it transformation: creating a strategy for...

A briefing paper from the Economist Intelligence Unit sponsored by Cisco

IT transformation:Creating a strategy for success

IT transformation: Creating a strategy for success is an Economist Intelligence Unit briefing paper, sponsored by Cisco. The Economist Intelligence Unit’s editorial team conducted the survey and wrote the report, and the findings and views expressed do not necessarily reflect the views of the sponsor. Elizabeth Bennett was the author of the report, and Debra D’Agostino was the editor. Richard Zoehrer was responsible for layout and design.

Our research was based on a survey conducted in January 2008 of more than 950 information technology (IT) professionals worldwide, as well as desk research and in-depth interviews with executives from around the world about the challenges and opportunities that they face with regards to IT transformation. Our thanks are due to all survey respondents and interviewees for their time and insights.

August 2008

Preface

© The Economist Intelligence Unit 2008 3

IT transformation: Creating a strategy for success

Executive summary

s the pace of business continues to quicken, many corporate IT

departments have realised the need to revisit how they deliver services to the rest of the enterprise. In many cases, such undertakings can transform the IT department—and the entire enterprise as a result. To understand the nature of this transformation better, the Economist Intelligence Unit conducted an independent survey in January 2008, sponsored by Cisco, that asked corporate IT professionals worldwide of varying seniority, company size and industry to explain their views on how IT transformation—initiatives meant to significantly improve the way corporate IT departments operate and support their businesses—can best improve their company. The study revealed the following points:

n IT respondents are in favour of pursuing IT transformation within their organisations. More than one-half of respondents have either recently completed an IT transformation programme or are in the process of doing so, and 30% are considering one. Only 18% feel that things are fine as they are or that the disruption would outweigh the potential benefits.

n As part of this transformation, IT organisations are focusing on their relationships with their non-IT business units. Fifty-seven percent of respondents said that improving IT’s responsiveness to new business requirements was their company’s top IT objective for 2008, more than any other response. In the UK and India, this was especially the case.

n Transformation, though, may require significant change. IT operating models—the method by which IT departments are organised and managed—play a key role in the IT department’s ability to serve the overall business. However, there are mixed reviews when it comes to the effectiveness of these approaches, indicating that enterprise IT departments need to reconsider their management frameworks.

A

About the surveyThis survey, conducted by the Economist Intelligence Unit on behalf of Cisco in January 2008, polled more than 950 IT professionals from 21 industry groups worldwide about their experiences regarding IT transformation. Twenty-three percent of respondents held C-level or senior management titles, 26% were mid-level managers (including IT architects), and 50% were frontline IT workers (IT operations staff). More than one-half (51%) of respondents work for companies with 1,000-4,999 employees; 31% work for firms with more than 10,000 employees. Thirty-five percent of respondents are from western Eu-rope, 21% from Asia, 15% from north America, 11% from the Middle East and 13% from Latin America.

Corporate IT departments often need to revisit how they deliver services to the rest of the enterprise. Such undertakings can transform more than just IT.

4 © The Economist Intelligence Unit 2008


n To make transformation effective, frontline workers need up-to-date information about company and division objectives. For example, about 49% of chief information officers (CIOs) say that contributing to business process optimisation is one of three top objectives in 2008. That perspective is shared by just 30% of frontline workers. Meanwhile, IT architects (59%) are significantly more likely than CIOs (45%) to think that cost cutting is an objective in the next two years.

n Companies that have completed IT transformation initiatives report cost savings and smoother operations as a result. Forty-six percent of all respondents expect IT transformation efforts to result in cost savings, and among companies that have recently completed such an initiative, 43% of respondents cite this as a top benefit, along with smoother, more flexible operations (40%), improved communication with customers and partners (32%), and increased profits (31%). In addition, more than one-quarter say IT transformation has improved their firm’s ability to respond to regulatory requirements, and 25% report improved IT operational efficiencies. Only 2% of companies that have completed an IT transformation initiative report no tangible benefits.

What are your IT organisation’s top objectives during 2008? (Select up to three) Improve IT’s responsiveness to new business requirements

Reduce IT costs

Contribute to business process optimisation

Improve corporate compliance practices to simplify auditing and reporting

Move to the operational model of “IT as a service”

Shift costs from maintenance to new projects

Other

Don’t know

48%

29%

24%

2%

1%

57%

60

30

15

7+

30%

39%

What are your IT organisation’s top project priorities through 2008? (Select up to three) Reduce overall IT complexity

Consolidate IT infrastructure

Improve data security

Virtualise servers and storage

Adopt service-oriented architecture (SOA)

Reduce IT power consumption

Other

Don’t know

51%

28%

17%

4%

3%

52%

60

30

15

7+

28%

43%



orporate IT systems have evolved dramatically over the past decade.

