Tensions Between IT and Business Leaders Forcing Changes in Enterprise Technology Delivery

By Peter Bernstein April 15, 2014

It should come as no surprise to anyone in the technology industry, be you buyer or seller, that inside of enterprises IT departments are being buffeted by unprecedented changes that are reshaping expectations, roles and responsibilities. All of the buzzwords come into play:  “Shadow IT,” “Consumerization of IT,” BYOD, cloud, mobility, virtualization, big data, security, risk management, ad infinitum and ad nauseam.

It is, to say the least, a challenging time to be a CIO or work for one. You are being asked to do more with less, do a better job of risk management and improving the customer experience, and do so in an environment where caution is seen as weakness and therefore invites circumvention. The end result has been the creation of tension between IT and business leaders that is driving significant adjustments as to the role IT can and should play in delivering technology that supports the business going forward. 

Since those who observe the industry know it when we see and feel it, this transformation of IT’s role and relationship to the enterprise while palpable has needed some context.  Seattle, Wash.-based Avanade, a global business technology solutions and managed services provider, with the release of a large scale survey conducted or it by in February 2014 by Wakefield Research, has provided some context to chew on that confirms much of what we all thought.

The research firm surveyed 1,003 C-level executives, business unit leaders and IT decision makers, at the top companies in: Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Italy, Malaysia, Netherlands, Norway, Singapore, South Africa, Spain, Sweden, Switzerland, the United Kingdom and the United States. What they found in the recently published report on the survey, titled “What’s creating tension between IT and business leaders?” was that technology budgets and decision-making are migrating away from IT departments. However, this is not necessarily bad news as IT is taking on new and productive roles for the enterprise.  

The interesting thing is that some of the findings of the survey seem to be at odds with each other, but maybe not given the direction things are going.

The role of IT is transforming in profound ways — service broker model emerging

As a result of shifting budgets and IT’s loss of control, as the sub-headline states, the study uncovered what it calls a new “services broker” model for IT taking hold. “In this model, IT staff consult with departments across the business to better understand their technology needs and objectives, and source internal or external IT services or partners to meet these demands,” the report notes.

In fact, it found that 35 percent of companies’ IT departments act primarily as services brokers today. It seems to be working. 

The research found of those employing the new model, 58 percent said they will expand the role of IT services brokers in the next 12 months, and 68 percent said their IT department is contributing more to accomplishing business objectives than they did three years ago.

Plus, there was more. To borrow a line that has been used on the popular TV show Family Feud for decades, “The Survey Says!”

First what appears to be bad news for IT:

  • Thirty-seven percent of budgets allocated in 2014 for technology are controlled by business departments outside of IT. In other words by people who do not report to the CIO.
  • In addition, 79 percent of C-level executives believe they can make technology decisions for their department better and faster without the involvement of IT.

As noted above, this seemingly bad news is contradicted in the survey by respondents who say IT is increasingly playing the role of business advisor to both internal stakeholders and external partners:

  • 83 percent of respondents said they are comfortable with IT staff interacting directly with important clients and partners in a consultancy role.
  • 66 percent of companies are planning to expand the role IT plays as business advisors in the next year.

Of course there is a catch to all of this, and it is one plaguing the entire IT industry where there is a growing skills gap between today’s workforce and what will be required, and soon.  C-levels who are attracted to the new model for IT and want to make the shift, want IT to build skills in key areas that will help them source innovative technologies that solve business problems for employees, customers and partners.  Specifically they see a need for more skills in cloud services (44 percent) and service and system integration (43 percent).

That raises the question as to why make the shift, and here the numbers seem compelling.  As Avanade points point the research found that companies planning roles for IT as business advisors and services brokers see positive results. In fact, 71 percent of C-level executives say their IT department today has “an employee-centric culture.” And, as noted this is reflected in C-levels feeling their IT folks are better aligned with serving business objectives than they were just three years ago.

Another interesting finding from the survey was that servicing the old while considering and deploying the news has its challenges, especially as an impediment for moving forward faster which is increasingly a requirement of all entities regardless of size, location or products and services.  As the authors point out, 36 percent of an IT staff’s time is spent managing and maintaining legacy systems. This leads to a situation known as “two-speed IT” where IT staff must balance the support of legacy systems with the need to continuously innovate in order to stay ahead of the competition.

“The tilting balance of control over technology decisions and budget has created a real tension between IT and the business and requires IT to rethink its approach, learn new skills and grow its influence,” said Mick Slattery, Avanade executive vice president, Global Service Lines. “Forward-looking companies are positioning their IT staff as business advisors and see IT contributing more to accomplishing objectives, and driving positive business results than ever before.”

The research also supports the findings of Accenture’s “High Performers in IT: Defined by Digital” report, which found that companies with high performing IT organizations invest in IT to deliver strategic capabilities to the business.

The takeaways from the survey are in line with shifts in why technology is being purchased in general and also with the fact that C-levels have by necessity become digitally adept and thus want to have a larger say in things. Long gone are the days when companies bought technology just to have the latest and greatest.  Now all tech purchases have to have a solid business case behind them. Not only must the intent of a purchase be known but there needs to be metrics that can be used to quantify progress and determine success of the deliverables. 

It is this shift putting technology in the context of measurable business success that is being measured in the survey results. While this may be outside of IT’s comfort zone, in an age where time literally is of the essence, being the strategic advisor on how to be faster, better and having procurement and support accountability as well as responsibility may be a change of pace for IT. However, it is a pace and a role they should relish not fear. After all what the survey also shows is that taking the tension out of the relationship between IT and business leaders by adopting the new approach is emerging as a good example of how success breeds success.   

Edited by Alisen Downey
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