IT Strives to Reinvent Itself Despite Budget Restrictions

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Shifting and better quantifying the IT value proposition

According to The Hackett Group's research, the most significant change being made in this area is in key performance indicators (KPIs) and performance reporting. IT organizations are finding that tracking basic operational IT metrics is no longer sufficient. IT leaders have to be able to discuss the transformative impact of their efforts: the amount of value expected, the effect of IT projects on business outcomes, and the importance of technology to business strategy, including innovation. This need is driving significant changes in performance measurement.

IT leaders are striving to reinvent themselves in 2014, as they struggle to support innovation-based corporate growth efforts with improved information and analytics, according to 2014 IT Key Issues research from The Hackett Group, Inc. At the same time, IT organizations are facing another year of staff cuts and only small budget increases, in the face of moderate revenue growth expectations.

According to The Hackett Group's research, companies are focusing on three IT strategy areas for 2014: redefining IT's value proposition, including developing business relationships necessary to support innovation and adopting metrics to better measure IT value contribution; development of enterprise information architecture and analytics capabilities to help their company support top-line revenue growth; and talent realignment.

The Hackett Group's research showed that IT organizations are being expected to improve efficiency in 2014, as they consistently have since 2008. Budgets are expected to increase by 1.7 percent and staffing is expected to be cut by 2.0 percent. But once the expected enterprise growth rate of 6.7 percent is factored in, the result is a productivity gap of 8.7 percent and an efficiency gap of about five percent for 2014. These gaps will require them to focus on reducing IT costs in traditional IT delivery service areas, and redeploy resources so they can largely self-fund any reinvention and transformation efforts.

"IT organizations have a long history of challenges keeping up with the changing needs of the business. That's truer today than ever before. As companies focus on improving innovation to drive growth, IT must shift towards a true service mentality which enables enterprise strategy and deepens the IT/business partnership. It's no longer enough to be simply a utility to the enterprise, with a strict focus on low cost," said The Hackett Group Global IT Advisory Practice Leader Scott Holland.

"Changes in technology have also undermined the total control that IT used to have over critical assets and services," Mr. Holland explained. "Technology has become pervasive, and there are so many new options available to the business, from the cloud to SaaS to tablets and smart phones. IT needs to up its game and change its mindset. A deeper understanding of the business is required, as is the ability to translate that knowledge into technology solutions that are virtually transparent to the user. Then IT needs to make sure it all hangs together."

 

Related Topics : A Big Market for Big Data Jobs, Midmarket CIO, IT Management Automation, SharePoint, Technology Markets

 
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