Key European IT Management Trends for 2015 Results of an international study: Issues, Investments, Concerns, and Practices of Organizations and their IT Executives dr.lec. Barry Derksen MMC CISA CGEIT, Stedin, Business & IT Trends Institute, VU, NOVI Jerry Luftman Ph.D., Global Institute for IT Management
What’s next.
Table of Contents _ Executive Summary ....................................................................... 3 2 Top IT Management Concerns ................................................... 4 Largest investments and most important technologies ........ 10 IT Practices (Organization, Budgets, Staffing) .......................... 18 CIO reporting relationships, time allocation, background, tenure and performance measurement ........................... 30 Future of IT ...................................................................................... 38 Summary and Conclusions .......................................................... 41
Executive Summary This is the fourth annual European research on IT trends for CIONET. It is based on the authors’ research underway since 1980. This report presents the major findings from the 35th Anniversary IT Trends Survey based on responses from 2,552 organizations worldwide; 801 organizations within Europe representing 24 European countries. It is clear that organizations in Europe and around the globe are continuing to invest in IT to improve operations, reduce costs, and enable/drive strategies. SMAC (Social, Mobile, Analytics, and Cloud) technologies are clearly trans-
5
forming the industry. IT budgets, hiring, and salaries are modestly increasing, and IT executives are cautiously optimistic that this trend will continue into next year. While the global results are available in multiple other publications, the scope of this report is Europe in comparison to the rest of the world. The important topics elaborated in this report include: -- IT spending patterns, including sourcing, and the use of cloud and shared services. -- IT workforce trends, including retirement forecasts and specifics about the performance analytics used for in-house and outsourced IT, as well as to evaluate IT executives. -- To whom CIOs report, what they do with their time, with whom they spend it, what they do with them, and what they think about the role of IT in strategy and innovation.
MOST IMPORTANT IT MANAGEMENT CONCERNS
Global
Europe
1. Business & IT Alignment 2. Business Agility 3. Velocity of change in IT 4. Business Cost Reduction / Controls 5. Business Productivity
3. Business Cost Reduction / Controls 4. Business Productivity 5. Infrastructure Capability
5
--
--
Skills requirements for the success of new IT hires, mid-level IT professionals, and CIOs. The personal views of senior IT leaders about their most important and worrisome IT management issues and technologies.
Overall, IT is becoming more strategic and business focused. It appears that organizations are becoming more digitized with their focus shifting away from tactical and organizational IT issues like efficiency, service delivery, and cost reduction to more strategic and organizational priorities like business agility, innovation, the velocity change in the organization, IT time to market, and the value of IT to the business. Some suggest that IT is the business. Time will tell if this is a widespread trend, but it is here now among global and European organizations, and it is confirmed by a corresponding shift in how CIOs are spending their time.
MOST INFLUENTIAL TECHNOLOGIES
Global
Europe
1. Analytics / Business Intelligence 2. Application / Software development 3. Data Centre Infrastructure 4. Cloud Computing 5. Enterprise Resource Planning
2. Big Data 3. Customer Relationship Management 4. Cloud Computing 5. Bring Your Own Device
3
Top IT Management Concerns The participants were asked to select, from a list of 43, up to three IT management issues that they considered ‘most important’ to their organization and up to three issues that were ‘most important or worrisome’ to them personally or that “keep you up at night.” This is similar to the approach used since the research began in 1980; albeit the second, personal question was added for the first time last year. Capturing both the organizational and personal perspectives of the respondents provides
additional insights. Some items on the selection list were modified or deleted (based on very low selection rates the previous year), and additional ones added for this year’s study.
The global top management concerns (see Table 1) tend to evolve slowly except for concerns such as IT cost reduction (ranked 23rd overall in 2014) and business cost reduction (ranked 4th in 2014) which appear to be directly related to the state of each region’s short-term economy. Despite the prevailing global economic conunundrum, management concerns such as ITbusiness alignment appear consistently (see Table 1) both globally and locally in the top management concerns.
The organization’s top 10 most important IT management concerns, from the perspective of the senior-most IT leader in each of the 2,552 organizations, are shown in Figure 1, together with the comparative rankings from the authors last ten years of IT trends studies.
Table 1. 2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Key management concerns
2014
4
IT and Business Alignment
1
1
2
1
3
2
1
2
1
1
1
Business Agility
2
2
3
2
2
3
13
17
7
IT Time to Market
3
Business Cost Reduction / Controls
4
3
1
4
1
1
7
4
Business Productivity
5
4
1
4
1
1
7
4
Security / Privacy
6
9
8
7
9
9
8
6
3
Business Continuity / Disaster Recovery
7
8
6
5
3
6
Time to Market / Velocity of Change
8
7
3
2
2
3
13
17
7
9
9
6
8
17 18
15
11
5
10
6
7
3
2
3
IT Value Proposition in the Business
9
Innovation
10
Infrastructure Capability
11
1
Revenue Generating IT Projects
12
2
Business Process Management
13
6
4
3
3
4
Globalization of IT
14
7
17
13
10
15
Change Management
15
13
11
11
11
14
New: IT Time to Market, IT Value Propoistion in the Business & Innovation Note: IT Cost Reduction is out of TOP 15 (first time!), is now 23.
5
2
3
5
Interestingly, Business Productivity (ranked 5th in 2014) and Revenue Generating Initiatives (ranked 12th in 2014) have started to appear in similar rankings across all geographies. Indeed the pattern is emerging where an increasing number of management concerns rank similarly across all geographies. We expect as enterprises are more assimilated in the global market, their IT management concerns will become even more consistent across geographies. Within Europe the top five IT management concerns for 2015 (24 countries, 801 organizations) are: 1. Business & IT Alignment 2. Business Agility 3. Business Cost Reduction / Controls 4. Business Productivity 5. Infrastructure Capability European country specific information follows below.
Five most important IT management issues and concerns
There is relative consensus within Europe about the top three management concerns with regards to Business & IT alignment, Business Agility, and Business Cost Reduction. The diversity between European countries in the ranking of the remaining top ten increases rapidly. The range of perspectives across Europe is indicative of the different emphasis that these enterprises place on the important issuers of the day.
24 European countries were represented in this year’s research. 13 countries have been well represented (above 10 responding organizations, over 1% representation). These countries were (in order of representation): Netherlands (39.5%), Spain (14.6%), Finland (8.1%), Germany (6.6%), Portugal (4.7%), Austria (4.2%), Belgium (4.2%), Italy (3.3%), Luxembourg (3.3%), United Kingdom (3.0%), France (2.2%), Poland (1.3%), and Switzerland (1.2%). The authors anticipate that the continued increase in the European data will provide a more balanced perspective for the results. The top ten most important IT management issues for these countries are displayed below.
3
4
15
8
9
8
6
16
3
10
5
7
9
35
9
5
25
8
28
2
14
18
20
3
29
36
24
19
6
21
13
7
12
5
20
9
5
17
17
25
6
10
10
3
11
2
6
30
Austria
2
5
2
20
Business Cost Reduction / Controls
3
1
Business Productivity
4
29
Infrastructure Capability
5
21
IT Change Management
6
22
5
Globalization of IT
7
4
19
Velocity of Change in Business
8
12
20
Business Continuity
9
13
4
Legal Compliance - HIPPA, SarBox, SAS70, PCI, etc.
10
14
21
14
U.K.
1
2
1
3
Business Agility
Switzerland
4
4
2
9
Spain
Netherlands
2
5
1
1
Portugal
Luxembourg
11
6
Alignment of IT and / with the business
Poland
Italy
2
France
1
Finland
1
Belgium
1
1
Europe
Top ten management concerns Europe
Germany
Table 2.
1
1
3
1
1
3
3
2
5
2
4
2
1
3
4
8
4
8
14
3
9
6
6
15
5
2
5
11
16
6
20
9
9
17
13
27
4
18
14
7
23
6
15
8
5
7
16
5
6
1. Alignment of IT and the business
2. Business agility
3. Business Cost Reduction/Controls
Following the pattern of the past 30 years, alignment of IT and business has been close to the top of the list of top concerns since 2000 (Luftman et al., 2013) (Derksen, 2013). Despite being in the spotlight for such a long time, it still remains a pervasive and persistent goal. The data shows that it remains the number one concern in North America, Europe, Asia, and Africa, but slipped to 8th position in Australia, and 35th in Latin America in 2014. Alignment of IT and business has been considered an important area right from the beginning of the trends research. Initially, it was ranked 8th in 1980, and remained in the top ten until 1994. After that, it remained in the number one position; except in 2012, 2010, 2009, and 2007 when it slipped either to the second or third position. It is expected by many pundits that it will continue to occupy the top spots in the coming years; hence, it is not a surprise that it has been ranked at or near the top of the list of concerns in all geographies. While there are some that advocate using a different term (e.g., integrate, fused, harmony), the important concepts that are espoused are similar; improve the business-IT relationship to provide demonstrable business value. Whatever term one prefers, IT will continue to be seen as an integral enabler and driver of efficiency and effectiveness throughout the business, especially with the emergence of leveraging IT for revenue generating initiatives. Both IT and business processes are relatively mature on their own, but it is their alignment that holds the key to driving the businesses forward (Luftman et al., 2013). Alignment will remain high on the list as IT and business evolve. It is more important to continue efforts to improve the IT-business relationship, than debate what term to use.
Business agility and speed to market are essential for business growth in today’s competitive economy, especially as organizations continue to increase their use of IT for competitive advantage. Business agility was first introduced into the survey in 2003. It has been ranked among the top ten IT management concerns except 20072008 when it was ranked 17th and 13th. Business Agility was ranked 7th in 2003, 5th in 2005, and 7th in 2006. It has been ranked among the top three global management concerns since 2009; mostly at number 2. Over the years, it has maintained the 3rd position in North America, 2nd in Europe, Asia, and Africa, and 1st in Australia and Latin America. This year, it is ranked 2nd in North America and Europe, while 7th in Asia, and 5th in Latin America. As organizations leverage IT to quickly reduce business expenses and increase revenues, Business Agility will remain an important concern for management. Business agility in concert with IT time to market/velocity of change (ranked 3rd in 2014), IT value proposition to the business (9th) is also indicative of the future impact that IT will have (is having) on revenues (which has fluctuated between 2nd and 17th over the last seven years).
Business Cost Reduction has been ranked among the top four management concerns across the globe since 2013. In the authors previous trends surveys it was combined with business productivity; this year they are separate, albeit even independent they are both among the top management considerations. Business productivity was ranked among the top four concerns since 2007; except 7th in 2008. This year Business Cost Reduction /Controls is ranked, 2nd in Latin America, 3rd in Europe, 4th in Asia, 9th in North America. Cost reduction is considered the foundation of long- term sustainable competitive advantage especially during economic stagnation, and therefore this will continue to be highly ranked in all geographies. Leveraging IT to attain these cost reductions and improvements in productivity are essential to the success of organization and the future of IT. As organizations continue to increase their focus on leveraging IT for cost reduction, improving productivity, and revenue generating initiatives, we anticipate seeing a continued change in IT roles, spending, and organizational considerations; perhaps a transformation.