Once considered a clunky, disruptive nuisance, technology has become an essential productivity tool and a key driver of the growth and success of many businesses. However, as non-IT workers continue to grow more savvy about technology, the increasing convergence of IT and business processes is challenging the traditional organisational model, where IT and business units operate largely in

separate spheres. That structural and philosophical distance has been narrowed by leading businesses around the world that view IT as a strategic asset, and that have made or are making radical adjustments to better shift their IT investments and create a more agile enterprise. Those technological, organisational and operational changes, often referred to as “IT transformation”, appear different for each corporation, depending upon size, geography and industry.

egardless of company size or geographic location, companies

realise that IT operations are in need of significant overhaul. These efforts could be as wide-ranging as re-engineering the entire IT department’s operating model, or shifting resources to help workers respond more quickly to business needs. Either way, the figures show a definite effort to improve IT: more than one-half of survey respondents have either recently completed an IT transformation programme or are in the process of doing so, and 30% are considering one. Forty-two percent say they can see how IT transformation would benefit them and their department, and more than one-quarter (28%) are personally advocating or planning changes. To varying degrees, improved collaboration with non-IT divisions is the goal of this transformation;

respondents in nearly every geographic region said their companies’ top-three objectives in 2008 are to improve IT’s responsiveness to new business requirements, reduce IT costs and contribute to business process optimisation. IT operating models—the method by which IT departments are organised and managed—play a key role in the IT department’s ability to serve the overall business. These models vary by company size and region: some companies allow workers to rotate among various areas of the IT department, others have set up permanent cross-functional teams and still others place domain experts in charge of certain functions. However, the two most common operating models worldwide are those in which IT professionals focus on either one area (most commonly found in the US) or

Introduction: Driving IT transformation

Global perspectives

C

R



several functions (most notably in India, China, Latin America and the Middle East). There are mixed reviews when it comes to the effectiveness of these approaches. For example, US IT workers are twice as likely as the global average to say their organisational structure is somewhat ineffective. In contrast, respondents from India and Latin America—whose IT models exhibit the strongest emphasis on cross-functional collaboration within IT as well as with non-IT stakeholders, and tend toward professionals who focus on several functional areas—cite IT’s operating model as a significant enabler of a range of business goals. For example, 32% of Indian respondents and 42% of those in Latin America say that their IT organisation’s operating model contributes significantly to its ability to integrate new technologies such as service-oriented architecture and virtualisation. One explanation for this difference may be that companies are struggling to allocate resources in the most cost-efficient manner. In China, for example, budgetary and personnel constraints tend to yield organisational structures that hold workers accountable for several IT functions, for very little pay. As a result, says William Tong, director of IT services at Evonik Degussa, a subsidiary of a multinational chemical company based in Essen, Germany, China faces a shortage of qualified IT workers; server and networking engineers often elect to work for companies abroad that offer more competitive salaries than Chinese corporations. “I lost three SAP consultants to US enterprises in one and

a half years,” he says. Perhaps this is the reason why China-based respondents say that the top benefits of IT transformation for IT workers would be better allocation of IT resources (56%) and greater job focus and productivity (41%). The survey results indicate that there is a definite need for companies to revisit their IT organisational structures. Sam Ceccola, former vice-president of technology transformation for Paris (France)-based consulting firm, Capgemini, says that the firm’s reorganisation of how IT delivers services to clients has had a positive effect on Capgemini’s overall business in the form of smoother operations, lower staffing costs, and higher employee and customer satisfaction. Today,

“We are used to IT being looked at as a vehicle to reduce costs, as opposed to a business differentiator.”Sam Ceccola, former vp technology, Capgemini

In your opinion, how effective is this method of organisation?

Very effective 17%

Effective 48%

Somewhat effective 26%

Somewhat ineffective 6%

Ineffective 2%

How does your company’s IT organisation typically manage operational domains? (Choose the one that most applies) IT professionals are responsible for two or more functions (eg, telephony and networking, servers and storage)

Most IT professionals focus on only one area

Cross-functional architects provide top-down guidance

Domain experts produce best practice implementations in their areas

We have set up permanent cross-functional teams

Individuals rotate among domains periodically

Don’t know

Other

19%

11%

7%

2%

1%

32%

40

20

10

5

14%

15%



business and IT services divisions at Capgemini operate within a single unit, an arrangement that promotes cross-functional collaboration. “In the past, IT was looked at as a vehicle to reduce costs, as opposed to a business differentiator,” Mr Ceccola says. This new approach, he adds, has significantly improved how Capgemini’s business units interact with IT.

