INFORMATION TECHNOLOGY PRACTICE




The Future of Corporate IT
How to Prepare for Five Radical Shifts
in IT Value, Ownersh...
2



EXECUTIVE SUMMARY
The Corporate Executive Board’s investigation into the five-year outlook for                       ...
EXECUTIVE SUMMARY (CONTINUED)
Shift 3: Externalized Service Delivery                                                      ...
There is no shortage of
          analysis into the future
                                                WHICH WAY FORWA...
The IT function is
          asked to do many roles
                                                CENTRIFUGAL FORCES
   ...
Ten external trends
          in IT demand and
                                                TEN EXTERNAL TRENDS THAT WI...
THE FUTURE OF CORPORATE IT
Five Radical Shifts in IT Value, Ownership, and Role



                                       ...
THE FUTURE OF CORPORATE IT
Five Radical Shifts in IT Value, Ownership, and Role
                                          ...
The majority of IT–
          enablement opportunities
                                                INFORMATION OVER PR...
The business shared
          services group subsumes
                                                IT EMBEDDED IN BUSIN...
Greater business leader
         responsibility does not
                                                GREATER BUSINESS ...
Headcount in standalone
          IT roles will likely
                                                DIMINISHED STANDALO...
Five short-term actions
        and investments pave the
                                                WAY STATIONS
    ...
The Corporate Executive
          Board’s Information
                                                HOW TO USE THE RESEA...
We would like to thank
          the IT and business
                                                WITH SINCERE THANKS
 ...
The future of corporate IT
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The future of corporate IT

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The survey, titled The Future of IT (pdf download), basically argues that the role of IT will diminish in the future. The survey argues that the IT group will move away from a large centralized function and transition into a shared services model with smaller IT teams sprinkled within business units. The role of the CIO will also change quite dramatically moving from that of Technology leader to that of either leader of a shared services group or a much more transactionally focus role in charge of IT procurement and integration.
Does that mean IT and the role of the CIO is going away? Like I said in the previous article, no…I don’t think either role is going away completely but I do believe the CIO role and the IT group must change in order to remain relevant in tomorrow’s organization.
The Diminishing Role of IT and the CIO?
The The Future of IT (pdf download) survey is an eye opener if you take the time to read it.

Source: http://ericbrown.com/diminishing-role-cio.htm?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+ConnectingTechnologyStrategyAndExecution+(Eric+D.+Brown+-+Technology,+Strategy,+People+%26+Projects)

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The future of corporate IT

  1. 1. INFORMATION TECHNOLOGY PRACTICE The Future of Corporate IT How to Prepare for Five Radical Shifts in IT Value, Ownership, and Role Executive Summary For more information about this research and to discuss the full set of findings, please contact The Corporate Executive Board Company at 1-866-913-8101 or EXBD_Support_Tech@executiveboard.com This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. © 2010 The Corporate Executive Board Company. All Rights Reserved.