4. Business Productivity There is general consensus on the importance of business productivity and cost reduction using IT, even though IT is still perceived within a majority of enterprises as an expense. While the research demonstrates productivity slowly moving down the list, to reflect this change in business perspective, as previously noted they are both included in the survey and both are among the top management concerns this year. Business productivity has been ranked in the top four management concerns for the past decade, except 2008 when it was ranked 7th. In 2014 it has been ranked among the top 6 management concerns across all geographies except Australia (ranked 32nd). The ranking of business productivity as a management concern shows a very erratic behavior, moving from 7th place in 2008 to 1st in 2009. Business productivity is rated among the top 4 management concerns across all geographies. We expect that it will continue to remain among the top 10 for the foreseeable future. Conversely, we anticipate IT cost reduction (ranked 23rd in 2014) to drop off the list in the coming years.
5. Security (Previously combined with Privacy) Since 1980 security has been included with privacy. It was rated between 2nd and 9th since 2003. From 1980 to 1990 it was ranked between 12th and 19th position, except 1985 when it was rated 6th. From 2003-2006, it was either 2nd or 3rd, and then 6th to 9th between 2007 through 2013 (Luftman and Zadeh, 2011, Luftman et al., 2013). This year security is ranked 6th globally; second in North America, 32nd in Europe, 30th in Asia, 38th in Australia, 31st in Latin America and Africa. Security (like alignment) remains as a pervasive and persistent concern. Recent headlines like the NSA fall-out and the Sony Pictures breach exemplify the need for companies around the globe to continue investing in their security systems. It is expected that business continuity/ disaster recovery (ranked 7th in 2014) and security will remain in the top ten. Security is also the 8th ranked technology in 2014 and ranked 4th overall in technology investments.
7
IT management Issues Most important or Worrisome to IT Leaders For a second year, we asked respondents to report not only on the IT management issues important to their organization, but also on issues that were personally “most important or worrisome to them�; the things that keep you up at night. While we have only two years of data to
present in Table 3 (worldwide), the year to year changes are significant in that new or revised selections have moved into the top ten. Security and Privacy moved from second to third place where as alignment kept the number one place. New in the top three is Business Agility. New in the top ten are Business Continuity, Vendor Management, Business cost reduction and IT time-to-market.
Table 3.
Org’s most important
This question was asked for the first time in 2013.
2014
3 Most Important / Worrisome to YOU
2013
Your most Impt. or Worrisome
Things that keep you awake at night
2014
8
1
1
Alignment of IT and / with the business
1
2
5
Business Agility
2
3
2
Security / Privacy
6
4
4
IT Talent / Skill Shortage
26
5
13
Business Continuity
7
6
8
Business Productivity
5
7
31
Vendor Management
38
8
3
CIO Leadership Role
19
9
18
Business Cost Reduction
4
10
17
IT Time-to-Market
3
Interestingly CIO Leadership role moved from the top three to eighth place, indicating that the CIO is becoming less worried about their perceived responsibilities in the enterprise; albeit leadership is a top skill required for CIOs. From the Europe countries perspective Vendor management interesting. Within Europe vendor management is ranked 2nd; a ranking which is not to be found in other geographies. Belgium, France, Italy, and Portugal ranked vendor management first. In Table 4 the European top 10 is presented.t
9
Germany
Italy
Luxembourg
Netherlands
Poland
Portugal
Spain
Switzerland
UK
1
1
2
1
11
1
4
1
2
14
5
1
7
3
3
13
13
3
2
14
3
2
12
6
2
4
10
15
4
3
13
7
14
16
16
16
5
5
14
8
4
9
6
39
4
19
15
10
7
6
15
10
5
11
8
8
5
11
21
12
9
12
6
9
13
10
9
16
4
France
1
Finland
6
Belgium
5
5
1
2
3
1
19
1
4
6
3
5
1
7
13
6
6
8
8
4
7
1
9
7
8
14
7
17
10
2
9
16
15
18
11
5
10
17
16
5
12
6
11
2
3
6
16
12
15
17
19
6
Austria
Management concern – awake at night 2014-2015
Europe
Table 4.
Business & IT Alignment
1
20
Vendor Management
2
Business Continuity
3
Business Productivity
4
Business Cost Reduction / Controls
5
Business Agility
6
12
CIO Leadership Role
7
21
IT Agility
8
13
Globalization of IT
9
9
Innovation
10
22
13
There are significant differences within Europe when considering the top ten. Both Austria and Switzerland ranked alignment outside the top ten. Vendor management seems to be important across Europe, but both Finland and the Netherlands ranked it 19th and 14th whereas the other European countries placed it within the top ten. Vendor management is ranked higher than other continents. A possible explanation might be the Cloud trend in which many Cloud suppliers are from North America (e.g. Salesforce, Amazon, Apple, Microsoft) and in which
European countries concentrate more on the legal implications, also supported by the European Union. Moreover, these changes in the top 10 of things that keep you awake at night also point to a shift in priorities and focus among senior business and IT leaders, away from tactical and operational IT issues like disaster recovery, service delivery, and change management to more strategic and organizational priorities like the IT value proposition, IT strategic planning, faster delivery, and coping with changing conditions.
Largest investments and most important technologies Participants were asked to select, from a list of 53 technologies, up to three of their ‘organization’s largest/most significant current or near-future IT investments’; up to three that they consider most important’ to their organization, and up to three that cause ‘the greatest concern’. Some items on the selection list from last year were deleted (based on very low selection rates the previous years) or modified, and additional ones added to this year’s study.
Table 5 lists the top 22 technologies identified as the largest investment for the 2,552 participating organizations worldwide, along with their rankings since 2007. The rankings have shifted when compared to 2013, yet all, but one entry in this year’s top 15 were also top 15 entries last year. Specifically, a new item, ‘Data Center Infrastructure’, which ranks third, and ‘Legacy Applications,’ tied at 17th. Next to ‘Data Center’ a new entry to the top ten is Security/Cyber security (ranked 8th). Customer/Corporate Portals and Network/Communications fell out of last year’s top 10.
Generally speaking, and consistent with last year, a relatively small percentage of the 2,552 respondents selected any one technology. This indicates that IT investments are well diversified across a broad number of options. Only the top six were selected by more than 10% of the respondents. This is not particularly different than the IT management issues shown in Table 1, of which also the top six were selected by more than 10% of the participating organizations. Blank cells indicate that the technology was not asked about in that year of Study. 1
2008
2007 2
14
6
Analytics / Business intelligence
1
1
1
1
1
Application/Software Development (previously Apps developments)
2
5
4
Data Center / Infrastructure
3
Cloud Computing (SaaS. PaaS. IaaS)
4
2
2
3
5
17
Enterprise resource planning (ERP)
5
4
3
2
3
3
Customer relationship management (CRM)
6
3
5
5
9
13
Big Data
7
7
18
Security / Cybersecurity
8
16
15
28
7
11
Workflow tools
9
9
7
8
7
7
Integration (previously EAI/EAM)
10
11
16
9
18
5
12
Networks / communications
11
10
8
11
9
10
11
Disaster Recovery
12
11
13
14
4
6
3
Collaboration Tools
13
12
4
8
7
7
Customer/Corporate Portals
14
8
9
Virtualization
16
15
17
7
12
7
Legacy Applications
17
16
Employee Portals
18
20
34
20
14
22
Outsourcing IT
19
Innovation / Disruptive Technologies
20
Continuity Planning
21
13
11
14
4
6
Consumer Oriented Devices
22
36
2013
2010
2
2011
1
2012
IT Trends, 2007-2014 1
2009
Table 5. 2014
10
new
8 32
4
2
3
4
European Organization’s IT Trends – Investments 11 The Europe differences in the most important IT Trends/investments can be found in Table 6. There is, like around the globe, consensus looking at Analytics/Business Intelligence (A/BI) being ranked first. Only Austria (7th) and Finland (4th) rank A/BI outside the top three. In the other IT Trends in the top twenty there are significant differences in the selected top IT Trends depending on the country perspective. Big Data, ranked 2nd, is a top three IT trend in Austria, the Netherlands, Spain,
and UK; whereas it is ranked outside the top ten in Italy and Luxembourg. Ranked 3rd is CRM and is within the top five in Austria, France, Italy, and Luxembourg; but outside the top ten for the Netherlands, Poland, Switzerland, and the UK. Cloud Computing is a top five trend within Germany, Italy, Netherlands, Poland, Spain, and the UK, but is outside the top ten in Austria, Belgium, Luxembourg, and Switzerland.
1
1
2
1
1
1
1
17
14
2
3
4
2
10
2
U.K.
1
5
Switzerland
1
5
Spain
Poland
1
8
Portugal
Netherlands
4
10
Italy
1
1
Germany
7
2
France
1
Big Data
Finland
Austria
Analytics / Business Intelligence
Belgium
Europe
Top 20 IT Trends Europe
Luxembourg
Table 6.
Customer Relationship Management
3
5
6
5
6
6
2
3
10
23
5
4
11
22
Cloud Computing
4
14
11
9
7
4
3
15
4
4
6
3
12
3
Shared Services
5
15
2
1
8
32
4
16
11
24
7
5
13
23
BYOD (Bring Your Own Device)
6
8
12
2
9
3
5
17
38
25
8
11
14
5
Enterprise Architecture
7
2
13
23
10
2
6
18
22
5
9
32
2
24
Workflow Tools
8
16
14
12
11
12
18
5
23
1
2
16
15
4
Employee Portals
9
31
15
18
12
13
7
4
8
26
10
6
16
25
Master Data Management
10
32
16
11
13
14
8
6
12
27
11
17
17
6
Web Services
11
3
4
34
2
15
19
19
24
28
12
12
18
7
Voice Over IP (VOIP)
12
17
5
35
14
16
20
2
5
7
13
33
19
8
Customer/Corporate Portals
13
9
17
14
15
19
9
7
9
29
14
18
3
26
Application / Software Development
14
33
18
12
16
33
21
20
3
30
15
21
4
27
Continuity Planning
15
18
19
15
17
7
22
21
25
8
16
7
20
28
Unified Communication
16
34
7
13
18
20
10
22
26
31
3
22
21
9
Enterprise Resource Planning
17
35
20
3
19
34
11
23
19
9
17
42
5
29
Collaboration Tools
18
36
21
10
20
35
23
24
6
10
18
34
22
10
Security / Cybersecurity
19
10
22
24
21
21
24
25
7
11
19
35
23
11
Innovation / Disruptive Technologies
20
37
23
25
3
22
25
26
13
12
20
13
24
12
Five largest IT Trends investments
12
1. Analytics/Business Intelligence
2. Application and Software Development
3. Data Center Infrastructure
Analytics/Business Intelligence (A/BI) remains in first place as the largest IT investment, a ranking it has held for six years straight. It has ranked in the top three since 2003, when it was first added to the list. A/BI was selected by 801 organizations Comprehensive Report: 2015 IT Trends Study A big ‘THANKS’ to all CIONET members who completed the IT Trends Study Questionnaire! 12 (31.4%), as one of their three largest or most significant IT investments. However, the percentage of organizations selecting this is down from 42% last year. It is worth mentioning that potential synergies exist between A/BI systems and the data made available via investments in 5th-ranked ERP, 6th -ranked CRM, and 7th-ranked Big Data, as well as many of the other technologies listed in Table 5.
