihood that CIOs will be left out of the IT purchasing loop has grown every year since the survey’s inception in 2013. In 2014, 72% of CIOs worldwide held the balance of power over IT decision-making (controlling more than 50% of decisions); in 2015 it was 66%; and this year that figure has dropped even further, with just 60% controlling technology spending.
One result of this loss of control is a move away from centralised IT, with more and more CIOs now operating in ‘distributed’ IT environments. This decentralisation of IT – a natural extension of shadow IT – is no longer seen as subversive but rather a positive and essential element of digital transformation.
CIOs have accepted that they are powerless to stop employees going rogue, and are instead putting the systems in place to ensure that they are supported when doing so. In fact, the vast majority of organisations now have dedicated shadow IT departments. 83% of CIOs report that line of business functions now employ IT people whose role is to support business function-specific software, applications and cloud services. More than a fifth (22%) of IT leaders surveyed work with these shadow IT departments on a daily basis and 41% do so at least weekly.
Commenting on the trend, Logicalis Australia marketing and alliances director, Oliver Descoeudres, says, the market is now seeing CIOs and their IT departments “increasingly collaborating with the lines of business to find new solutions for IT problems. There’s also an evolution of the IT org chart, with the IT organisation embracing business-facing roles that provide an interface between the IT department and the lines of business. The challenge for CIOs is to find ways to embrace ‘shadow innovation’ without compromising security and governance controls.”
CEO of Logicalis US, Vince de Luca, adds to this: “The challenge for IT departments and CIOs is to find ways to support these specialists effectively – securing the network and vital data without stifling the ‘shadow innovation’ their skills support.”
The sheer range of issues facing CIOs as a result of digital transformation means the pressure to hand off day-to-day technology management, to focus on strategy, and reframe IT departments as internal service providers, is greater than ever. To alleviate this, CIOs are increasingly looking outside the enterprise to partner-led and delivered services. This year a quarter of CIOs outsource more than 50% of their IT, whilst the number outsourcing none or just 10% of their IT has fallen dramatically to 9% (from 26% in 2015).
In this way, IT leaders can play a leading role in enabling digital innovation, drawing on skills from insightful partners to help shape their businesses and lead their sectors through the application of digital technologies. Those partnerships will allow organisations to release the creativity that runs through their workforces and using digital technology to deliver outstanding results.
To read more about this year’s Global CIO Survey results, download the full report here.