  2. 2. 2 EXECUTIVE SUMMARY The Corporate Executive Board’s investigation into the five-year outlook for Shift 1: Information Over Process corporate IT points to fundamental changes in how the function is organized The rise of technology delivered as a service, or the cloud, will significantly and managed. The IT function of 2015 will bear little resemblance to its reduce sources of competitive advantage from information technology. In current state. Many activities will devolve to business units, be consolidated theory, a start-up could use the cloud to obtain the same functionality, scale, with other central functions such as HR and Finance, or be externally sourced. and quality as an industry leader. Differentiation will lie in how an organization Fewer than 25% of employees currently within IT will remain, while CIOs face manages change, integrates its service portfolio, and critically, exploits the the choice of expanding to lead a business shared service group, or seeing information the services generate. their position shrink to managing technology delivery. The nature of demand for information technology also is changing. Most After interviewing and surveying hundreds of IT and business leaders, we employees are now knowledge workers. Social media is becoming vital for find that these changes are already underway. Many IT leaders are optimistic, customer and internal communication, and data volumes continue to rise. seeing changes as no more than the usual swings of the centralization As a result, in the business areas that drive growth—innovation, marketing, pendulum or a fad resulting from recent buzz around consumer technologies. sales, customer service—up to 80% of IT enablement opportunities relate This study argues that the changes will be rapid, permanent, and radical. We to business intelligence, collaboration, or the customer interface. At the heart have advocated for a decade that IT leaders become demand shapers, not of each of these opportunities is the need to capture, integrate, and interpret order takers. Similarly, we now recommend that IT leaders devote the time, information, both structured and unstructured. energy, and resources to actively shape the coming transition. Shift 2: IT Embedded in Business Services Backdrop The corporate center is in flux. All corporate functions have the same Five years ago, less than 25% of business leaders rated their organization’s problems: their capabilities overlap; they do not control the outcomes IT function effective at delivering the capabilities they needed. Today the they enable; and after many cuts, they are struggling to find the next big number hasn’t changed. IT functions have strived tirelessly to understand efficiency. And for organizations growing in emerging markets, no corporate demand, set priorities, deliver effectively, and capture value, yet the results function has the scale or expertise to provide sufficient local support. still disappoint. Business and IT leaders alike feel they should be getting The IT function shares these problems. It has skills in strategy, program more—more efficiency, more innovation, more value—from technology. management, business process design, and sourcing. All are valuable, but none are needed solely for delivering technology, and so they can all exist Unasked Questions elsewhere. Second, no amount of alignment and partnership changes the fact Among all the talk of engagement, alignment, and “being part of the that the IT function enables business outcomes that someone else controls. business,” one assumption is never challenged—that for information Much value has disappeared down the hole that this situation creates. Finally, technology to grow in strategic importance, so must the IT function. But cost pressures mean many CIOs face the unwelcome choice of cutting what if this is not the case? What if a dedicated, standalone IT function is no delivery resources needed to “build things right,” or management resources longer the best option and the function’s resources and responsibilities were that ensure IT “builds the right things.” better located elsewhere? The need for efficiency and joint accountability for execution and outcome To answer these questions we launched an exhaustive review of business, will change the IT function’s delivery model and organizational location. social, and technology trends across the next five years, and interviewed Technology will be consumed as part of business services as the IT function and surveyed hundreds of business and IT leaders. Our work revealed five merges into a business shared services group alongside other corporate emerging shifts in IT value and role that make these questions necessary functions. and urgent. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 2
  3. 3. EXECUTIVE SUMMARY (CONTINUED) Shift 3: Externalized Service Delivery Organizations that do not make these shifts will be left behind as they Externalization of applications development, infrastructure operations, and struggle to effectively exploit technology and manage an inefficient IT back-office processes continues, gradually eroding the “factory” side of the IT function and an underperforming corporate center. For IT leaders too, function. The pace will accelerate as the cloud enables the externalization of the shifts present risk and opportunity. Those who do not adapt face a much up to 80% of application lifetime spend. As this occurs, internal roles will shift diminished role in a group with little strategic impact. But the opportunity from being technology providers to technology brokers. is also significant. Leading a business shared services organization offers new levels of resource and accountability for business outcomes. Another Shift 4: Greater Business Partner Responsibility option is a leadership role in a newly empowered business unit that thrives Technologies for collaboration, business intelligence, and customer interface on exploiting technology for competitive advantage. all require experimentation and iteration, use non-linear, user-driven This research is just the beginning of our work in this area. Across 2010, workflows, and offer value from diversity across the organization. None of we will help IT leaders navigate