Strategic budget allocationThe manner in which firms allocate their IT budgets is an important indication of how IT departments are organised. Domain-specific budgets—those that are determined based on specific technology functions such as storage and applications—are the most common in all parts of the world, although companies located in India and Latin America, perhaps because of a focus on business alignment, tend to budget on the basis of business initiatives. (This is also more often true among companies that have recently completed a transformation initiative.) Firms in western countries tend to allocate IT budgets to internal IT projects. Chinese IT groups seem to have the least control over their spending, and often find themselves allocating funds on demand to the latest business programme. Ronald Pomerantz, director of global computing at General Motors Corporation (GM), says that GM spent the better part of the last decade slashing IT budgets by renegotiating contracts and replacing antiquated enterprise systems to transform the company’s dispersed IT organisation into a unified, less “bloated” entity. It included a shift in budget allocation that now holds business functions and geographic regions accountable for technology spending; in the past, only those directly involved in a project were accountable. GM’s annual IT budget is now derived entirely from collaborative planning between leaders in global business processes. “Project by project,” says Mr Pomerantz, “there is an ongoing linkage between IT spending and business requirements.” By thinking more strategically about how budgets

are allocated, companies can become more agile. Survey figures reveal that organisations that are undergoing or have undergone IT transformation are more likely than those that have not considered or have not undergone such initiatives to have discretionary budgets for special projects that are controlled by IT—allowing IT greater flexibility to respond to new issues as they arise. The finding is provocative, but does not paint a complete picture. Jerry Meeker, a senior IT manager at computer chip maker, Advanced Micro Devices (AMD), says his company has undergone a major transformation in the last five years, resulting in a team that can respond nimbly to business needs. Yet, it has little control over discretionary spending. Usually AMD’s IT group gets a mandate from senior management to spend what it needs “to keep the lights on”, and anything left over is available for new projects. However, Mr Meeker must confer with business counterparts and the chief financial officer (CFO) before spending any of the remaining technology budget. “If you don’t focus on collaborating with the business, especially on budgets, you end up fighting for every dollar, and IT will be viewed as a cost centre, not an asset,” says Mr Meeker. The lesson to be learned is that even if IT controls its own budgets, spending should be closely aligned with business goals.

To whom does your organisation’s CIO/head of IT report?

Board of directors 14%

CEO/president/managing director 39%

CFO/treasurer/comptroller 21%

COO 14%

Other 3%

Our company does not havea CIO or eqivalent 6%

Don’t know 3%



For some years now, India has been

seen as a model of progressive technol-

ogy practices. Survey data provides greater

insight into this perception. For example,

respondents in India are by far the most

likely to have goals associated with interact-

ing with business counterparts. Those goals

include implementing new projects based

on corporate—not information technology

(IT)—objectives, actively seeking opportuni-

ties to propose technology-based approach-

es to improving business practices and

gaining more support from senior business

managers for things like budgeting, change

management and technology adoption.

The willingness among Indian IT groups

to “go where the business is going” and take

concrete steps to pursue

highly collaborative working

environments is perhaps one

explanation for why Indian respond-

ents were most likely to identify their

companies’ organisational structures as

“very effective”.

Another explanation may lie in the rela-

tive power of their technology executives.

Fifty-seven percent of Indian respondents

say their chief information officer reports

directly to the chief executive officer, presi-

dent or managing director, compared with

48% in the Middle East, 42% in the US and

35% in France and the UK. A direct line to

the head of business puts IT in a position

to help shape business strategy rather than

focus on back-office opera-

tions.

It should be noted that nearly

23% of Indian respondents say

that they work in the technology

sector, compared with an average of 9%

in other regions. While IT companies have

a reputation for innovative operational and

organisational practices, there is more to

the story of India’s transformation success,

such as a tightly knit business culture ori-

ented towards collaboration and a relatively

new environment for large enterprises.

