CIO RESEARCH CIO TOP OF MIND 2013

In recent years, the corporate focus on IT cost cutting and consolidation has been

relentless, particularly in the United States. But a new IDG CIO Research Survey of

more than 1,500 CIOs and other IT leaders indicates an emerging trend: a sharp

bias in IT toward value generation versus expense reduction.

It’s part of a global shift toward a service orientation for IT, led increasingly by CIOs

and other technology leaders.

When asked to select the top goals that are driving major technology investments

for the next five years, the number one selection—according to 49 percent of more

than 200 executives polled in the United States—is improving productivity. Next is

enabling better, faster decision making, followed by improving service levels and

protecting corporate data. Lower costs or the shifting of CAPEX to OPEX is eighth in

ranking, at 31 percent.

A majority of IT leadership now appears to recognize that there’s a big opportunity

at hand to use information in new ways to create value and differentiation, and

they’re starting to invest.

Research indicates Big Data and cloud spur competitiveness and productivity gains;

security seen as table stakes

from Cost Cutting to Value Creation

American CIOs Shift Focus

8

Research indicates Big Data and cloud spur competitiveness and productivity gains;

security seen as table stakes

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Predicting the Future with Data Enterprises have come to the realization that they’re sitting on very valuable data: More than half say they are devising Big Data strategies and projects to generate greater value from existing data. Another 20 percent indicate that this is a top priority during the next 12 months.

A common motivation that surfaced during in-depth interviews with some of the survey respondents is the desire to better understand what motivates customers. “We want to know how we get repeat customers, [and] why we get repeat customers,” says the vice president of IT at a financial organization. “We don’t really have any visibility into that beyond what we get in [our CRM system], and it doesn’t give us enough detail to understand why customers come back to us.”

Says another, “We’ve done a lot of mapping of where the data sources are, and they are all in disparate systems across the enterprise. So we have to pull that out of those individual systems.”

Just over half of respondents say they have already deployed Big Data analytics tools or are considering how to do so, while another 20 percent expect to acquire capabilities in the next 12 months. Improving the quality of decision making is the top goal for use of Big Data analytics, according to 61 percent of the survey respondents. Close behind, at 52 percent, is speeding decision making. Reducing costs is third on the list, but cited by fewer than half.

Big Data Spurs Collaboration between Business and ITYou know you’re on the right track when everybody wants to take credit for the outcome, and Big Data looks to be one of those win-win areas where business and IT want to be seen as being in alignment. As one IT executive notes in regard to his organization’s first Big Data project: “It actually was born out of IT and talked about for a long time with senior management—but all of a sudden, it was their idea!”

In fact, when asked who is responsible for driving the Big Data strategy at their organizations, 69 percent of IT leaders say that they are. That’s no surprise, yet half indicate that business leader-ship is taking on a strong role as well. That may be a clear indica-tion that while IT needs to play a key part in enabling Big Data analytics proficiency, at its essence, it’s clearly a business issue—and IT and business leaders are increasingly seeing eye-to-eye on major strategic initiatives.

In some cases, the impetus is regulatory pressure. “As you started understanding what you had to provide for the regulations, you

began to see that there were other benefits you could get from it,” says a follow-up interviewee.

Adding to the complexity of these issues is the fact that nearly half of the survey respondents believe

business and technical leaders do not have the expertise to formulate a Big Data strategy.

Are We Overlooking the Data Scientist?

There’s growing talk within the technology industry that a new breed of data scientists—

distinct from the familiar business analysts—are the primary rock stars headlining the effort

to unlock the power of Big Data analytics. A recent Harvard Business Review article named data scientist as the

sexiest job of the 21st century.

For the United States, however, that does not yet appear to be the case. Only 22 percent of U.S. respondents indicate that they either have this key skill set or are planning to acquire it shortly. That highlights a key distinction from the global IT survey, in which two-thirds of the non-U.S. respondents indicate that they consider this talent very important. In Asia-Pacific, for example, 39 percent say they already have data scientists on board, and another 42 percent plan to hire in this area during the next 12 months.