the five shifts. We will offer input into this is easy for a central function to fulfill. strategic planning, provide readiness diagnostics, and publish tactics for A generation of business leaders and end users is emerging with greater information and service management, new IT-business divisions of labor, technology knowledge and confidence. They see advanced, user- and agile development. friendly technology as an everyday occurrence, and can recite stories of companies gaining industry leadership through technology. At the same time that business leaders’ expectations, and their ability to articulate those expectations, are quickly rising, the cloud gives them access to unprecedented technology scale and expertise. The fact that cloud services cannot be extensively customized levels the playing field; business units cannot customize cloud applications but neither can the IT function. Together, these trends point to a greater role for business partners in areas where the value of differentiation outweighs the need integration. This is not a return to local control of IT resources, rather it is a shift in responsibility for technology decision making. Shift 5: Diminished Standalone IT Role As IT roles migrate to business services, evolve into business roles, or are externalized, the scope of the IT function will diminish and its headcount fall by 75% or more. Strategy, architecture, risk, program management, user support, and relationship management will exist at the business services level, not within the IT function. The CIO position will expand to lead this broader group or shrink to manage technology procurement and integration. Roles remaining in the IT function will organize around build and run, and adopt an agile operating model to allow rapid value delivery and resource mobility. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 3
  4. 4. There is no shortage of analysis into the future WHICH WAY FORWARD? of corporate IT. However, conventional wisdom Conventional Wisdom on the Future of Corporate IT What Conventional Wisdom Misses misses the impact of external change and tacitly assumes that the Technology on Demand Which Business Changes Will Impact Corporate IT? basic shape and remit Greater externalization and the rise of the cloud Most analysts describe the impact of technology of the IT function will will reduce the IT function’s in-house technology trends but miss the impact of changes in the economy, remain the same. delivery role. customers, or the workforce. Increased Business Alignment How Will Technology Create Business Value in Future? ■■ In response, this research The IT function must work ever more closely with There are many theories about how IT enablement will looks beyond technology business partners to be effective. create value—data analytics and customer enablement trends to understand are often mentioned—but there is no consistent view. business, economic, and A Strategist and Innovator workforce changes that will How Will Ownership and Accountability affect how organizations use The IT function (and CIOs personally) must refocus on for Information Management Change? information technology. business strategy, customer enablement, and business innovation. Most analysis ignores structural changes elsewhere in the business that, in turn, will change the location ■■ This research also explores Wanted: Business Skills and ownership of many IT roles. the future structure and remit of the IT function IT staff will need business-centric skill sets and will relative to other groups often have business backgrounds. within the organization. It does not assume that the Tacit Assumption: The IT function will growing importance of remain a strong central function, led by a technology to organizations CIO, and grow in importance, if not in size. equates to a growing future role for the IT function. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 4
  5. 5. The IT function is asked to do many roles CENTRIFUGAL FORCES that are difficult to do simultaneously and Sources of Tension Between Roles Played by Corporate IT are often more closely related to being central than to being IT. IT Central ■■ The IT function combines ■■ IT Strategy ■■ Corporate Strategy operational roles with roles ■■ Innovation In addition to IT–centric ■■ Business Process related to business strategy roles, the IT function Design and consulting, despite the ■■ Enterprise Think assumes a set of different skills and incentives Architecture ■■ Information central roles that have required. Management ■■ Requirements no natural ownership. and Analytics ■■ Key central IT roles, such as Definition program management and business process design, are not directly related to “Thinking” and “doing” Many central roles technology. The ownership roles require different are now duplicated in of these roles by the IT skills, incentives, and Finance, Procurement, function has as much to business relationships. Supply Chain, and other do with IT’s position in corporate functions. the corporate center as it does with IT’s technology capabilities. Increasingly, ■■ Software Development ■■ Program Management these roles are duplicated and Maintenance elsewhere in the corporate IT “doing” roles are ■■ Change Management center. ■■ Infrastructure being externalized ■■ Business Shared Do Operations faster than other Services ■■ Many of the IT function’s ■■ Vendor Management central “doing” roles. operational roles are being ■■ Procurement externalized so thinking roles ■■ User Support will predominate. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 5