India has had a chance to benefit from the

established best practices—and mistakes—

of those in the West, and it appears to have

learned those lessons well. n

Cue: India Rising

ith so many companies—more than one-half of respondents—

undergoing extensive transformation initiatives, it is not surprising to see CIOs in an elevated role. Thirty-nine percent of all respondents say that their CIO reports to the chief executive officer (CEO), president or managing director—more than those reporting to the CFO (21%) or chief operating officer (14%). Fifty-seven percent of respondents in India say that their CIO reports to the CEO, indicating a link between CIO reporting structure and business alignment. In Latin America, 32% of respondents say that their CIO reports

to their company’s board of directors, although globally this figure is much lower, at 14%. Considering the pace of business today, one can imagine a growing divide between the goals of senior management and the activities of rank-and-file workers. In general, however, CIOs and the IT employees that they supervise have a common understanding of what their top priorities should be. In addition to cost-cutting and business alignment, they agree that consolidating infrastructure, reducing complexity and improving data security are IT imperatives. Yet, survey results indicate that more must

Getting the message across IT

W



be done to provide frontline workers with up-to-date information about corporate objectives. For example, about 49% of CIOs say that contributing to business process optimisation is one of three top objectives in 2008. That perspective is shared by just 30% of frontline workers (ie, IT architects and IT operations staff). IT architects (59%) are significantly more likely than CIOs (45%) to think that cost cutting is an objective in the next two years. Additionally, while 65% of CIOs and senior IT managers say that improving IT’s responsiveness to business needs is one of the top-three priorities in the coming year, only 43% of IT architects hold that same view. Furthermore, it appears that CIOs may be out of step with the operational structure of their IT organisations, as CIOs seem unaware of the frequency of cross-functional teaming and staff rotation through functional areas. Communicating corporate strategy is a never-ending task. At United Parcel Service (UPS), the shipping and logistics concern based in Atlanta, Georgia, CIO Dave Barnes holds, at a minimum, monthly meetings with all levels of the IT organisation, according to Nick Gray, vice-president of IT for UPS’s European division. Mr Barnes first addresses a timely topic, such as the evolving needs of customers, then holds a question-and-answer session, which gives IT workers the opportunity to ask Mr Barnes directly about such issues as outsourcing, IT architecture and high-profile projects. “The meetings provide a human touch,” Mr Gray says. “Everyone at UPS has a responsibility to be involved in generating creative ideas for improvements.”

The question of outsourcingThere is also a clear discrepancy in how IT employees view outsourcing. When executed carefully, outsourcing has been shown to help companies focus more directly on strategic efforts and minimise spending over time. CIOs and senior managers say that outsourcing is meant to enable staffers to focus on

more strategic efforts. However, mid-level managers, IT architects and operations staffers are more likely to cite cost-cutting goals as the impetus for outsourcing, suggesting that the complete outsourcing strategy is not being communicated clearly. Trey Marshall, an IT director at Sun Microsystems, says that when the network computing maker announced its intention to outsource all application development, global networking and data centre operations three years ago, it did a thorough job of explaining and communicating the reasons behind the move. “That’s not to say that everyone liked it,” says Mr Marshall, “but the goals were made pretty clear” through meetings and emails. “People knew what was happening and what to expect.”

If you are currently outsourcing or plan to outsource some or all of your IT operations, what are the main reasons for this decision? (Select up to three) We need to reduce costs for low-level, routine tasks

We plan to focus our in-house expertise on initiatives requiring direct knowledge of our core business

We are not currently outsourcing, nor do we have plans to outsource

We are trying to simplify IT operations

Our budgets are too small to hire additional full-time staff

We are trying to minimise capital expenditures on equipment

There are not enough skilled workers available in our geographic area

Other

Don’t know

33%

19%

17%

14%

3%

2%

36%

40

20

10

5

25%

30%



here is a clear distinction between the behaviour of organisations

not considering a change and those that have undergone or are undergoing one. Professionals whose firms are not considering making a significant change tend either to see no benefits or do not know what the benefits would be. On the other hand, in organisations where transformation is in progress or on the horizon, IT workers are more proactive about introducing new technologies,

educating senior business managers, implementing new projects based on corporate objectives and seeking improvements in business practices through technology-based solutions. Respondents whose companies are considering or are currently undergoing an IT transformation see more flexible IT support and better overall service to the business as an important benefit, and anticipate being more in touch with the business as a result. Furthermore, nearly 98% of companies that have

“Haves” versus “have nots”

T

Over the years, Sun Microsystems’ informa-

tion technology (IT) division has laboured to

find an organisational model that efficiently

meets the needs of its business units. Bob

Warrall, chief information officer of the

US$14bn manufacturer of network computing

products, says that he and his colleagues finally

hit on the right approach three years ago.

In 2005, Sun decided to outsource all

technology operations that did not directly

relate to its core business, including applica-

tion development and data centre operations.

IT executives saw the shift as an opportunity

better to align IT workflow with the business,

but employees at the Santa Clara, California,

company were less than pleased with the ar-

rangement, according to Trey Marshall, an IT

director. Technologists who were accustomed

to experimenting with new applications

without having formally to justify the time

and cost suddenly had to justify the value

of each project. “They had to do a lot more

prioritising,” says Mr Marshall.