Selected by 330, or 12.9% of the respondents, Application and Software Development is ranked 2nd this year. Interestingly, software development has been moving up in the rankings since its introduction in 2012. This high ranking may come as a surprise in the world of off-the-shelf software, Software-as-aService (SaaS), and Cloud Computing; and yet, custom software development is still a critical undertaking in many organizations. SaaS and Cloud should not imply no application/software development. Nearly 35% of the responding organizations are in industries where developing and/or using custom software is common. From an industry perspective it shows that 13.84% of the 2,552 responding organizations are in financial services; IT hardware, software, and services (8.28%); government (7.89%); and medical technology, telecommunications, and electronics (6.14% combined).
Data Center Infrastructure was added to the list of options this year and was in 3rd place, selected by 327 or 12.8% of responding organizations as one of their three largest technology investments. These large investments in infrastructure are surprising in light of the significant growth of publically traded cloud providers and the many who reported moves to “the Cloud” appearing in the business and IT press, where capital investments can be leveraged into other current expenses. Increasing use of the Cloud is confirmed by this year’s IT Trends Study’s IT budget and the cloud utilization data, as reported below. Nevertheless, nearly 20% of the respondents reported making large investments in Data Center Infrastructure. It is noteworthy; however, that this year’s study finds that nearly half of cloud-base IT services are delivered via in-house private clouds, and that only five responses separated the second- and fourth-ranked technology investments.
4. Cloud Computing
5. Enterprise Resource Planning (ERP)
Cloud Computing was selected by 311 organizations (12.2%) as one of their three largest IT investments. As indicated in Table 5, the first appearance of Cloud Computing was in 2009, when both “Cloud Computing” and “Softwareas-a-Service (SaaS, PaaS)” appeared separately. These listings continued in 2010 and 2011; but in 2012, Cloud Computing was redefined to include SaaS, PaaS (Platform-as-a-Service), and IaaS (Infrastructure-as-a- Service). Despite this single, expanded definition, Cloud Computing dropped to fourth place this year as the largest or most significant investment, down from second place in 2013 and 2012 and third in 2013. That does not necessarily mean, however, that fewer IT budget dollars are going to Cloud Computing, or that fewer IT services or solutions are being delivered that way; and in fact, it appears quite the opposite is occurring (as discussed the “Participating Organizations and Their IT Practices” section below).
Investments in ERP systems have been ranked among the top five position since 2009. This year it was selected as one of the three largest investments by 288 (11.3%) of the respondents. Like data centers, ERPs tend to be large investments. However, unlike data centers, ERP systems are designed to provide a vehicle for reducing business expenses and optimizing business processes, both important management objectives. Also, ERP systems, by virtue of the comprehensive and integrated data that they provide about internal operations, as well about supply chains and customers, they enable second- and third-order benefits when used in combination with technologies such as A/BI. Thus it is not surprising to see that ERPs continue to be large, significant investments for many organizations.
13
14
Last year, for the first time, respondents were asked to report on both their organization’s largest IT investments as well as those “of greatest concern” personally to the senior IT leaders themselves. This proved quite revealing2, and so it was repeated again in this year’s study. Additionally, this year respondents were also asked to select up to three technologies that are “most important” to their organizations. By separately assessing organizations’ largest technology investments, those of greatest importance, and those of greatest concern to IT leaders, additional detail and granularity are added to the research. This also provided some interesting insights as detailed below.
Comparing organizations’ largest IT investments to their most important ones The technologies identified by the respondents as being most important to their organizations map fairly well to those technologies where the organiza-
Kappelman, L. A., McLean. E. R., Luftman, J., Johnson, V. (2013) Key Issues of IT Organizations and Their Leadership: The 2013 SIM IT Trends Study, MIS Quarterly Executive, 12(4), 227-240. 2
tion is making the largest investments. As indicated in Table 7, seven of the top ten are present on both of the lists, but with different rankings. Also, asset management (at 4th), Customer/Corporate Portals (at 6th) and Service Management (at 10th) only appears on the most important list. In the most significant IT investments workflow tools (8th), employee portals (9th) and Master Data Management (10th) are in the top ten.
Table 7.
Comparing organizations’ largest IT investments to its most important (2014 – Europe)
Most significant IT investment
Most important IT Trend to the organization
Analytics / Business Intelligence
1
1
Big Data
2
7
Customer Relationship Management
3
2
Cloud Computing
4
5
Shared Services
5
8
BYOD (Bring Your Own Device)
6
3
Enterprise Architecture
7
9
Workflow Tools
8
48
Employee Portals
9
13
Master Data Management
10
16
Web Services
11
44
Voice Over IP (VOIP)
12
54
Customer/Corporate Portals
13
6
Application / Software Development
14
18
Continuity Planning
15
11
The most worrisome technologies for senior IT leaders in Europe This year’s top six technologies that are most personally worrisome to senior IT leaders (“things that keep you up at night”) were selected by more than 11% of the respondents, with numbers 7 thru 19 by between 5% and 10%. The top 10 most worrisome technologies remained fairly consistent when compared to last year. However, there are some differences. In particular, BYOD (18th this year), Enterprise Architecture (15th), and CRM (13th) all dropped out of the top 10 to be replaced by Application Development (fifth, up from 15th last year) and the two new items, “Data Center Infrastructure”(tenth) and “Innovative/Disruptive Technologies” (tied for seventh). Security moved up from second to first, being selected
by 224 or 31.2% of the respondents, while second-ranked Analytics and Business Intelligence was selected by 160 respondents (22.3%). Disaster Recovery ranks third this year as the most worrisome technology, selected by 106 (14.8%). Integration is fourth with 14.5%; and rounding out the top five is Software Development, selected by 13.1%. The only other item selected by at least 10% of the respondents is Cloud Computing, at sixth with 11.6%. Looking over this year’s rankings of the things that keep senior IT leaders up at night, they seem about evenly divided between “keeping the IT lights on” (i.e., security, disaster recovery, legacy, and infrastructure) and “increasing business capabilities” (i.e., analytics, integration, software development, innovation, and ERP). Cloud could be in both categories, and disruptive technologies could be seen as in a strategic IT-value proposition category of its own.
U.K.
Switzerland
Spain
Portugal
Poland
Netherlands
Luxembourg
Italy
Germany
France
Finland
Belgium
Austria
IT Trend most worrisome for senior IT leaders Europe (2014 - 2015)
Europe
Table 8.
Security / Cybersecurity
1
18
1
1
1
14
1
1
5
14
1
1
7
3
Asset Management
2
1
2
6
7
4
12
13
3
3
2
6
8
9
Smart Gadgets (e.g., smart watches/ gadgets)
3
11
3
2
8
15
4
14
21
15
3
3
9
10
Service Management
4
12
7
4
9
25
13
15
6
16
4
2
10
11
Analytics / Business Intelligence
5
19
8
15
10
16
5
2
15
1
5
4
11
4
BYOD (Bring Your Own Device)
6
10
9
5
11
8
14
3
16
6
6
7
1
12
Business Process Management Systs
7
2
10
21
2
1
6
16
22
17
7
8
2
13
Social Networking / Media
8
13
11
3
12
26
15
17
23
18
8
5
12
14
Customer/Corporate Portals
9
14
12
12
13
3
16
18
17
7
9
18
3
2
Cloud Computing
10
15
13
13
3
17
17
19
1
19
10
11
4
5
Continuity Planning
11
3
14
16
4
5
18
4
7
20
11
12
13
15
Enterprise Application Management
12
4
15
25
5
2
2
20
24
21
12
29
14
16
Big Data
13
20
16
22
6
18
19
5
8
4
13
13
5
17
Enterprise Resource Planning
14
21
4
7
14
19
20
21
18
22
14
14
15
6
Innovation / Disruptive Technologies
15
5
17
26
15
9
21
6
9
23
15
9
16
18
15
Comparing IT Leadership’s most worrisome technologies to the largest technology investments As was the case last year, the technologies that keep senior IT leaders up at night are different than the largest IT investments in their organizations3. Nevertheless, as indicated in Table 9, the differences in some ways outweigh the similarities. This is more than last year. However, there are still some interesting similarities, with Cloud Computing, BYOD and Analytics/Business Intelligence in all three perspectives in the top ten. These three IT Trends are important to the organization, gain
significant IT investments and keep the CIO awake at night. Some of the other differences include technologies that may not require a very large investment but are critical for keeping the IT lights on, and thus are fundamental for the credibility, reputation, and job security of senior IT leaders. Security is an example of this, as it ranks as the number one personal concern with 33.1% selecting it. Other examples are Smart Gadgets, Social networking and Service Management.
3
Derksen, Luftman. CIONET report 2014
Table 9.
Security / Cybersecurity
19
22
1
Asset Management
21
4
2
Smart Gadgets (e.g., smart watches/ gadgets)
40
15
3
Service Management
48
10
4
Things that keep you up at night
Org. important IT
Comparing Europe’s most significant IT investment, organization important it and keeping the CIO awake at night
Most significant IT investment
16
Analytics / Business Intelligence
1
1
5
BYOD (Bring Your Own Device)
6
3
6
Business Process Management Systs
23
19
7
Social Networking / Media
26
24
8
Customer/Corporate Portals
13
6
9
Cloud Computing
4
5
10
17
“Security issues, asset management and smart gadgets are what keep the CIO awake most at night�
IT Practices (Organization, Budgets, Staffing) The average IT spending as a percent of revenue in European organizations is 4.8%, which is less than the other global geographies. The comparison is shown in Figure 1. Although more depending on industry than country the countries (9.27%) Netherlands (7.11%), Luxembourg (9.06%) and Spain (6.92%) have above average IT spending. Finland (4.34%), Germany (1.94%) and
Portugal (3.89%) are below the average. These differences are the result of the kind of industries involved within the countries. Comparing Europe to the other geographies (Figure 1) it can be seen that Europe is more oriented on IT cost reduction than the other geographies. Which is similar to the economic state of Europe in the research period.
Figure 1.
Asia
Europe
North America
Latin America
Australia
Europe is the only geography which is focusing as much on reduces IT spending. We do expect to see a turning point in the near future. Compared to the other geographies Europe is in ‘catch up’ regarding IT investments making up for the lean ‘Great Recession’ years of 2008-2012, when both revenue and IT investment contracted in most organizations. The increase in many of the other geographies (Figure 1) is also being affected by new investments in cloud, shared services, digital marketing and analytics as well as the increasing digitization of organizations in general.