  6. 6. Ten external trends in IT demand and TEN EXTERNAL TRENDS THAT WILL CHANGE supply will change how organizations use CORPORATE IT technology to create value, and the roles, Demand-Side Changes structure, and skills of the 1. Rise of the Knowledge Worker—Widespread transaction automation and outsourcing, and the resulting IT function. shift in retained skills, mean almost everyone is becoming a knowledge worker. 2. Ubiquitous Data—The rise of “smart” mobile devices and “ubiquitous sensing” will drive an exponential ■■ Trends that are important increase in data volume and throughput. but will likely not significantly 3. Social Media—The way customers and consumers learn about products and interact with companies is change IT’s value drivers, changing fundamentally. structure, or skills include 4. Emerging Market Growth—Shifting global demand means emerging markets will be main source of growth, green IT and greater eventually reaching the scale of developed markets. government intervention in the economy. 5. Efficiency Shortfalls—The corporate center (IT, Finance, HR, Supply Chain, Procurement, etc.) is reaching the limits of efficiency in its current functionally oriented form. 6. Tech-Savvy Workforce—Technology knowledge and confidence in the workforce is broadening but losing its depth (more employees understand how to exploit technology, fewer have a deep technical expertise). Supply-Side Changes 7. Technology as a Service—Infrastructure and applications are increasingly available as virtualized, configurable, and scalable services in the cloud, or will to adopt licensing structures that mimic a service. 8. The Industrialized, Externalized Back Office—Industry standards will emerge for back-office business processes that are then delivered by external providers. 9. A Blueprint for Service Delivery—ITILv3 provides a pathway to reorienting IT around service delivery. 10. Desktop Transformation—A convergence of virtualization, SaaS, and unified communications combined with greater workforce mobility is triggering a “transformation of the desktop” that will enable device-agnostic service delivery. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 6
  7. 7. THE FUTURE OF CORPORATE IT Five Radical Shifts in IT Value, Ownership, and Role Current State The Future of Corporate IT 1. Value Drivers Business Process First—Business process automation Information Over Process—Competitive advantage from absorbs the largest share of IT investment. Business information technology will shift toward customer experience, process design is used to define future capabilities data analytics, and knowledge worker enablement; and drive competitive advantage. consequently, information management skills will rise in importance relative to business process design. 2. Delivery Structure IT as a Service Provider—Applications and infrastructure IT Embedded in Business Services—Centrally provided are bundled into services that directly reflect business applications and infrastructure will be embedded in business partner technology consumption. The IT function is services and delivered by a business shared services increasingly centralized as a standalone shared service. organization. 3. Sourcing Model Right-Sourced IT—Delivery combines external provision Externalized Service Delivery—Delivery will be predominantly with significant internal resources as vendors are externalized as vendors expand service provision and internal uncompetitive for many critical tasks. resources become brokers not providers. 4. Business Role Pressure for Central Control—Liaison and governance Greater Business Partner Responsibility—Business unit guide business units and end users away from obtaining leaders and end users will play a greater role in obtaining and their own IT capabilities. managing technology for themselves where differentiation has more value than standardization. 5. IT Function Role Fully Functional IT Function—The scope of central IT Diminished Standalone IT Role—IT roles will embed function encompasses strategy, governance, and delivery in business services, evolve into business roles, or be with direct control of almost all IT–related resources and externalized. Remaining IT roles will be housed in a business activities vested in the CIO. shared service group. The CIO position will expand to lead this group or shrink to manage IT procurement and integration. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 7
  8. 8. THE FUTURE OF CORPORATE IT Five Radical Shifts in IT Value, Ownership, and Role Value Risk Low High Low High The IT Function Focuses on Enhancing End-to-End Customer Experience 1. Information Over Process Competitive advantage from information technology shifts toward customer experience, The IT Function Focuses on Boosting Knowledge Worker Productivity data analytics, and knowledge worker enablement; consequently, information The IT Function Focuses on Delivering Information Analytics Capability management skills will rise in importance relative to business process design. Information Technology Converges with Production Technology 2. IT Embedded in Business Services Centrally provided applications and infrastructure Information Technology Is Delivered as a Service will be embedded in business services and delivered by a business shared services The Central IT Function Becomes Part of Business Shared Services organization. 3. Externalized Service Delivery Most of the Infrastructure Portfolio Will Migrate to the Cloud Delivery will be predominantly externalized as vendors expand service provision and internal Back-Office Business Processes Will Become Entirely Commoditized resources become brokers not providers. and Outsourced 4. Greater Business Partner Responsibility Business Units Plan and Procure Their Own Technology Business unit leaders and end users will play a greater role in obtaining and managing End Users Acquire Their Own Collaboration and Knowledge Sharing Tools technology for themselves where differentiation has more value than standardization. End Users Provision Their Own End-Point Devices The Infrastructure Group Focuses on Contract and Vendor Management 5. Diminished Standalone IT Role IT roles will embed in business services, evolve Security Moves Away from Securing Physical Devices into business roles, or be externalized. Remaining IT roles will be housed in a business shared Project Management and Business Analyst Roles Move to BUs service group. The CIO position will expand to lead this group or shrink to manage IT The Applications Group Shrinks to Legacy Maintenance procurement and integration. All Technologists Move Outside the Organization n = 127 IT leaders. © 2010 The Corporate Executive Board Company. This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice All Rights Reserved. CIO5847710SYN cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the 8 Information Technology Practice.