The changes created a collapse in morale

and sparked a series of initiatives to improve

the work environment. An IT transformation

team was formed to address concerns and

institute changes. For example, the volunteer

group posted resources online that focused

on helping workers to accept the transfor-

mation, including a forum where employees

could ask questions about the changes and

how to handle them. To help manage the

uncertainty that IT workers faced, the trans-

formation group developed a formal career

development programme that outlined ex-

pectations and potential career paths in the

IT organisation. It also instituted a quarterly

awards programme that recognises employ-

ees who make exemplary contributions, such

as lending expertise to a project to which

they are not assigned.

Mr Marshall says the efforts significantly

helped to empower employees who felt lost

in the transformation. It took a little longer

to see a financial return on the outsourcing

investment but, after three years, Sun says it

is seeing the fruits of its IT labours via a 20%

year-on-year increase in timely project com-

pletion and a 17% jump in project delivery

within the anticipated budget. n

Sun Microsystems: Lost and found in transformation



recently completed an IT transformation initiative report tangible business benefits. It appears that transformation, or the prospect of it, has a positive impact on how IT workers view their organisation’s ability to respond to business needs. Perhaps the most dramatic benefit comes in the form of IT playing a far more strategic role in the organisation at large. “Transformation is key for turning IT from a cost centre to a strategic partner,” according to Christian Oecking, head of global operations at Siemens IT Solutions and Services, which is responsible for the technology operations of Siemens AG, the German engineering conglomerate, and other large clients. Strategic benefits are a common refrain among companies that have undergone transformation. Mr Ceccola says that over the last year, Capgemini’s IT department’s ability to better meet business needs has had a direct and positive effect on how technology is delivered. “IT has to transform itself to be more like a business,” he says, so that it can “reduce the barriers to technology adoption and address the social, organisational and cultural aspects of the business.” The new approach reflects an effort to more rapidly and inexpensively get closer to the desires of business units and clients. Prior to transformation, the IT department would spend months in seclusion building enterprise applications that it would deploy to 80,000 employees worldwide, an expensive and often ineffective method, says Mr Ceccola, because the final result was a huge system that was difficult and costly to alter. Today, Capgemini’s IT professionals work directly and in an ongoing fashion with business units collectively to identify requirements. It develops rough prototypes, which it rapidly refines with regular feedback from business managers. “The days of building systems to last ten years are over,” says Mr Ceccola. “Now we’re talking about building to change and to be agile.”

Narrowing the divideThe degree to which an IT department can strengthen and improve its relationship with the business depends on how far it has gone in transforming itself. Companies that have recently completed one

How much does your organisation’s IT operating model contribute to each of the following? (Rate on a scale of 1 to 5 where 1 = Significant contribution and 5 = No contribution)

Timely resolution of outage or other problems

Rapid response to business process changes or new requirements

Ability to integrate new technologies (SOA, collaboration tools, virtualisation) into ongoing operations

Maximum use of existing resources/delay capital expenditures

Ability to adopt service-level agreements and metrics of relevance to business managers

1 Significant contribution 2 3 4 5 No contribution Don’t know/na

44%35%

15%3%

1%1%

1%

1%

25%33%

30%9%

1%

2%

20%32%

31%13%

2%

2%

21%31%

32%11%

2%

4%

19%35%

29%12%

6030

157+



or more transformation projects or are currently undergoing a transformation were significantly more likely to say that their IT divisions were working more closely with the business: about 60% of companies that are undergoing or have recently completed a transformation agree or strongly agree that their IT departments seek opportunities with non-IT departments to improve business practices, compared with 46% of respondents whose firms are still considering or not considering a change. Five years ago, AMD did not have a centralised way of prioritising IT initiatives, according to Mr

Meeker, who says that the “loose” structure meant that project teams sometimes worked at cross purposes. This led the company’s former CIO to radically change the way IT operated, creating a business architecture planning team that focuses on “big picture” technology strategy and reorganising projects so that teams include workers from the disciplines required to make each project successful. “The networking guy on my team frequently sits in on project teams to make sure the network component of a project is well defined,” Mr Meeker says. The final piece in AMD’s transformation puzzle came in the form of an extensive outsourcing contract with Amsterdam-based Getronics for all operational and application support. The move resulted in a dramatic staff reduction, but those who remained—the most senior subject matter experts, service delivery managers and decision makers—were better positioned to strengthen operations, according to Mr Meeker. “Now that the requirements of the business are represented through collaborative activities,” he says, “IT is constantly receiving appropriate feedback it can act on.”