5,6 % 5,2 % 5,5 %
Africa
2014
10,9 %
9,38 %
9,27 %
Global
2013
560 520 550
0%
2012
580 5,8 % 1000 630 6,3 % 550 5,5 % 590 5,9 %
2%
2011
390 3,9 % 360 3,6 % 490 4,9 % 500 5,0 % % 530 5,3 %
4%
2010
330 3,3 % 640 6,4 % 610 6,1 % 540 5,4 % 480 4,8 %
6%
580 5,8 % 560 5,6 % 940
8%
920
10%
8,1 %
Percentage of revenue allocated to IT budget (2015)
470 4,7 % 810 580 5,8 % 560 5,6 % 550 5,5 %
18
IT organization structure
is the most popular (69%), followed by federated (14%), and decentralized (12%). A possible explanation for this difference is likely the European decentralized usage of new technologies. Quite often business units do tend to invest in IT that they require within their own function. This might also explain the lower IT spending (hidden IT costs) as discussed in the previous section.
Within the surveyed European countries the most popular organization structure (Figure 2) identified by 48% of the respondents is decentralized, followed by centralized with 34%, and federated with 14%. Globally the centralized IT organizational structure
Figure 2.
Centralized
IT Organization Structure – Europe
Decentralized Federated / Hybrid Matrixed Networked
Belgium Austria
100
Finland
90
France
80
Germany
70
Italy
60
Luxembourg
50
Netherlands
40
Portugal
30
Norway
20
Spain
10
Switzerland
29% 57% 14% = 290+ 570 +140 40% 20% 40% 400+ 200 +400 = 53% 13% +200 20% 7%+70 7%= 530+ 130 +70 20% 60% 20% 200+ 600 +200 = 82% 9% = 90+9%820 +90 67% 17% 8%= 80+8%670 +170 +80 50% 33% 17% 500+ 330 +170 = 13% 800 80% 7%= 130+ +70 50% 17% 33% 500+ 170 +330 = 14% 710 71% 14% = 140+ +140 61% 4% 30% 610+ 40+300 +404%= 13% 800 80% 130+ 70 + 7%= 63% 13% 250 630+ 130 + 25% = 0
U.K.
19
facilitate minor changes more readily. Overall, Figure 3 suggests that while IT is centralized in most organizations, there is a slow-moving trend toward more decentralized IT structures and fewer centralized ones. Time will tell whether that is in fact the case, or if that trend has begun to reverse. On the other hand, this distinction between centralized and decentralized/federated IT organization structures (as shown in Figure 3) may be blurring, as IT governance becomes more federated and IT delivery becomes more centralized. That is a matter to explore in future IT Trends Studies.
“There is a clear trend towards decentralised IT structures�
Figure 3.
120 12% 100 10% 50 5% 90 9% 20 2% 100 10% 90 9% 20 2% 110 11%
690 69% 620 62% 620 62% 660 66% 680 68% 720 72% 690 69% 770 77% 740 74%
Global organization structure 2006-2014
Decentralized
Centralized
80% 60%
40% 20%
0%
200 20% 280 28% 340 34% 250 25% 300 30% 180 18% 220 22% 180 18% 150 15%
20
The IT organizational structure tends to change over years globally, as can be seen in Figure 3. This year globally both the centralized and decentralized IT organizational structure increased whereas federated decreased. Often a centralized IT structure is chosen for cost reduction reasons whereas the decentralized IT structure is chosen customer focus and flexibility. Large changes to the IT organization structure is complex, time consuming, and costly. Thus structure change is not something most organizations do frequently, take lightly, or do simply because it is fashionable, lending credence to the demonstrable value of a federated structure which can
Federated / Hybrid
IT budgets and Staffing Trends
in 2010 with 36% reporting increases, but 64% still indicated flat or decreasing IT budgets from the prior year.
Economic conditions have had a significant impact on IT budgets. As indicated in Figure 4, prior to the ‘great recession’ (2004-2008), the majority of global organizations reported increasing IT budgets. However, as the economy slowed in 2008 only 47% of respondents reported an increase in IT budgets; and in 2009 only 27% of organizations reported increases, with 73% of the respondents indicating that their IT budgets had remained flat or decreased. Things tentatively improved
In 2011 the trend improved further with 55% of the respondents reporting increasing IT budgets, 27% flat, and only18% decreasing (a bit more than half of the 2010 rate of decreases). The percent of organizations reporting increases pulled back in 2012 with nearly 40% of organizations seeing budget increases and 20% decreases. In last year’s IT Trends Study, 56% of the respondents reported increasing budgets, and respondents accurately forecast a slight increase for this year.
Figure 4.
Increase
Change in IT budget from previous year (2004-2015)
No change
61% 18% 21%
47% 28% 25%
27% 22% 51%
34% 30% 36%
55% 27% 18%
40% 35% 26%
53% 21% 26%
56% 20% 24%
45% 30% 25%
610= 180= 210=
470= 280= 250=
270= 220= 510=
340= 300= 360=
550= 270= 180=
400= 350= 260=
530= 210= 260=
560= 200= 240=
450= 300= 250=
Decrease
2007
2008
2009
2010
2011
2012
2013
2014
2015
This year the number of organizations reporting IT budget increases is 56%, up from 53%, but still not above the 2007 high of 61%. Organizations with budget allocations remaining flat are a bit lower (20%), while decreasing budgets are down from 26% to 24%. However, when asked to project next year’s IT spending, the outlook is more pessimistic. Only 45% of organizations expect to have an IT budget increase in 2015. This represents almost a 20% decline in the num-
ber of organization’s currently reporting budgetary increases. Moreover, 30% (50% more than this year) are projecting flat budgets, and 25% anticipate a decrease in IT spending (about 4% more than in 2014). This could be a signal of further economic uncertainty, and likely an anticipated overall weakening in the global economy, or perhaps the end of the ‘catch up’ period in IT investments making up for the lean investment years early in the recession.
21
increased or flat IT budget in comparison to 72% in 2014. 21% of the European organizations reported a decreased IT budget, whereas 29% of the European organizations reported a decreased IT budget in 2014. German organizations are most positive with 60% of the organizations reporting an increased IT budget over 2015. 60% of the IT budgets of organizations in Austria report a flat IT budget in 2015. 43% of the organizations in Switzerland report an expected decreased IT budget in 2015.
When comparing the forecasted changes in IT budget with regard to 2015, the European countries are slightly more positive (see Figure 6). 79% of the European organizations anticipate an
Figure 5.
Figure 6.
Change in IT budget from previous year (2014 compared to 2013) in Europe
Change in IT budget from previous year (2015 compared to 2014) in Europe
Germany France Finland Belgium Austria
100
Italy
90
Luxembourg
2015 < 2014
80
Netherlands
2015 = 2014
70
Portugal
40
Spain
30
Switzerland
20
Austria
U.K.
2015 > 2014
31% 48% 21% = 310+ 480 +210 36% 55% 9%= 360+ 550 +90 14%430 43% 43% 140+ +430 = 40% 45% 15% = 400+ 450 +150 28% 59% 14% = 280+ 590 +140 29% 43% 29% 290+ 430 +290 = 35% 59% 350+ 590 +606%= 33% 39% 28% 330+ 390 +280 = 60% 20% +200 20% = 600+ 200 31% 38% 31% 310+ 380 +310 = 26% 48% 26% 260+ 480 +260 = 17% 460 46% 38% 170+ +380 = 20% 600 60% 20% = 200+ +200 10
Belgium
Europe
0
Finland
100
France
90
Germany
80
Italy
70
Luxembourg
60
Netherlands
2014 < 2013
50
Portugal
40
Spain
30
Switzerland
20
U.K.
2014 = 2013
30% 42% 29% 300+ 420 +290 = 14%290 29% 57% 140+ +570 = 31% 33% 36% 310+ 330 +360 = 31% 33% 36% 310+ 330 +360 = 24% 410 41% 34% 240+ +340 = 24% 520 52% 24% 240+ +240 = 29% 53% 18% = 290+ 530 +180 44% 33% 22% = 440+ 330 +220 54% 38% 8%= 540+ 380 +80 36% 29% 36% 360+ 290 +360 = 26% 35% 39% 260+ 350 +390 = 29% 38% 33% 290+ 380 +330 = 60% 20% +200 20% = 600+ 200 10
Europe
2014 > 2013
60
29% of the European organizations reported an IT budget decrease in the 2014 budget (see Figure 4). This percentage is highest of all continents (North America 24%, Australia 20%, Africa 11% and Asia 3%). Also the percentage of European organizations reporting a flat IT budget in 2014 in comparison with 2013 was highest of all continents with 42%. The number of European organizations reporting an increased IT budget was lowest of all continents with 30%.
0
22
Within Europe (Figure 5), 14% of the UK organizations reported an increased 2014 IT budget, lowest within Europe. In Portugal and the Netherlands just 24% of the organizations reported an increased IT budget. Austria and Germany are at the other end of the scale with 60% and 54% of the organizations reporting an increased IT budget. Only 7.7% of the German organizations reported a decreased IT budget in 2014.
50
European IT budgets developments
IT budget allocations Since 2009, when these Global IT Trend Study first began gathering IT budgetary data, the survey focused on two major categories: people and things. These two categories were further subdivided into In-House, Outsourced, and Foreign and Domestic spending. In Table 10 both Europe (2014 & 2015) and the Global figures (2009-2015) are provided. The internal staff-domestic spending is 19.7% of the European IT organizational budget. The surveyed organizations
predict a decrease to 17.9%, whereas the anticipated global budget allocation for internal staff-domestic increases from 17.1% in 2014 to 19.5% in 2015. Considering the internal staff offshore, the trend to increase in Europe and globally. Interestingly the trend for domestic outsourcing (within the continent) shows a flat budget allocation within Europe (12%) in the years 2014 to 2015, whereas the global trend shows a significant decrease of allocated IT budget to outsourced services domestic (from 16.9% to 6.8%) with regard to people services. Spending on consulting services shows a decrease in Europe and globally.
Considering the spending on ‘things’, the global and European trend is decreasing for in house-domestic expenses. At the same time, in-house offshore increased globally from 5.4% to 11.9% whereas within Europe the trend is less significant with 6.9% in 2014 compared with 7.3% in 2015. Both Global and Europe show a significant increase in outsourced things both domestic and offshore.
Table 10.