In fact, according to a McKinsey & Company report, there will be a shortage of talent necessary for organizations to take advan-tage of Big Data: “By 2018, the United States alone could face a shortage of 140,000 to 190,000 people with deep analytical skills

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Latin American: Security a Concern, But Not an Obstacle

Security is a top IT concern in Mexico and Brazil, but that’s not holding back the hosting of mission-critical applications in cloud environments, according to the IDG CIO Research Survey, which polled 100 IT leaders in each country.

In Mexico, cloud computing is critical or important to 89 percent; in Brazil, to 93 percent. Mexican executives expect just 20 percent of mission-critical applications to be on-premise, non-cloud hosted. In Brazil, where 91 percent are concerned about security risks, non-cloud is slightly higher at 28 percent. Security is also the number one concern among the Mexican respondents, but at a lesser 70 percent rate.

Big Data is seen as an important investment by 93 percent of Bra-zilians and 86 percent of the Mexican respondents.

“We want to know how we get repeat customers, [and] why we get

repeat customers.”

as well as 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions.”1

It may be that U.S. executives are focusing on broader issues. Nearly half believe that one of the biggest challenges today is the fact that business and technical leaders do not have the expertise to formulate a Big Data strategy.

Reinvention in IT Staffing People issues, in fact, trump all others in regard to concerns over gaps in IT operations on a day-to-day basis. Seven out of 10 respon-dents cite that issue, which includes ensuring they have the right staff levels and skill sets, along with training and productivity concerns.

Technology that is transforming business is also disrupting tradi-tional roles and responsibilities. “We have to build whole new skill sets in people because there are things that we just never really had to worry about before,” says one of the interviewed executives.

Another explains that his organization has transitioned from a distrib-uted computing environment, where specialists knew the application and the IT components needed to make it work right, to a functional breakdown, where each component has a specialist assigned. Now, he says, “We’re starting to see a more combined role. They won’t have the knowledge that all the individual domains and components have; rather, they need to somehow have a consolidated sense to manage as a collective resource against that service orientation. We’re starting to restructure some of our organization to position toward that.”

Second in the ranking of top concerns is the perennial worry of security. But, interestingly, respondents in the rest of the world are of an opposite mind, selecting security first, while people issues are secondary. However, 73 percent of the U.S. respondents agree that IT security needs are changing at a faster rate than their orga-nizations can reasonably expect to meet.

Caution: Clouds Investment While there is strong majority support for new investment among U.S. IT executives, they do appear to be more cautious than those in other regions—at least when it comes to mission-critical applications in the cloud.

Just 52 percent of the U.S. respondents indicate that cloud is critical, and they are investing heavily, or important and investing moderately. That compares with 78 percent in the EMEA region, 91 percent in Latin America and 92 percent in the Asia-Pacific region. For Big Data, the breakdown is 60 percent in the United States compared with 80 percent in EMEA, 91 percent in Asia-Pacific and 90 percent in Latin America.

When it comes to IT security initiatives, though, the number bumps up to 83 percent of U.S. executives who indicate their organizations are making heavy or moderate investments, compared with 92 percent or more in the other regions.

Almost 80 percent agree that the requirement for IT to enable business agility and growth is in greater conflict than ever before with the need to protect and secure information.

Cloud: Private or Public?With cloud in particular, U.S. executives are not quite as eager to thrust mission-critical apps into this new environment as are those in other regions. The U.S. respondents indicate that more than half (55 percent) of their mission-critical applications will reside on non-cloud on-premise solutions, somewhat more than EMEA (45 percent) and far more than either Asia-Pacific (28 percent) or Latin America (25 percent).

Private cloud and hybrid cloud are expected to host 34 percent of mission-critical deployments in the U.S. over the next 12 months, with public cloud amounting to 10 percent. Several of the U.S. interviewees indicated they already or are in the process of offering software or infrastructure as a private cloud service to their lines of business. The top technologies they see as essential building blocks for success are those that provide centralized control and visibility (73 percent), virtualization (68 percent) and failover protection (56 percent).

“What we are providing with private cloud is at the infrastructure level right now,” says an executive at a banking company. “What we’re talking about is compute/storage/network components, and we’re basi-cally describing those as predefined templates where people pick this server with this processor and this much memory. At the end of the day, what is underneath they don’t know about and don’t care about.”