When Nicholas Gray arrived at United

Parcel Service (UPS) Europe in 2005, he had

spent nearly 17 years thinking about how

technology could enable business processes as

an application manager at the Atlanta, Georgia,

headquarters of the US$48bn shipping and

logistics concern. In his present role as vice-

president of information technology (IT)

for UPS Europe, he brings to bear all of his

multi-disciplinary knowledge. Mr Gray reports

to the president of UPS Europe and oversees

250 IT professionals who form the firm’s

global information services group.

“With IT and business alignment, you don’t

have a true distinction between IT and the

business,” says Mr Gray, who is based in Brus-

sels, Belgium. “People need an understanding

of each other’s work so expectations can be

set for our customers.” To that end, work-

ers in the IT solutions group are at the table

from the first negotiations with a potential

customer to gain an understanding of the

business and technical requirements of, for

instance, a warehouse fulfillment implementa-

tion. The technologists must understand the

scope of a client’s needs from the outset, Mr

Gray says, so that as soon as a deal is inked,

UPS can link up its fulfillment systems.

“From the earliest stages of a contract, IT

understands what it is like being in front of a

customer,” Mr Gray says, adding that IT’s pres-

ence is not just a technical imperative, but also

a financial one: without IT to determine the

baseline costs for a deployment, there would

be no way to determine whether a deal would

be profitable. n

UPS: Cross-function begins at the top

“Now that the requirements of the business are represented through collab-orative activites, IT is constantly receiving appropriate feedback it can act on.”

Jerry Meeker, senior IT manager, AMD



ltering the foundation and character of a technology department can

take months and even years of planning and careful execution. This survey shows that IT transformation, while challenging and time-intensive, tends to bring smoother operations to both IT and the broader organisation, improved communication between IT and non-IT departments, and business innovation via successful implementation of new technologies. Because of these and other benefits, IT transformations are being carried out in organisations of all industries, sizes and geographic locales. Those undertaking an IT transformation project should consider the following:

n Addressing corporate cultural issues is key to any successful IT transformation project. Senior IT executives must work doggedly to communicate goals, and build bridges up and down the chain of command throughout the organisation, both in business strategy sessions and regular meetings with technology employees.

n IT transformation is not a cure-all. Changing processes and organisational structures may make IT departments more agile, but will do little good if IT professionals do not adapt their thinking around how

better to align their efforts with that of the business on a regular basis. Encourage IT staff to communicate regularly with business partners.

n Walk before you run. Before embarking on a large-scale IT transformation initiative, assess the length of time it will take to complete the effort, as well as the costs, risks and eventual benefit to the business. Connect with all stakeholders to make sure requirements are properly met.

n Track—and publicise—success. Make sure to assess the return on investment of any IT transformation project. Not only will it strengthen IT’s reputation among business partners, it could help to build momentum for future IT initiatives.

Conclusion: Looking toward the future

A


Appendix: survey results IT transformation: Creating a strategy for success

Appendix: Survey results In January 2008, the Economist Intelligence Unit conducted a global online survey of 950 IT professionals from 21 industry groups worldwide. Please note that not all answers add up to 100% because of rounding or because respondents were able to provide multiple answers to some questions.

Are you involved in your company’s IT operations?

Yes 100%

How many people does your company employ globally?

1,000 to 4,999 51%

5,000 to 9,999 18%

Over 10,000 31%

Which of the following best describes your title?

CIO/CTO 12%

Senior IT management (reports directly to CIO/CTO) 11%

Director/Manager (mid-management) 21%

IT architect 5%

IT operations staff 50%

Other 1%

Which of the following IT functions are you involved in? (Select all that apply) Applications

Architecture

Servers

Security

Network administration

Storage

Facilities

Data centre

Compliance and risk

Telephony

Head of local, regional or global IT

Virtualisation

Other

44%

38%

35%

27%

25%

24%

45%

60

30

15

7+

22%

19%

15%

6%

39%

40%



To what extent are budgets commonly allocated within the organisation? (Rate on a scale of 1 to 5 where 1 = Very extensively and 5 = Not at all)

Domain-specific budgets (eg, servers, network, other infrastructure elements)

Project-level budgets relating to internal IT initiatives, controlled by IT

Project-level budgets relating to business initiatives, controlled by IT

Project-level budgets relating to business initiatives, controlled by the business

Program-level budgets allocated to specific expenditure on demand

Discretionary budgets controlled by IT for special projects and initiatives

Non-budget spend justified on a purely discretionary basis

32%33%

21%7%

3%5%

4%

3%

27%33%

24%10%

6%

7%

16%27%

30%14%

8%

7%

17%24%

28%16%

8%

4%

17%27%

30%13%

8%

9%

14%25%

27%17%

11%

19%

7%20%

23%20%

5025

12.56+

1 Very extensively 2 3 4 5 Not at all Don’t know/na

What are your IT organisation’s top project priorities through 2008? (Select up to three) Reduce overall IT complexity

Consolidate IT infrastructure

Improve data security

Virtualise servers and storage

Adopt service-oriented architecture (SOA)

Reduce IT power consumption

Other

Don’t know

51%

28%

17%

4%

3%

52%

60

30

15

7+

28%

43%

To whom does your organisation’s CIO/head of IT report?