2014 Actual Europe
2015 projected Global
2014 Actual Global
2013 Global
2012 Global
2011 Global
2010 Global
2009 Global
Employees / Internal Staff: Domestic
17,9%
19,7%
19,5%
17,1%
30,4%
21,0%
31,0%
43,0%
39,0%
Offshore
11,4%
10,3%
10,9%
9,9%
4,2%
11,0%
5,0%
3,0%
4,0%
Outsourced Services/ Contractors: Domestic
12,0%
12,0%
6,8%
16,9%
8,7%
10,0%
9,0%
7,0%
8,0%
Offshore
9,8%
9,3%
7,1%
10,5%
3,9%
8,0%
3,0%
5,0%
4,0%
Consulting Services
5,6%
6,1%
6,1%
6,6%
7,2%
10,0%
11,0%
10,0%
12,0%
TOTAL People
56,8%
57,4%
50,4%
61,0%
54,4%
60,0%
59,0%
68,0%
67,0%
30,1%
32,0%
33,0%
32,0%
33,0%
IT Budget Area
AVERAGE: PEOPLE V. THINGS
2015 projected Europe
IT budget allocations Europe & Global
PEOPLE
59,2%
THINGS: HARDWARE, SOFTWARE, FACILITIES In-house - domestic
16,4%
18,7%
12,7%
15,9%
28,3%
22,0%
In-house – offshore
7,3%
6,9%
11,9%
5,4%
3,7%
2,0%
Outsourced - domestic
11,2%
9,6%
12,8%
7,3%
10,5%
13,0%
Outsourced - offshore
8,3%
7,3%
12,2%
10,4%
3,2%
3,0%
Total Things
43,2%
42,6%
49,6%
39,0%
45,6%
40,0%
10,9% 41,0%
40,8%
23
age to be higher in countries’ with a higher percentage IT staff compared to total staff. Within Belgium, Finland, Luxembourg and Switzerland the IT staff decreased more than in other countries. In Germany 50% of the organizations reported an increase in IT staff followed by Norway with 45% of the organizations reporting an increase in IT staff. In Austria 75% of the organizations reported a flat number of IT staff in 2014 compared to 2013.
Interesting are the changes in IT staffing. These changes in previous year are displayed in Figure 8. When comparing Figures 7 and 8, the decrease in IT staff looks on aver-
Figure 7.
Figure 8.
Percentage of company’s personnel is IT (%)
Total in house IT staff size in Europe
Italy
Germany France Finland Belgium Austria
36% 36% 29% 360+ 360 +290 = 33% 33% 33% 330+ 330 +330 = 4% 46% 50% 40+460 +500 = 21% 36% 43% 210+360+430= 48% 24% +280 28% 480+ 240 = 44% 16% 40% 440+160+400= 75% 19% = 60+6% 750 +190 100
Luxembourg
90
Austria
Netherlands
45% 45% 100+10% 450 +450 = 28% 48% 24% 280+480+240=
80
Belgium
Norway
2014 < 2013
70
Finland
Portugal
30
France
Spain
20
Germany
Switzerland
10
Iceland
U.K.
2014 = 2013
27% 43% 30% 270+ 430 +300 = 25% 50% 25% 250+500+250= 70% 20% +100 10% 700+ 200 = 16% 61% 24% 160+610+240= 26% 48% 26% = 260+ 480 +260
0
Italy
Europe
100
Luxembourg
90
Macedonia
80
Netherlands
70
Norway
60
Poland
50
Portugal
40
Spain
30
Switzerland
20
U.K.
5,58 558= 8,60 860= 6,00 600= 7,78 778= 5,50 550= 3,60 360= 2,33 233= 6,72 672= 2,00 200= 8,15 815= 2,29 229= 3,00 300= 3,46 346= 5,92 592= 4,47 447= 7,16 716= 3,59 359= 10
Europe
2014 > 2013
60
IT staffing as percentage of the total company’s personnel differs between the European countries as displayed in Figure 9. On average more than six
50
To provide greater insight into the IT personnel practices, IT staffing is another area that was refined and expanded considerably in this year’s IT Trend Study.
0
24
percent of the total staff within the organization is IT staff in Belgium (7.16%), Luxembourg (8.15%), the Netherlands (6.72%), Portugal (7.78%), and UK (8.60%). In Italy (2.29%), Macedonia (2%), and Norway (2.33%) the percentage of total staff being IT personnel is below three percent.
40
IT staffing and salary trends
25
Figure 9. 2014 > 2013
Total salaries for IT staff in 2014 compared to 2013
Germany France Finland Belgium Austria
60% 30% 100+10%600 +300 = 14% 36% 50% 140+360+500= 24% 390 39% 36% 240+ +360 = 24% 44% 32% 240+440+320= 13%530 53% 33% 130+ +330 = 100
Italy
21% 210 21% +570 57% 210+ = 14%520 52% 33% 140+ +330 =
90
Luxembourg
26% 48% 26% 260+ 480 +260 =
80
Netherlands
70
Portugal
60
Spain
50
Switzerland
2014 < 2013
40
U.K.
2014 = 2013
22% 460 46% 32% 220+ +320 = 9% 45% 45% 90+450+450= 14%570 57% 29% 140+ +290 = 38% 38% 23% 380+380+230= 26% 59% 15% = 260+ 590 +150
30
Europe
20
In Europe 68% of the organizations reported a decrease (22%) or flat (46%)
by United Kingdom (9%) and Germany (10%). Both UK and Germany expect a higher decrease of total IT salaries in 2015 (Figure 10).
10
To provide greater insight into IT personnel practices, IT employees and their salaries was expanded considerably in this yearâ&#x20AC;&#x2122;s IT Trend Study. The salary changes in 2014 compared with 2013 by country are displayed in Figure 9.
total salaries for IT staff in 2014 compared to 2013. Only 32% of the organizations reported an increase in the total salaries for IT staff. Within Europe, 57% of the organizations in Luxembourg reported increased total salaries in 2014 compared to 2013. At the other end of the spectrum, only 15% of the organizations in Portugal reported an increase in total salaries. In Spain 38% of the organizations reported a decrease in total salaries for IT staff in 2014 compared to 2013. The lowest decrease is reported
0
IT employees and their salaries
IT Skills
Rounding out the top ten skills for entry-level candidates are business analysis, oral communications, user relationship management, systems analysis/design, and analytics/statistics. The CIO skills are discussed in the section on The Future of IT. About 64% of the organizations in Austria report an expectation to have lower total salaries for IT staff in 2015 which is significantly different from other European countriesâ&#x20AC;&#x2122;. This is consistent with the expectation of organizations in Austria for flat or decreased IT budgets at 80% of the organizations reported (Figure 7).
The global top five skills identified for mid-level hires are:
Total salaries for IT staff in 2015 compared to 2014 (projected)
Germany France Finland Belgium Austria
100
Italy
90
Luxembourg
80
Netherlands
70
Portugal
2015 < 2014
60
Spain
2015 = 2014
50
Switzerland
40
U.K.
2015 > 2014
20% 51% 29% 200+ 510 +290 = 13% 500 50% 38% 130+ +380 = 20% 40% 40% 200+ 400 +400 = 23% 36% 41% 230+ 360 +410 = 4% 85% 12% = 40+850 +120 13% 580 58% 29% 130+ +290 = 36% 57% 70+7%360 +570 = 20% 70% 10%= 200+ 700 +100 29% 29% 43% 290+ 290 +430 = 23% 38% 38% 230+ 380 +380 = 21% 55% 24% 210+ 550 +240 = 25% 38% 38% 250+ 380 +380 = 64% 29% 640+ 290 +707%= 30
Europe
20
Rounding out the top ten skills for midlevel candidates are change management, functional area (industry) knowledge, people/relationship management, accounting/finance, and problem solving.
Figure 10.
10
1. collaboration/teamwork - North America and Latin America were ranked as number 1; where Asia was 5th, Europe 6th; Australia 14th, and Africa 20th. 2. business analysis - was ranked 2nd by Australia, 3rd by Europe, 4th by Asia, 7th by North America, 7th by Africa, and 31st by Latin America. 3. technology architecture - Africa and Asia ranked it number one, where Europe has it 5th, Australia 11th, Latin America 14th, and North America 18th. 4. user relationships - Europe has it ranked 1st, Africa 4th, Asia 14th, Australia 15th, North America 19th, Latin America 32nd. 5. oral communications - was ranked 2nd in Latin America, 5th in North America, 8th in Asia, 14th in Europe, and 16th in Australia.
0
26
A pervasive and persistent complaint from IT leaders are that their people do not have the right competencies and that they have job openings but cannot find people with the right skills. As previously presented, the advent of SMAC technologies is having a significant impact on enterprises around the globe. These changes are driving commensurate changes in ITs role and the demand for qualified IT professionals at all levels with an appropriate balance of technical, management, leadership, industry, and interpersonal skills. They differ across geographies based on the respective degree of importance placed on introducing many of the required changes, albeit are rather homogenous across Europe.
The global top five skills identified for entry-level hires are: 1. technical knowledge - was ranked 1st by every geography except Asia where it was ranked 2nd. 2. problem solving - was ranked 2nd by Europe, 3rd by North America, 4th by Latin America and Africa, and 5th by Asia and Australia. 3. collaboration/teamwork - was ranked 2nd by North America and Latin America, 4th by Australia, 9th by Asia, 10th by Europe, and 18th by Africa 4. functional area/industry knowledge â&#x20AC;&#x201C; was ranked 3rd by Asia, Europe, and Latin America, 4th by North America, and 5th by Africa. 5. technology architecture - was ranked 1st by Asia, 2nd by Africa, 8th by Europe, 13th by Australia, 15th by North America, and 17th by Latin America.
Turnover and Retirements, education and training Last year we saw a significant decrease in the IT turnover rate over 2013 within Europe (from 4.7% to 3.8%). Globally there was an increase in the IT turnover rate. This research year the European turnover rate increased to 4.14%. In Figure 11, the turnover rate of European countries are displayed. The European IT staff turnover rate is below the global average of 6.17% in the same research year. On average in the research period 2006 - 2014 the average is 5.97% for the global IT staff turnover rate.
Consistent with previous years, the European organizations report a low percentage of IT budget allocated for education/training (Figure 12). Africa and Australia also reported a low percentage of IT budget allocated for education and training. European organizations reserved 2.12% of the total IT budget for training and education, 34% less than the global average of 3.23% of the total IT budget and even 46% less than North American organizations. This is further illustrated by the strong IT management education activity by the Global Institute for IT Management in Asia, Latin America, and North America.
Figure 11.
IT staff turnover rate 2014
Europe U.K. Switzerland Spain Portugal Netherlands Luxembourg Italy Germany France Finland Belgium Austria
10,17 1000= 3,92 392= 3,09 309= 3,65 365= 5,50 550= 3,87 387= 3,25 325= 7,00 700= 1,57 157= 4,64 464= 1,300 300= 6,17 617= 4,14 414=
27
28
â&#x20AC;&#x153;European organisations reserve 2,1% of IT budget for training and education, versus 3,2% worldwideâ&#x20AC;?
Figure 12.
Percentage of IT budget allocation for education/ training
2009
2010
2011
2012
2013
2014
12% 10% 8%
Europe
North America
Latin America
309 452 792 338 487 323
Asia
210 434 665 125
Africa
210 434 665 667
0%
270 344 323 287 468 395
2%
235
4%
265 234 220 334 212
6%
210 434 665 302
4,52%
Avg. of yearly averages
Australia
Global
29
CIO reporting relationships, time allocation, background, tenure and performance measurement As of July 2014 http://www.ejobdescription.com/ IT_salary_survey.html reports CIO tenure at 4.33 years. In January 2014 CIO magazine reported it at 5.92 years. http://fedscoop.comsurvey-2014-bringschallenges-wind-shift-cios/. 4
Figure 13.