  9. 9. The majority of IT– enablement opportunities INFORMATION OVER PROCESS in innovation, sales and marketing, and customer Breakdown of IT Enablement Opportunities by Business Process service do not involve traditional process automation. 15% 9% 18% 27% 28% ■■ Analysis of 550 level 13% three and four processes 12% determines whether and how 20% 16% each process could be IT 14% 14% enabled. 4% 11% 44% ■■ Overall, almost half the 3% 34% 30% opportunities do not involve process automation. In innovation, marketing and 13% sales, and customer service 13% processes, enablement 54% 46% 3% opportunities are mainly at the customer interface or 28% 18% using business intelligence 13% and collaboration. Finance Production Customer Marketing Product/ and HR and Supply Service and Sales Service Chain Innovation None Customer Interface In customer service, marketing and sales, and Collaboration Process Automation innovation, more than half the opportunities for IT enablement are at the customer interface or Business Intelligence involve business intelligence or collaboration. Source: Analysis based on APQC Process Classification Framework v5.0. Note: May not equal 100% due to rounding. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 9
  10. 10. The business shared services group subsumes IT EMBEDDED IN BUSINESS SERVICES many IT activities within business services, or in overarching service strategy and service 1. IT strategy, Business Service Strategy and Portfolio Management architecture groups. A architecture, and risk are smaller, more operational owned by Service Architecture (Business, Information, and Integration) IT function remains within groups under the business service the head Risk Management and Security of business 6. Business group. services. Group IT Supply HR Finance service managers Chain define their IT ■■ Design/procure requirements and ■■ Account management and applications and work directly with Business Services help desk are shared across technology external providers. all business services, not just ■■ Integrate IT. 2. Services ■■ Test Business ■■ IT development and requiring PMO and Change Mgmt. Service Units Manage external Account Managers ■■ business operations are externalized run and maintain knowledge Help Desk to outsourcers or the cloud. to realize Business Analytics Service ■■ Retire value are ■■ Remaining internal IT managed resources are organized into outside IT. Sourcing and Contracting Service groups for build and run. 3. 5. Account Communication/Collaboration Service Technology managers and services are help desk are managed by shared by all Connectivity and Hosting Service functionally business services. aligned IT resources. Integration Layer and Standards 4. External providers deliver commoditized External Service Providers (IT/Business Process Outsourcers and Cloud) business processes and technologies. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 10
  11. 11. Greater business leader responsibility does not GREATER BUSINESS PARTNER RESPONSIBILITY entail a swing of the pendulum back to local or “rogue” IT functions. ■■ It is a shift in responsibility What Greater Business Responsibility What Greater Business Responsibility from the IT function to Entails Does Not Entail business partners, not a shift in resource from central to + Business-Led Opportunity – Rogue Local IT Staff—No local, “rogue” local. Identification—Business leaders are IT groups of dedicated IT headcount. responsible for identifying technology enablement opportunities and defining – “Servers Under the Desk”—No needs. business unit–owned, on-premise application or technology portfolios. + Business Responsibility for Processes, Programs, and Change—Business – Unintegrated Data—No relaxation of process design, project management, central information and integration and change management become standards when the value of business roles. integration outweighs differentiation. + Selective Business-Owned – Security Risk—No relaxation of Technology Sourcing—Business central security policy where business leaders can obtain IT capabilities unit actions create organization- directly from the cloud when the wide risk. value of differentiation outweighs standardization. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 11