Board of directors 14%

CEO/president/managing director 39%

CFO/treasurer/comptroller 21%

COO 14%

Other 3%

Our company does not havea CIO or eqivalent 6%

Don’t know 3%

What are your IT organisation’s top objectives during 2008? (Select up to three) Improve IT’s responsiveness to new business requirements

Reduce IT costs

Contribute to business process optimisation

Improve corporate compliance practices to simplify auditing and reporting

Move to the operational model of “IT as a service”

Shift costs from maintenance to new projects

Other

Don’t know

48%

29%

24%

2%

1%

57%

60

30

15

7+

30%

39%



How does your company’s IT organisation typically manage operational domains? (Choose the one that most applies) IT professionals are responsible for two or more functions (eg, telephony and networking, servers and storage)

Most IT professionals focus on only one area

Cross-functional architects provide top-down guidance

Domain experts produce best practice implementations in their areas

We have set up permanent cross-functional teams

Individuals rotate among domains periodically

Don’t know

Other

19%

11%

7%

2%

1%

32%

40

20

10

5

14%

15%

How does IT executive management value each of the following IT employee skills? (Rate on a scale of 1 to 5 where 1 = High priority and 5 = Low priority)

Technical expertise

Intra-IT collaboration

Project management

Change management

Business/financial management (supplier relations, purchasing, budgets, etc.)

Business process design

Ability to communicate well with non-IT business managers

1 High priority 2 3 4 5 Low priority Don’t know/na

50%33%

11%3%

1%1%

2%

2%

31%37%

22%6%

2%

2%

29%35%

25%8%

2%

4%

21%33%

30%10%

3%

5%

20%31%

27%13%

3%

6%

22%32%

26%12%

2%

3%

30%33%

23%8%

6030

157+

In your opinion, how effective is this method of organisation?

Very effective 17%

Effective 48%

Somewhat effective 26%

Somewhat ineffective 6%

Ineffective 2%



To what extent do the following skills contribute to business (non-IT) executives’ perception of you or your IT team’s effectiveness? (Rate on a scale of 1 to 5 where 1 = Significant contribution and 5 = No contribution)

Technical expertise

Intra-IT collaboration

Project management

Change management

Business/financial management (supplier relations, purchasing, budgets, etc.)

Business process design

Ability to communicate well with non-IT business managers

38%35%

18%6%

1%1%

2%

3%

24%35%

28%8%

2%

2%

25%35%

25%10%

3%

3%

19%33%

28%14%

3%

6%

20%30%

29%12%

3%

4%

22%30%

27%13%

2%

2%

33%32%

22%8%

6030

157+


How much does your organisation’s IT operating model contribute to each of the following? (Rate on a scale of 1 to 5 where 1 = Significant contribution and 5 = No contribution)

Timely resolution of outage or other problems

Rapid response to business process changes or new requirements

Ability to integrate new technologies (SOA, collaboration tools, virtualisation) into ongoing operations

Maximum use of existing resources/delay capital expenditures

Ability to adopt service-level agreements and metrics of relevance to business managers


44%35%

15%3%

1%1%

1%

1%

25%33%

30%9%

1%

2%

20%32%

31%13%

2%

2%

21%31%

32%11%

2%

4%

19%35%

29%12%

6030

157+



Do you agree or disagree with the following statements about your IT department’s interactions with other departments across the company? The IT department… (Rate on a scale of 1 to 5 where1 = Agree strongly and 5 = Disagree strongly)

is working to improve the way it communicates with non-IT departments

regularly provides non-IT departments with metrics and reports

evaluates non-IT department requests on an as-needed basis

implements new projects based on functional/IT objectives, then works with users to facilitate adoption

works with non-IT departments to understand their needs

educates senior management of non-IT departments about new technologies that will help their organisations

seeks opportunities with non-IT departments to improve business practices

is effective in gaining non-IT department support for budgeting, change management and technology adoption

