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Gartner: Why CIOs need to replan their roadmap
IT has always been about gaining more efficiency by automating processes, but greater efficiency doesn’t lead to a step change in business outcomes
Heads of IT are being urged to consider how they take their role forward, as organisations develop business strategies that rely heavily on digital technologies.
Gartner analysts said technology can help CIOs gain freedom from historical insights, legacy business practices and bias.
Speaking during the opening keynote at the virtual Gartner Symposium conference, Daryl Plummer, distinguished research vice-president and Gartner Fellow, said: “CIOs [chief information officers] need to reconsider how they think about value, and how they get to that value. They need a more expansive view of the role technology plays in doing so, and they must be bold to reach beyond the ‘where’ to discover freedom.”
The biggest change moving forward will be how IT is financed – not necessarily how much. “IT is transitioning from supporting the business to being the business, which means spending on technology shifts from a cost of operations (selling, general and administrative) to a cost of revenue, or possibly cost of goods sold,” said John Lovelock, distinguished research vice-president at Gartner. “CIOs have a balancing act to perform, saving cash and expanding revenue.”
He said 2022 would continue the evolution of IT, as businesses adapt to a post-pandemic reality: “People have changed, but we are still social beings.”
This means people are unlikely to return to pre-Covid working patterns, where the majority of office workers commuted to an office daily. Whatever hybrid becomes, Lovelock said the way content is shared and how collaboration takes place will be fundamental to the way the workplace evolves. For instance, older technologies such as digital whiteboards could be used to encourage collaboration.
However, he also sees a need for asynchronous forms of collaboration, to enable people who work different hours or are located in different time zones to participate in online meetings.
According to Gartner’s latest spending forecast, enterprise software spending in Europe, the Middle East and Africa (EMEA) is estimated to have the highest growth in 2022, driven by the rise in cloud spending. Spending on software is set to grow 10%, ahead of IT services, which Gartner has forecast will grow by 8.2%.
Gartner estimated that enterprise cloud spending will represent 12.5% of total enterprise IT spending in 2022. Infrastructure as a service (IaaS) and desktop as a service (DaaS) are expected to be the two segments where EMEA organisations will increase their spending the most in 2022, achieving 32.3% and 31.1% growth, respectively.
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- According to Gartner, the pandemic has pushed IT to the top of the business agenda, and long-term IT integration is key to success.
- CIOs are under pressure to reduce costs, but they also need to modernise applications and help their businesses return to profitability.
Looking at IT buying habits, Lovelock said: “We are seeing fundamental shift.” More and more organisations are moving from buying IT products to a service model. “Licence software sales are on a decline and datacentre growth is flat for the next few years,” he added. “The ownership model is going away.”
While IT leaders have demonstrated their effectiveness at enabling business operations to continue during the pandemic, Lovelock warned that most companies will fall behind in terms of digital transformation. “They won’t be able to digitally transform,” he said.
Hybrid approach
Any partial digital transformation leads to a hybrid approach, which, according to Lovelock, would widen the gap from similar organisations that have fully embraced digitisation. “Don’t do old processes with new technology,” he said.
Instead of looking at efficiency savings, Lovelock said IT leaders should think about how IT can enable the business to earn more money. Instead of saving a dollar here and there through efficiency gains, he said: “If you can earn the business a dollar, everything changes.”
From an IT management perspective, larger organisations with substantial IT practices can be held back by the way they charge for internal services. This is known as chargeback. “This relies on older accounting practices,” said Lovelock. “Chargeback is a reason why IT doesn’t move as fast as it can.”
In Lovelock’s experience, companies are making generational decisions about technology. “Some of the projects that are happening now are through partnerships with technology providers who work with a client to develop a new business model,” he said.
This changes IT’s relationship with the business. “The CIO’s career has been about providing a stable environment,” added Lovelock. “Now the business wants IT to generate revenue.”
His advice is similar to that given in a recent McKinsey article, which looked at how CIOs themselves need to change to help drive business change.
“CIOs need to make the leap from tech leader to business driver, and the actions they take in the next 12 months will largely determine whether their business can meet its aspirations,” said Amer Baig, a senior partner at McKinsey.