  12. 12. Headcount in standalone IT roles will likely DIMINISHED STANDALONE IT ROLE shrink to 25% or less of current totals by 2015 in Estimated Reallocation of IT Headcount at Progressive Organizations by 2015 organizations where the As a Percentage of Total Central IT Headcount in 2010 five shifts have taken full effect. 45–75% ■■ In many cases, the number of staff in standalone IT roles 20% will be less than those with External responsibilities related to technology in the business shared services group. 2–5% 80% 13–25% Internal 10–25% Central IT Externalized Business Units Business Shared “Indispensible” IT Function in 2010 Services Groups Source: Analysis based on CIO Executive Board 2009 IT Budget Benchmark. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 12
  13. 13. Five short-term actions and investments pave the WAY STATIONS way for the five shifts. Key Intermediate Steps Toward the Five Shifts 1. Information Architecture—Reemphasizing information architecture and data management creates a foundation for future investment in business intelligence and collaboration. 2. ITIL v3—The development of management processes, structures, and metrics for technology services paves the way for subsequent moves to business services. This can be done through selective adoption of ITIL v3 or by defining a similar model internally. 3. Private Clouds—Virtualized internal infrastructure allows organizations to gain shorter- term scale advantages and prepare for eventual migration to the public cloud. 4. New IT–Business Divisions of Labor—Emerging capabilities for business architecture and program management readies business units for greater responsibility. 5. Agile Development—Greater use of agile development concepts (formally or informally) allows greater rapid service enhancement and mobility for remaining internal IT resources. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 13
  14. 14. The Corporate Executive Board’s Information HOW TO USE THE RESEARCH Technology Practice can help you to exploit the Uses for the Research Which Volumes How We Can Help trends explored in this to Look At research. ■■ For more information on any of the resources described 1. Update Your IT Strategic Plan All Initiate a Strategic Planning Engagement on this page contact your Use The Future of Corporate IT to refresh with the CIO Executive Board or have account manager or the your three- to five-year strategy for IT us lead a discussion on The Future of Member Support Center at value delivery. Corporate IT findings at your strategy +1-866-913-8101 or EXBD_ off-site. Support@executiveboard. com. 2. Broaden the IT Organizational Design Volumes 2, 4, 5 Benefit from CEB’s cross-functional Conversation reach to keep up-to-date on parallel Initiate conversations with company organizational changes in other leadership on the future role and corporate functions through our work structure of IT and IT’s relationship on the Business Agenda for IT. to other corporate functions. 3. Pressure-Test Your Sourcing Model Volumes 3, 5 Use the Emerging Technologies Roadmap Ensure your sourcing strategy is ready from the Infrastructure Executive Council for greater externalization and a move to get real-world data on adoption rates by providers to the cloud. and risk assessments for new technologies and sourcing models. 4. Clarify IT Staff Career Paths Volumes 2, 5 Provide your team with targeted training Accelerate development and boost on the skills they will need most with our engagement by giving IT staff clear online training modules and IT Business direction on the direction of the function Leadership Academy. and the skills they need to succeed. INFORMATION TECHNOLOGY PRACTICE This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs © 2010 The Corporate Executive Board Company. are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. All Rights Reserved. CIO5847710SYN 14
  15. 15. We would like to thank the IT and business WITH SINCERE THANKS leaders who helped guide our work through Partial List of Participating Organizations interviews and survey responses. ■■ The ideas and opinions contained in this research are those of The Corporate Executive Board and do not necessarily reflect the views of the organizations listed here. INFORMATION TECHNOLOGY PRACTICE © 2010 The Corporate Executive Board Company. All Rights Reserved. CIO5847710SYN This document may not be reproduced or redistributed without the expressed permission of the Corporate Executive Board Company. The Information Technology Practice has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, the Information Technology Practice cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Information Technology Practice is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Information Technology Practice or its sources, or b) reliance upon any recommendation made by the Information Technology Practice. 15
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