“We have to build whole new skill sets in people because there are things that we just never really had to worry about before.”

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1 “Big Data; The Next Frontier for Innovation, competition and productivity,” www.mckinsey.com/insights/mgi/research/technology_and_innovation/big_data_the_next_frontier_for_innovation

It’s a different story with public cloud, though, and 65 percent of U.S. executives believe there is significant or critical risk associ-ated with employees procuring public cloud services without consulting or informing IT. Furthermore, less than half (46 percent) express confidence that IT is being consulted on all public cloud initiatives taking place in their organization.

In fact, maintaining security and policy compliance in the cloud is the top concern of 66 percent of respondents. “One of the biggest holes right now around these cloud-based data reposito-ries is the opportunity to leak data all over the place, and by that I mean confidential company data,” says the vice president of IT services at a large communications company. “Data security around the cloud continues to be a worry to us.”

Risk ConcernsThe scope of both cloud and Big Data is what worries many executives, even with regard to hybrid cloud; two-thirds indicate their top concern is maintaining security and policy compliance in that environment.

“I don’t think there’s anything inherent to cloud or Big Data that makes it a bigger risk, but if you’ve built a cloud and are now hosting resources for thousands of devices, when there’s a breach they are now able to span across all of those thousands of things you’re providing for,” says one of the survey participants.

“It’s the same with Big Data—now that you’re compiling all this data in one spot, when it is breached, they are not only getting patient account data, but everything else because it’s all together.”

But on the issue of whether cloud has the potential to be more secure and trustworthy than the physical environments it is displacing, there’s broad disagreement. A plurality of 39 percent thinks it will, while 31 percent of respondents disagree and 29 percent are in the middle.

CIOs as Brokers of Value That’s not to say these challenges are causing IT in the United States to dig in its heels. Just 10 percent indicate they have no plans to invest in cloud computing and fewer still don’t plan on investing anything in Big Data (7 percent) or IT security (2 percent). Rather, a strong majority of respondents (71 percent) agree that cloud architecture will overtake traditional IT architec-ture at enterprises within the next three years.

As they adjust staffing and roles and responsibilities to meet the needs of a service-oriented IT, these executives indicate

they’re increasingly erasing the long-perceived gap between their organizations and the business

groups that consume the technology.

“With all these process changes, we’ve been able to make IT managers responsible for the line of business for this service and all the underlying capital that’s needed for this,” says a banking IT executive.

This can have both positive and adverse impacts on the workload. As another points

out, business users “are placing more demands on us because they are getting to where they

can’t live without us. But, as much as they hate to admit it, sometimes, they are also seeing the value

that we’re bringing to them.”

The majority of IT leaders in this study agree: There is indeed a big opportunity to use information in new ways to create value and differentiation. The service-delivery framework underlies this trans-formation. It’s what’s enabling improved productivity, better and faster decision making as well as improved service levels. Moreover, increasingly, Big Data is seen as the focus. Writes CIO magazine, “in the next three to five years, we will see a widening gap between companies that understand and exploit big data and companies that are aware of it but don’t know what to do about it.”2 Companies that don’t embrace this transformation risk falling behind their competitors.

IT’s Top Concern

66%

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Maintaining security and compliance in the cloud is the biggest concern of

two-thirds of survey respondents.

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“The idea here is to do as

much as you can with the smallest

amount of resources possible.”

2 “How to Be Ready for Big Data,” www.cio.com/article/702467/How_to_Be_Ready_for_Big_Data

It’s clear from the IDG-EMC global survey of CIOs and other senior IT executives that cloud computing and virtualization are transforming IT on a global scale, by increasing efficiency, improving business agility and making IT personnel not only more productive, but more attuned to service delivery in their relationship with business units.

IT has got the message loud and clear—to remain relevant in the enterprise, IT must be more responsive and more attuned to busi-ness needs. The study and in-depth follow-up interviews show the extent of the transformation of IT and its relationship with business units.

Adoption of cloud computing is not only changing IT’s relation-ship with the business, but also creating greater need for new roles within IT that are focused on broad functional responsibili-ties rather than narrow technical specialties in an increasingly service-oriented world of technology. The survey also illustrates that companies investing in cloud view investments in Big Data capabilities at a similar level of criticality, while security trumps them both on that score.