Asia
Europe
2,7
North America
Latin America
451 4,51 430 4,3 680
Africa
644 6,44 690 6,9 550 5,5
599 5,99 540 5,4 520 5,2
Global
4,51 4,3
451 430 190 1,9
0%
270
2%
580 5,8 580 5,8 460 4,6
4%
Australia
Figure 14.
5,20 520= 4,89 489= 2,00 200= 1,87 187= 6,74 674= 9,50 950= 4,33 433= 4,93 493= 6,80 680= 1,74 174= 5,73 573= 6,24 624= 7,54 754= 1,59 159= Austria
France
Germany
Italy
Luxembourg
Netherlands
Norway
Portugal
Spain
Switzerland
IT staff turnover rate 2014
U.K.
In terms of distribution, it is worth noting that nearly half of the CIOs have been in their current position for less than three years. On the other hand over ten percent of the CIOs have been in their current position for ten years or more.
6%
Europe
The average time the CIOs have been in their current position decreased this year by 20% globally from last year, from 5.8 to 4.6 years (see Figure 13). In Europe the CIO Tenure decreased by almost 4% from 5.4 to 5.2 years. The average tenure since 2006 is 4.7 years, down from last year’s average of 4.77. Overall, CIO tenure appears to be on an upward trend over the last decade with a significant breaking point this year. The overall trend is confirmed by other studies; although, CIO job tenure varies across studies4. The respondents in this year’s study reported lower CIO tenure than in the last two years (twice 5.8 years). The median CIO job tenure decreased to two years, especially due to Asia. Within Europe the highest number of CIOs with over ten years in their current job is 71 CIOs in this survey. The European CIOs tenure is 5.2 years.
600 6 520 5,2 530 5,3
4,7%
Avg. of yearly averages
6,8
CIO tenure across the continents
Belgium
CIO Tenure
Within Europe there are significant differences between the responding countries (see Figure 14). In Austria the CIO Tenure is only 1.59 years, whereas Norway the CIO tenure is 9.5 years. UK, Netherlands, Luxembourg, France and Finland are rather close to the European average.
Finland
These responses provide insights into what the IT organization is doing and how it is performing and interacting with the business. To better understand the role and activities of IT leaders in organizations, we turn to the data set consisting of the people who responded they are the ‘top IT person (e.g., the CIO)’ in their organizations. Hereafter we will refer to them as the ‘top IT executive’ or the ‘CIO’.
CIO Reporting Relationship The role of the CIO is often thought to be shaped by to whom they report; although it is unclear to what extend and in what way formal reporting relationships are related to CIO focus and job activities5, Luftman alignment maturity research has found that organizations where the CIO reports to the CEO outperform their competitors. Within Europe, just over 40% of the responding top IT executives report directly to their CEO (globally about 39%), a fourth
Plante & Bain (2005), “The Changing Role of the CIO: Why IT Still Matters,” IT Professional, 7(3), 45-49 and Smaltz, Sambamurthy, & Agarwal (2006), “The Antecedents of CIO Role Effectiveness in Organizations: An Empirical Study in the Healthcare Sector,” IEEE Transactions on Engineering Management, 53(2), 207-222 found CIO reporting relationships to be unrelated to CIO job activities; however, Carter, Grover, & Bennett (2011), “The Emerging CIO Role of Business Technology Strategist,” MIS Quarterly Executive, 10(1), 19-29 did find a relationship between to whom CIOs report and the focus and activities of CIOs.
(25%) report directly to their CFO (27% globally), and about 19% of CIOs report to their organization’s COO (28.5% Globally) (see Figures 15 and 16).
nies average alignment level is at 3.11, and 35.6% of the CIOs report directly to the CEO and only 6.1% to the Board of Directors.
As for the CIO tenure the reporting structure differs significantly by European country. In Luxembourg 64% of the CIOs report directly to the CEO, where in Belgium it is 67%. In the United Kingdom it is only 18%.
From a global perspective a trend line as shown in Figure 16, suggests that there is a slow moving trend of an increasing percentage of CIOs not reporting to CEOs and CFOs but to the COO. Other studies show increases for CIOs reporting to CEOs6, but such trends, if present, do not appear particularly strong except for the decrease in direct reporting to the CEO. The percentage of CIOs directly reporting to the CEO decreased from nearly 60% in 2011 to below 40% in 2014.
Interestingly in the Netherlands 29% of CIOs report to the CEO and 29% to the Board of Directors. However, their alignment maturity is only 2.53 out of a maximum 5. The Global 1,000 compa-
5
CEO/President
Reporting line CIOs
CFO COO Business Unit Executive Board of Directors
Belgium Austria
100
Finland
90
France
80
Germany
70
Italy
60
Luxembourg
50
Netherlands
40
Portugal
30
Spain
20
U.K.
40% 25% 19% 7%+90 9% = 400+ 250 +190 +70 18% 45% 27% 9%= 180+ 450 +270 +090 41% 18% 18% 5%+170 17% 410+ 180 +180 +50 = 56% 16% 4% 12% +120 12% = 560+ 160 +40+120 29% 28% 11% 4% 28% 290+ 280 +110 +40+280 = 65% 14% +210 21% 650+ 140 = 50% 25% 15% +50 5%+50 5% 500+ 250 +150 = 25% 50% 25% 250+ 500 +250 = 46% 23% 8%+80 8% +150 15% = 460+ 230 +80 26% 13% +300 30% 30% 260+ 130 +300 = 67% 13% +130 13% +80 8% = 670+ 130 50% 50% 500+ 500 = 10
Europe
0
CIO magazine’s ‘State of the CIO 2014’, Kim Nash reports that ’44 percent of the CIOs report to the CEO, up from 39% last year’, http://www.cio.com/ article/2380234/cio-role/state-of-the-cio-2014the-great-schism.html. 6
Figure 15.
31
Figure 16.
CIOs report to, 2005-2014 (global)
CEO
60%
CFO 50%
COO
THIS LOOKS LIKE A TREND
SBU
32 40%
30% THIS LOOKS LIKE A TREND 20%
THIS COULD BE A TREND
10%
0%
IT, outside organization
Germany France Finland Belgium Austria
100
Italy
90
Luxembourg
80
Netherlands
70
Portugal
60
Spain
50
Switzerland
non-IT, outside organization
40
U.K.
non-IT, same organization
42% 16% +140 14% +280 28% 420+ 160 = 33% 67% 0+330 +670 = 50% 50% 500+ 0+500 = 45% 15% +400 40% 450+ 150 = 100% 1000= 10% 30% 10% +500 50% 100+ 300 +100 = 20% 20% 60% 200+ 0+200 +600 = 40% 60% 400+ 0+600 = 100% 1000= 25% 75% 250+ 750 = 41% 41% 5% 14% 410+ 410 +50+140 = 100% 1000= 100% 1000= 30
Europe
20
Within Europe (Figure 17) significant differences can be found by country. Within Germany and Austria 100% of the surveyed CIOs came from an internal IT organization. Finland (41%), Netherlands (30%) and Spain (15%) hired the CIO from an external IT company. Also interestingly, within Europe 28% of the CIOs came from outside the company from a non IT function; the highest globally (Africa 17%, Asia 8%, North America 7%, Latin America 24% and Australia 13%). More significantly, this appears to be an important change in the organization from where CIOs are hired.
CIO prior employment, Europe 2014
10
CIOs responded to this question regarding their prior position before becoming the top IT executive in their current organizations. Most CIOs still come from a prior IT position (58% in Europe, 79% globally); but this is down this year from the 92% in 2010 and 2011 to 79% in 2014.
IT, same organization
0
CIO Previous Employment
Figure 17.
33
2010
Figure 18.
2011
2012
2013
2014
Global last position before CIO or equivalent (2010 to 2014)
350 35% 360 36% 330 33% 310 31% 380 38%
440 44% 460 46% 470 47% 610 61% 540 54%
70 7% 50 5% 120 12% 40 4% 40 4%
140 14% 130 13% 80 8% 30 3% 40 4%
80%
IT, same organization
IT, outside organization
non-IT, same organization
non-IT, outside organization
60%
40% 20%
0%
Globally it also appears that more CIOs are being hired from non-IT positions, at 21% this year, up from 18% last year and above the five-year average of 15% (see Figure 18). Bottom line, 58% of CIOs came from another company, 35% were promoted from within, 79% came directly from a prior role in IT, and 21% were hired from a prior non-IT role. As Figure 18 indicates, over the past several years there has been a significant increase in CIOs being hired from outside their current employer, and a commensurate decrease in those being promoted to CIO from within, regardless of whether they were in a prior IT position or not.
34
Performance Measurements for CIOs The investigation of IT performance metrics was added to the IT Trends Study in 2012 to gain a better understanding of how IT is being assessed and measured. This year respondents were provided a list of 32 metrics (up from only 14 last year) and asked to separately “select up to three (3) of your organization’s most important performance measures for: internal IT, outsourced IT, and your own performance.” The personal performance question was added this year for the first time. Table 11 shows the percent of the organizations selecting each metric in the category internal IT metrics per geography. The Table is sorted by the rankings of the global internal IT performance measures used most. No trend can be discerned, of course, since this is the first time these CIO most used internal performance measures data are available; nevertheless, some important findings are in evidence. Examining the CIOs’ top 10 most selected performance measures, as shown in Table 11, notice that only three focus on IT, while the other seven are business focused. Equally, if not more important, four of these top 10 are strategic, including three of the top four, as well as the top three: “Value of IT to the business” (selected by over 40%). The others are: Innovative/new ideas (ranked 6th), Business cost reduction/ control (7th) and workforce reduction (9th). Since performance measurements are tied to incentives and deliverables, this points to the current overall strategic and business focus of these CIOs, a good thing indeed. Rounding out the top five for CIOs are second ranked “User satisfac-
tion”, “Value of IT to the business” (at third), fourth ranked “Satisfaction of internal IT customers”, and number one “Availability,” which is one of two IT-focused performance measure to appear in the top five for CIOs, selected by the respondents. Moreover, although the performance of the IT organization is still important to their overall evaluation, with five IT-centric performance measures in their top 10, it appears the CIOs are increasingly evaluated on their overall contribution to the organization. Nevertheless, the performance metrics for CIOs and in-house IT do have a lot in common with “Innovative new ideas” (ranked 6th by the CIOs) and “Value of IT to the business” (ranked 3rd). Nevertheless, with two of Internal IT’s top six performance measures focused on the business, and half of their top 10 IT focused, it is clear that alignment of IT and business is alive and well. As might also be expected, Outsourced IT is more about keeping the IT lights on than Internal IT, with their top five metrics all IT focused (not in this table). CIOs share only one performance measure in their top five with Outsourced IT – “Availability.” They do share six in their top 10, however, which is also indicative of an alignment. Similarly, Internal and Outsourced IT share seven measures in their top 10 lists.
35
Table 11.