1 Agree strongly 2 3 4 5 Disagree strongly

37%40%

18%3%

2%

4%

19%36%

30%12%

2%

19%37%

33%8%

4%

22%35%

29%10%

2%

27%36%

26%9%

5%

23%32%

28%12%

4%

22%33%

28%14%

4%

19%33%

32%12%

6030

157+

Which statement do you feel best applies for your company? My company…

is currently undergoing an IT transformation programme to align better with business initiatives (compliance, risk mitigation, “green”, etc) 27%

recently completed one or more IT transformation projects 27%

is considering a series of changes to its IT organisation and processes 30%

is not considering making any changes to its IT department 16%

Which of the following best describes your IT group’s goal in terms of its business interaction model over the next two years? Our IT department aims to… (Select up to three) actively seek opportunities to propose technology-based approaches to improve business practices

implement new projects based on corporate, vs IT, objectives

take a more proactive approach to educating senior business managers about the potential impact of new technologies on their operations

gain more support from senior business managers for budgeting, change management and technology adoption

maintain its current business interaction model; no changes are planned

Other

Don’t know

43%

36%

13%

1%

2%

44%

60

30

15

7+

37%



Are you in favour of pursuing IT transformation within your organisation? Select the response that best describes your views.

No, things are fine as they are 9%

No, the disruption would outweigh the potential benefits 9%

Not sure 12%

Yes, I can see how it would benefit me and the department 42%

Yes, I am personally advocating for/planning changes 28%

In your opinion, what is/would be the greatest benefit to your company of an IT transformation programme? (Select up to three)

Cost savings

Smoother, more flexible operations

Improved communication with customers/partners

Increased return on technology investments

Improved ability to respond to regulatory requirements

Increased profits

Increased sales

No benefits would result

Other

Don’t know

44%

26%

25%

17%

5%

1%

2%

46%

50

25

12.5

6+

30%

34%

What is/would be the greatest benefit to your IT organisation as a result of IT transformation?

Improved IT operational efficiencies 22%

IT workers more in touch with business needs and are better at identifying IT solutions to business problems 19%

More flexible IT support, better overall service to the business 18%

Increased IT worker productivity and overall satisfaction 13%

Improved resource allocation 9%

No benefits would result 8%

Improved risk management 7%

Don’t know 3%

Other 1%

What are/would be the biggest challenges facing IT when undergoing transformation? (Select up to three)

Staying on time and within budget

Overall cost of transformation

Managing change while continuing IT operations

Gaining support from IT professionals who may resist change

Getting buy-in from corporate executives

Uncertain return on investment

Job security concerns of IT professionals

Finding the best partner/consultants to help/oversee the transformation

Communicating changes to business executives

Other

Don’t know

36%

24%

22%

21%

21%

17%

1%

2%

38%

40

20

10

5

26%

31%



What effect does/would IT transformation have on staffing, talent, and skills development? (Select up to three)

Better allocation of IT resources

Greater job focus and productivity

More focused training program and skills development for in-house staff

Alteration of the types of skills of the people in IT

Improved recruitment of high-quality candidates

Greater probability of employee retention

Fewer people expected to do more; devaluing of deep domain expertise

Fewer hires due to outsourcing decisions

None; our IT transformation efforts would not focus on staffing issues

Don’t know

36%

24%

22%

18%

10%

6%

5%

42%

50

25

12.5

6+

26%

26%

Describe the portion of your company or organisation’s IT department for which you are responsible.

Multinational company; responsible for branch or regional services 13%

Multinational company; responsible for local country and intracountry services 18%

Multinational company; responsible for centralised IT operations 17%

National company; responsible for branch or regional services 20%

National company; responsible for centralised IT operations 24%

Other 7%

What is your primary industry? Financial services

Manufacturing

IT and technology

Healthcare, pharmaceuticals and biotechnology

Retailing

Consumer goods

Professional services

Logistics and distribution

Transportation, travel and tourism

Government/Public sector

Automotive

Telecommunications

Chemicals

Entertainment, media and publishing

Energy and natural resources

Wholesale/distribution

Education

Construction and real estate

Aerospace and defence

Utilities

Agriculture and agribusiness

14%

6%

5%

5%

4%

4%

4%

3%

3%

3%

3%

2%

2%

2%

2%

16%

20

10

5

2.5

6%

11%

2%

2%

1%



In which country are you personally located?

United States

Germany

United Kingdom

India

France

China

United Arab Emirates

Other

Mexico

Middle East region; other

Brazil

Chile

Latin America region; other

13%

11%

10%

7%

5%

5%

4%

4%

2%

2%

15%

20

10

5

2.5

11%

11%

While every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out in the report.

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