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Business-Managed IT Brings Gain, But Adds To Enterprise Risks: Study

Tech spend outside IT department creates opportunities, but opens back door to potential security and consumer trust risks,

business-managed IT
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As team decisions about technology spend is shifting, more companies are moving toward business-managed IT. While, they are reaping significant business advantages, this trend also opens door to potential security and consumer trust risks. A new Harvey Nash-KPMG CIO Survey reveals that almost two-thirds (63%) of organizations now allow technology to be managed outside the IT department. Needless to say, this shift brings with it heightened privacy and security risks.

The study analyzed responses from organizations with a combined technology spend of over US$250bn. It reveals that when IT spend is managed away from the direct control of the CIO, companies are twice as likely to have multiple security areas exposed. They are therefore more likely to become a victim of a major cyber-attack.

At the same time, organizations where the IT team is formally involved in decision making around business-led IT, the scenario is positive. The business advantages include improving time to market of new products. This is 52% more likely to be significantly better than their competitors. Besides, employee experience is paramount. The study shows, it is 38% more likely to be ‘significantly better than their competitors’. However, the study shows four in ten (43%) companies are not formally involving IT in those business-managed IT decisions.

These organizations are twice as likely to have multiple security areas exposed than those who consult IT, 23%less likely to be ‘very or extremely effective’ at building customer trust with technology, and 9%more likely to have been targeted by a major cyber-attack in the last two years.

The study finds that these risks come at a time when cyber security reaches an all-time high. The huge opportunity to capitalize on the value of business-led IT, but also manage its risks, comes at a time of significant change for the business, the CIO, and the IT department.

Here are some of the key takeaways from the survey.

Fewer CIOs sit on the board

Although the influence of the CIO remains intact(66% this year view the role as gaining influence compared to 65% in 2018), fewer CIOs now sit on the board – dropping from 71% to 58% in just two years.

AI and automation driving huge change

As the IT department uses AI/automation to improve efficiencies (up 17% this year as a board priority), CIOs can expect that up to 1 in 5 jobs will be replaced by AI/automation within 5 years. This is likely to lead to a significant reorganization of roles across the business-managed IT. However, 69% of CIOs believe that new jobs will compensate for job losses to AI/automation.

T‍ech leaders struggle with skills shortages

Technology leaders are struggling to find the right talent with skills shortages at their highest level since 2008. The three most scarce skills are big data/analytics (44%), cyber security (39%) and AI (39%).

“In an age where anyone with a smartphone and credit card can set up an IT system, there are both incredible opportunities and major risks. Those enterprises that get the balance right between innovation and governance will be the winners,”said Albert Ellis, CEO of Harvey Nash.

He added, “At the same time, boards are asking their CIO and technology team to prioritize automation of jobs. How organizations adapt to automation will increasingly become a priority, and many are not at all ready.”

Digital leaders perform better

‍Digital leaders are considered organizations that are considered ‘very effective’ or ‘extremely effective’ at using digital technologies. These organizations that have advanced their business-managed IT strategies, performed better than their competitors on every aspect.

For example: time to market (53% vs 34% for the rest), customer experience (65% vs 49%), revenue growth (55% vs 43%)and profitability in the last year (50% vs 37%).

Digital leaders are also more likely to introduce ‘major new changes to products and services’ in the next three years(55% vs 39% for the rest), and focus on making money. The study also shows 76% of CEOs in digital leader organizations want their technology projects to perform better.

Gender diversity initiatives are failing big tech

74% of IT leaders feel their team diversity and inclusion initiatives are moderately successful. There has been only a meager growth (1%) in women on tech teams from previous year. Also there was no change in the percentage of female technology leaders which stands at 12%.

First signs of Quantum Computing

Although Quantum Computing is at such an early stage, 4% have implemented Quantum Computing to at least some degree. This is especially true for with big pharmaceuticals, financial services and energy organizations.

A fifth (22%) of organizations implementing Quantum Computing were based in the UK, followed by 19% in the US, and 7% for both Australia and Ireland.

IT leaders reporting budget increases 

More technology leaders reported increases in IT budgets under their control. This has happened ever in the last 15 years, since the global recession. In business-managed IT the jump from 49%to 55% is the largest so far.

For technology projects where the CEO prefers to ‘save money’ almost half (45%) of respondents report budget increases. This shows a 7% jump from last year. This trend suggests that many CIOs are investing to save, for instance through automation.

Steve Bates, Global Leader, CIO Advisory Center of Excellence, KPMG International, said,“There is no longer business strategy and technology strategy, it’s simply strategy with technology driving it. The future of IT is a customer obsessed, well governed and connected.”

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Sohini Bagchi
Sohini Bagchi is Editor at CXOToday, a published author and a storyteller. She can be reached at sohini.bagchi@trivone.com