Africa
Asia
North America
Latin America
Australia
Availability (Up time)
1
20
13
1
1
2
28
Customer satisfaction (internal IT customers)
2
4
3
11
2
1
5
Value of IT to the business
3
28
31
3
4
12
8
Satisfaction of internal IT customers (e.g., portals, social, mobile)
4
21
26
9
3
14
32
Europe
Global
CIO performance measures (with internal it metrics used)
Projects delivered on time
5
22
25
5
5
4
29
Innovative / new ideas
6
29
14
2
16
7
3
Help-desk performance
7
8
8
18
6
3
18
Business cost reduction/control
8
5
4
12
11
6
6
Workforce reduction
9
1
1
19
24
18
15
Projects delivered on budget
10
6
19
7
8
24
16
Productivity improvement
11
12
16
21
7
5
10
SLA target compliance
12
23
27
15
19
8
1
Employee attrition / retention / turnover
13
7
9
4
18
17
23
Increases in new products / services
14
13
2
26
22
15
2
IT cost control
15
24
10
24
9
13
19
IT spending as a % of revenue
16
2
15
20
12
16
17
IT cost / headcount reduction
17
14
5
6
20
21
24
Time to market
18
3
29
16
13
25
9
ITâ&#x20AC;&#x2122;s contribution to strategy
19
9
21
27
10
9
30
Revenue growth
20
15
30
10
15
26
25
Project return on investment (ROI)
21
10
22
14
17
10
20
Improved decision making
22
30
6
23
21
8
26
Profit / Profit growth
23
16
17
22
25
22
11
Total cost of ownership
24
31
32
25
14
20
21
Lower error rates by users/customers
25
17
23
8
27
19
27
IT spending per employee
26
25
20
13
28
30
7
Industry-specific measurements
27
18
7
17
29
23
22
Quality / defect rates in software
28
11
18
30
23
28
31
Return on equity (ROE)
29
19
28
31
26
31
4
Compound annual growth rate (CAGR)
30
26
11
28
32
27
13
Earnings per share
31
27
12
29
30
25
14
Stock price
32
32
24
32
31
32
12
How CIOs spend their time across geographies (2014) Architecture
Relationship with IT staff
IT Governance
Relationship with Vendors
IT operations
Software Development
HR
Strategy
Relationship with Business
Other
Global
100
Africa
90
Asia
80
Europe
70
North America
60
Latin America
10% 90 9% +130 13% +120 12% 130 10% 50= 5% 100+ + 13% 100 + 10% 100 + 10% 90 + 9% +100+ 14% 110 11% +80 8% +90 9% 90 7% 90 9% +100 10% +100 10% = 140+ + 9% 130+ + 13% 70+ 10% 50 5% 13% 210 16% 7% 202% 18% 1% 100+ +707%+130 + 21% +160+ 70+ +180+ 10= 12% 90 9% +170 17% 13% 110 7% 70 7% +50 5%= 120+ +130 + 11% 80 + 8%100+ + 10% 70+ 8%110 11% +90 9% +90 9% 90 8% 160 16% 14% = 80+ + 9% 60 + 6%100+ + 10% 80+ +140 8%100 10% +100 10% +90 9% 150 6%80 8%+160+ 16% 7% 80+ + 15% 110+ + 11% 60+ 70= 11% 110 11% +150 15% +120 12% 120 10% 50= 5% 110+ + 12% 80 + 8% 100 + 10% 70 + 7%+100+ 50
Australia
40
The results are shown in Table 12. Not surprisingly, CIOs report that on average they spend 8% of their time interacting with IT employees within their organization. CIOs spend over 26% of their time interacting with non-IT people within their organization (13% with C-level, 13% with non-IT non-C-level), indicating a significant focus on the overall business.
twenty percent of the CIOs (19.8%) in Europe interact with the CEO on a monthly basis, 17.8% on a weekly basis and 13.9% more than once a week. Over 51% of the CIOs talks to CEO at least monthly (53.5%). The interaction with the CFO in Europe is higher at 58.6% indicating at least monthly with the CFO. But the most interaction is with the COO, with almost 65% of the CIOs interacting at least monthly.
Figure 19.
30
These improvements, and the inclusion of all five of these dimensions (specifically, how much, with whom, doing what, how often, and how valuable), significantly increase our ability to understand and track changes in the multifaceted role of the CIO in these times of rapid change, albeit, it makes it difficult to draw comparisons from previous years.
The interaction of CIOs with other C-level in Europe is in Figure 20. Almost
20
The job of the CIO is complex and evolving. Since 2007, the IT Trends Study questionnaires have included questions regarding how CIOs spend their time. In particular, how much of their time (the “how much”) they spend with whom (the “who”) doing which activities (the “what”). These questions were expanded last year, and additional questions added to assess how often CIOs meet with various other senior executives (expanding the “who” to be more specific and adding the “how often”). Questions were also added to determine to what extent CIOs believe those C-level relationships contribute to the value of IT to the organization (the “how valuable”). This year, these questions were further expanded and improved, with the “who” and “what” being separated for the first time, and both those lists expanded significantly.
In Europe breakdown is in Figure 19. IT operations takes 17% of the CIO time, the highest of all geographies whereas “relationship with business” is almost half of the percent (11%) of the North American CIOs (21%). Considering the earlier alignment discussion, additional focus on business relationships could be recommended.
10
How CIOs spend their time, with whom, and what they do with them
0
36
37 Table 12.
How CIOs spend their time (global) 2014 Categories
CIO or Equivalent
Previous years (global): How CIOs spend their time
2007-2012 Categories
2014
2013
2012
2011
2010
2009
2008
2007
IT priorities/strategy
10%
12.7%
10.0%
13.0%
13.0%
15.0%
17.0%
16.0%
Strategy
Business priorities/ strategy
10%
10.9%
Interacting w/ internal IT employees
8%
11.9%
11.0%
5.0%
11.0%
12.0%
15.0%
13.0%
Relationship mgmnt w/ IT staff
Interacting w/ nonIT non C-Level
13%
10.1%
IT Operations
16%
10.7%
12.0%
15.0%
13.0%
15.0%
8.0%
8.0%
Operations
Interacting w/ nonIT C-level
13%
13.3%
15.0%
14.0%
18.0%
19.0%
26.0%
23.0%
Relationship mgmnt w/ business
Interacting with IT. non employees
10%
7.6%
8.0%
5.0%
6.0%
0.0%
0.0%
0.0%
Relationship mgmnt w/ vendors
IT governance
11%
8.7%
10.0%
11.0%
9.0%
10.0%
11.0%
11.0%
IT governance
IT Human resources
12%
8.0%
9.0%
15.0%
7.0%
8.0%
7.0%
8.0%
Human resources
Software development
7%
5.3%
7.0%
4.0%
6.0%
6.0%
4.0%
6.0%
Software development
Other
5%
0.9%
9.0%
9.0%
11.0%
10.0%
6.0%
7.0%
Non-IT
9.0%
9.0%
7.0%
7.0%
6.0%
8.0%
Architecture
Figure 20.
CIO interaction with c-level (Europe)
No interaction Less than once a year
13,8
6,4 16,0
20,2
8,5
2,2
1 3 2
100
90
80
70
60
50
40
3
30
CEO
8,5 11,7
20
CFO
1,1
3,4 1,1
10
CMO
117+21+11+85117 + 138+ + 64160 + +202+85= 16,9 23,6 6,779 10,1 22= 169+ 34+11+236 146 + 14,6 135+ + 13,5 67 + 7,9 +101+ 18,2 172 9,1 141 16,2 10+30+20+182 + 17,2 141+ + 14,1 91 + 14,1 +162 +55,11= 15,8 8,9 79 13,9 +50= 5 40+4404+30+158 198+ + 19,8 89 + 7,9 178 + 17,8 +139 11,7 2,1
0
COO
Once a year Less than once per month Once a month More than once a month Less than once a week Once a week More than once a week At least daily
Future of IT 38
This year we asked a dozen questions to elicit the perspective of the future of IT. The Appendix I includes the summary of the respective global questions and their results. A summary is: 1. 84% of respondents believe that there will be an internal IT organization in the future. Within Europe 82% of the responding organizations answered that an internal IT organization will still be needed. 2. Governance (29%) and demonstrating value (23%) will provide the most significant changes. In Europe both ‘Contribution/value to the business (29.8%) and ‘Organizational reporting’ (26.3%) are considered the most significant change to IT in the future. With regards to organizational reporting the combination with Business Intelligence/Big Data is made (see management concerns/IT Trends in this report). Significant country differences are: ·· United Kingdom sees Governance/Relationship to Business as the most significant change to IT in the future (40% of responding organizations) ·· Switzerland sees Governance/Relationship to Business as most significant change to IT in the future (50% of responding organizations) ·· Spain also sees ‘Gaining value from Cloud’ as significant change to IT in the future (21.9%) ·· Poland sees Governance/Relationship to Business as most significant change to IT in the future (66.7% of responding organizations) ·· The Netherlands is most focused on ‘Contribution/value to the business’, 60.7% of the responding organizations identified this item as the most significant change to IT in the future ·· Luxembourg also sees ‘Gaining value from Cloud’ as significant change to IT in the future (23.1%) ·· Germany ‘Human Resources/Skills/Sourcing’ was selected by most responding organizations as most significant change to IT (36.4%) 3. While the skills required for entry-level and mid-level IT professionals were previously discussed, the skills identified for CIOs (or head of IT) are described here. Overall, like with mid-level and entry-level professionals, they differ across geographies; albeit they have remained relatively stable over the years, and are consistent across Europe. The top five skills for CIOs are: ·· leadership - has been and remains the top skill in North America and Europe; it was ranked 5th in Africa, 11th in Latin America, 14th in Asia, and 31st in Australia. ·· change management – was ranked 1st in Africa, 2nd in
Latin America, 5th in Asia, 6th in Latin America, 9th in Australia, and 16th in North America. ·· business analysis – was ranked 2nd in Europe, 5th in Asia, 65h in Latin America, 7th in Africa, 9th in North America, and 14th in Australia. ·· budgeting – was ranked 3rd in Latin America, 7th in Europe, 11th in Asia, 12th in North America, and 13th in Africa and Australia. ·· oral communications - Asia ranked it 2nd, North America 5th, Latin America 7th, Europe 9th, Australia 15th, and Africa 29th. Rounding out the top ten CIO skills were user/relationship management, accounting/finance, collaboration with others, emotional intelligence, and decision making. Globally 27% of the organizations predict that the future skills of the CIO will be more business, 42% stated it will be more business & technical, 19% stated it will be unchanged and 12% of the responding organizations worldwide predicted that there will be no CIO (head of IT) in the future. Within Europe differences can be found, in Switzerland 100% of the responding organizations stated that more business & technical skills will be needed with regard to the future CIOs. This is, partly, confirmed by Spain (50%), France (50%) and Finland (47.6%). Other countries within Europe tend to state that there will be no change needed with regard to the skillset of the future CIOs. Within Belgium 61.1% predicted skills of future CIO will be unchanged. This supported by countries such as Portugal (52.2%) and in lesser extend by Italy (46.7%), Spain (40%) and Germany (40%). Within Finland most organizations believe that especially business skills are added to the future CIO. A number of organizations do believe that there will not be a CIO (head of IT) needed in the future. This belief is stronger in Germany (30% of the responding organizations) and in the Netherlands (25%). 4. The most effective way to communicate to the business is via board meetings/presentations (44%). European countries predict that informal discussions/ meetings are the most effective way to communicate for CIO. This is stated by 51% of the European responding organizations which is 64% more than global average (31%).