IT-as-a-Service Taking HoldThe global survey, one of the largest ever on this topic, demon-strates that the catalyst of the transformation is the need to simplify and improve cost-effectiveness of IT service delivery. Starting with virtualization, IT is radically improving its ability to provision new services, leveraging cloud technologies to increase scale and enhance scope. Moreover, IT organizations are building on those capabilities to implement new analytics, in particular Big Data, to get better value from the information their companies are collecting.

But at the same time, IT leaders are concerned about how to secure these new information resources. Outside the United States, secu-rity is the top concern by far, and in the United States, it is second only to the issue of getting the right people in the right jobs.

Realizing that data is only as valuable as its usability to the busi-ness, IT is thinking and acting more in a business context. There’s a recognition that if business customers can’t get what they want from IT, when they want it, it’s all too easy for them to contract outside for cloud-based services that can be quickly provisioned, scaled and terminated at will.

Big Data Gains MomentumGlobally, Big Data is gathering momentum as companies grapple with the huge amounts of information they’re collecting in an effort to improve the quality and speed of decision making, as well as to reduce costs. More than half (55 percent) of those surveyed in all regions are devising strategies and projects to generate greater value from existing data, and many others view this as a top priority during the next 12 months.

There is widespread agreement that Big Data will force and promote the cultivation of organizational agility needed to act on newly gleaned, real-time insights, and that Big Data will change the way that respondents’ industries do business within the next five years. IT leaders in Asia-Pacific and Latin America are somewhat more affirmative in those views, but strong majorities in Europe and the United States also agree.

Those executives in Asia-Pacific and Latin America are also more inclined to think that Big Data analytics already impacts or will result in reduced IT costs. Overall, though, cost cutting is taking a backseat to the potential to create value through IT initiatives.

IT Is the CloudCloud is enabling IT to respond to the need for greater agility and flexibility, which translates to responsiveness to the business. It has enabled IT to rethink its role, both in terms of what it is delivering to information consumers, and how it is doing so.

IT in Transition across Continents

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Across the four regions covered in the survey, there is broad agreement—81 percent—that cloud computing is creating and will continue to create new roles, responsibilities and opportuni-ties for IT to generate value for the organization. Furthermore, three-quarters of IT leaders worldwide say cloud is spurring collaborative relationships between IT and business stakeholders, and that cloud architecture will overtake traditional architectures within the next three years.

With the exception of the U.S. portion, respondents in each region believe that cloud has the potential to be more secure and trustworthy than physical environments that can be displaced. In the United States, only 39 percent of respondents embrace that view, and worldwide it’s clear that there’s a lot more willing-ness to deploy mission-critical applications to private and hybrid cloud environments than the public cloud.

Rethinking SecurityNot surprisingly, security remains a top concern globally and is viewed as an important or critical area for investment. Great majorities in each region, and 82 percent worldwide, indicate that the security strategies and investments of the past 10 years need to be reevaluated based on the current threat landscape.

IT is dealing with so many challenges, including the pace of change, that there is an ever-greater struggle to find the balance between enabling productivity and growth and protecting corpo-rate data from compromise. As the IT world is speeding up, most agree security needs are changing at a faster rate than organiza-tions can reasonably expect to keep up.

Managing the TransformationWhile new technologies are driving the transformation of IT, in many ways the underlying goals—productivity, protecting corpo-rate data, agility and better, faster decision making—are consis-tent with previous breakthroughs, such as the moves to client/server computing and web applications.

The difference now is that the goal of IT-as-a-service is made possible by a service-oriented infrastructure that enables the delivery of information where, when and in what format it is most valuable. More than ever, IT transformation is not simply a function of technology advances, but also related advances in the changing roles, processes and skills to master these new tech-nologies.

To successfully manage the transformation, IT must devise strate-gies to build more efficient, available and agile infrastructures. IT organizations must foster development of new skills and new management strategies, and recreate processes and architectures in order to meet the challenge.

Ultimately, more effective IT offerings, such as efficient backup infrastructure, virtualized applications and more productive IT teams, will free up resources for investment in strategic areas of business growth.

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