Organizations within European countries tend to see board meeting presentations as a lesser effective way to communicate for CIOs than other geographies. 22% of the European organizations see board meeting presentations as the most effective way to communicate which is significant lower than other geographies. In Australia 83% of the organizations state that board meeting presentations is most effective way to communicate for CIOs, in Asia 88%, Latin America 34%, North America 34% and Africa 35% of the organizations. Also above average is the usage of IT briefings as most effective way to communicate for CIOs, 9% of the responding organizations predict this way of communication as most effective. This is 80% above the global average of 5% of the responding organizations. 5. The largest increase in developing and maintaining between Europe and the rest of the geographies exist with regard to the expectations towards Cloud Service Providers. Only 10.2% of the European organizations see Cloud Service Providers as the largest increase in developing and maintaining whereas other geographies are all above forty percent (Australia 43%, Latin America 43%, North America 44%, Asia 42% and Africa at 60%) stating that Cloud Service Providers will be the largest increase in developing and maintaining applications. Within Europe only Finland is the big exception with 50% of the Finish organizations stat that Cloud Service Suppliers will be the largest increase in developing and maintaining, five times more than the European average. Most European countries predict that the largest increase in developing and maintaining will be in COTS (Commercial Off-The-Shelf) and ERP (Enterprise Resource Planning). The largest indication for COTS are United Kingdom (50%), Switzerland (50%), Luxembourg (53.8%) and Italy (31.3%). The largest selection for ERP is supported by Spain (33.3%), Italy (43.8%) and Germany (54.5%). Outsourced off-shore were largely selected by Switzerland (50%) and France (53.3%). 6. Globally 36% of the organizations predict that IT application development staff primarily will be centralized. Within Europe this percentage is 26.9%. The centralized IT application development staff in the future is mainly predicted by countries such as United Kingdom (55.6%), Switzerland (50%), Germany (50%) and Finland (42.9%).
39 European countries tend to predict a networked IT application development staff in the future more than on a global scale. 45.1% of the European organizations predict that networked IT application development staff will be the primarily organization structure whereas globally 27% of the organizations believe this is true. Within Europe especially Spain (58.6%), Portugal (61.9%), Italy (66.7%), France (62.5%) and Belgium (53.3%) foresee the networked organization structure as the primary structure for future IT application development staff. 7. The most important skill for the CTO will be knowledge of applying IT to the business (62%). Another development is the role of the Chief Technology Officer (CTO) focusing on turning technology to business value. Globally 38% of the organizations believe there will not be a CTO in the future. European surpasses this percentage with 46.9% of the European organizations. This percentage is lowest in North America with just 4% of the organizations stating that there will not be a CTO in the future. United Kingdom (50%), Portugal (69.9%), Luxembourg (61.5%), Italy (58.8%), France (54.4%) and Belgium (77.3%) state that there will not be a CTO in the future. The countries where the expectations is that the CTO in the future will be more technical are the Dutch (46.2%), where the Finish organizations expect the CTO to be more business & technical in his/her expertise. 8. When considering the most important skill of the CTO, 63% of the European organizations expect the CTO to have knowledge of applying IT to the business. This is also the main expectation on a global scale, supported by 62% of the world wide organizations. 9. Globally 70% of the researched organizations believe that the support of IT infrastructure is done by a Cloud service provider. This percentage is lower within Europe at 62%. 10. The lead executive for data/analytics should report to the CEO (38%), Applications Executive (29%), or the CIO (23%). Big Data is a hot topic (see also management concerns/ Trends in IT in this report). European organizations tend to see applications executives as the chief executive to report Big Data initiatives to. This is supported by 46% of
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the European organizations. 37% of the European organizations state the reporting should be directly to the CEO which is close to the global percentage of 38%. Just 9% of the European organizations believe that the Big Data initiatives should be reported to the CIO, which is considerably lower than the global believe of 23% and much lower than the opinion of Australian companies (38%), Latin America companies (45%), North America (52%) and Asia (38%). 11. The most important IT skill for non-IT executives are IT governance (31%) and IT HR/sourcing/organization (28%). 30% of the European companies support IT governance. 23% of the Europeans forecast that the most important skill of the non-IT executives will be to identify and implement trends in leveraging IT, this forecast is lower than the global average whereas 28% of the organizations forecast this skill as most important. 12. The most important consideration for a service provider is reliability/responsiveness (63%). Interestingly European companies consider more technical skills/expertise as most important consideration in service provider than other geographies. 9% of the European companies selected technical skills/expertise as the most important consideration in service provider in the future.
Summary and Conclusions So what does all of this really mean? In essence:
IT is reshaping global markets while reshaping itself as it becomes the business. While different countries withen Europe have responded differently, with the enduring economic uncertainties prevailing, and the dramatic changes across every industry being enabled/driven by IT, organizations are continuing to focus on leveraging IT to swiftly reduce expenses and, more recently to increase revenues. SMAC (Social, Mobile, Analytics, and Cloud) technologies are clearly transforming the industry. While IT appears to be quite resilient, with IT budgets, hiring, and salaries on the rise, upon closer analysis, these increases continue to evolve cautiously. This guarded trend has brought increased attention to reducing IT budgets through IT infrastructure spending (especially Cloud) and innovative sourcing models. Are we seeing the end of the CIO role and position as we have known it? We are clearly seeing the role of the CIO and the overall IT organization undergoing a significant transformation. It is those organizations and individuals who are best prepared that will prosper in these exciting times. There are pundits and blogs espousing that the end of IT is near. Rather than dispute the existence of IT in the future, the important question to consider is what will CIOs or indeed IT will have in the future. Not only is IT not going away any time soon, the role of IT is more important than ever. IT is going through a renaissance that requires the role of the CIO and IT organization, as well as how the business and IT organizations collaborate, to transform. IT has evolved from a group supporting back office processes, to enabling front office processes, to driving business innovation. IT is moving from an organization focusing on metrics/ SLAs and expenses to analyse itself, to an organization that is delivering demonstrable business value through cost reduction, to an organization that is providing distinctive revenue increases. IT has evolved from having technical initiatives motivated by pure technology or business desires to being responsive to customer/client needs. These are significant shifts from what we have experienced in the past. These fundamental changes in technology and how they are applied by the business are shaping the future of IT. Naturally
not all organizations or geographies can respond in the same way; different scenarios will enable or inhibit these changes; albeit the data demonstrates that there are more similarities than differences. In general, organizations need to recognize that competitive advantage that is facilitated by IT is clearly on the rise. IT organizations, with effective leaders have an opportunity to position themselves at the heart of corporate strategy. The key to this positioning is the people having the appropriate balance of technical, business/management, industry, and interpersonal skills to meet the challenge that lie ahead.
41
Appendix I: Future of IT Results
42
43
Appendix II: Research Methods, Design, and Demographics
44
This research has evolved from the lead authors coordination of the SIM survey from 1999-2013. The SIM survey has been conducted since 1980. Surveys prior to 2000 focused exclusively on the top management concerns. Since then, the survey has been extended to pursue more specific insights regarding key IT issues of the day. A significant strength of this research is in its ability to identify important trends by comparing survey data from previous years. Beginning in 2008 the survey has been extended to IT executives from around the globe.
(academic and industry). Additionally, some questions were updated and new questions were added based on (1) lists from other similar research, (2) input from Board members from sponsoring organizations, and (3) the lead authorâ&#x20AC;&#x2122;s experience. Additional question were asked related to the participants view of the future of IT.
The 2014 survey was similar to previous ones in methodology and process. The questions were based on previous surveys, with questions modified based on previous results, and suggestions from respondents and researchers
The authors anticipate extending the reach of this important research to a more complete set of countries and geographies, and invite leading researchers with a strong network of IT executives to contact us.
Senior IT executives were invited to take the online survey. The purpose of this paper is to provide important international insights and trends.
The authors wish to express their appreciation for the support of Herman van Bolhuis and Hendrik Deckers (CIONET) in obtaining the European data. The European country demographics for the 801 European organizations surveyed are below. We hope that the spread across European countries will continue to improve. Most economic sectors and industries are represented in the figure on the next page. Differences in representation can be found in the industries Food beverages consumer packaged goods, Telecommunication, Wholesale/ Retail/Trading, Public Sector/Non Profit, Education, and Auto/Industrial Manufacturing.
39+15+8654321t Other (<1%): Norway Romania Albania Sweden Ukraine
Switzerland Poland
France
United Kingdom
Denmark Ireland Iceland Lithuania Macedonia Slovenia
Luxembourg Italy Belgium
Austria
Portugal
Germany
Finland
Spain
Netherlands
Industry representation (global & Europe) Construction
Transportation / warehousing
Chemicals / energy / utilities
Food beverages consumer packaged goods
Pharmaceutical / biotechnology / life sciences
Telecommunication
Media / entertainment / travel and leisure
Wholesale / retail/ trading
Healthcare
Public sector / non profit
Hardware / software / networking
Education
Auto / industrial manufacturing
Aerospace / defense
Business professional services
Financial services / real estate / insurance
3,93% 393= 2,01% 201= 2,43% 243= 2,07% 207= 3,18% 318= 2,20% 220= 9,91% 991= 2,39% 239= 2,80% 280= 3,04% 304= 7,10% 710= 3,10% 310= 2,62% 262= 4,14% 414= 8,60% 860= 4,66% 466= 2,99% 299= 6,40% 640= 11,78% 1000= 7,89% 789= 8,04% 804= 8,28% 828= 3,18% 318= 8,54% 854= 2,80% 280= 10,22% 1000= 11,96% 1000= 10,28% 1000= 10,47% 1000= 10,93% 1000= 8,22% 822= 13,84% 1000=
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Appendix III: About the Authors
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Jerry Luftman’s experience combines the strengths of practitioner, consultant, and academic. His proficiency in business-IT alignment and IT trends, eighteen books, published research, consulting, mentoring, and teaching/speaking engagements exemplify Dr. Luftman’s expertise and leadership. After a notable twenty-two year career with IBM, he had an exemplary career for almost twenty years as Distinguished Professor, Founder and Associate Dean of the Stevens Institute of Technology Information Systems Programs; one of the largest in the world. Driven by the strong demand for a global executive education program focusing on managing information technology, Dr. Luftman has leveraged his experience as a CIO, IT management consultant, and leading academic, with his strong network prominent IT practitioners and academics, to provide a valuable and innovative offering via the Global Institute for IT Management. Dr Luftman’s project experience ranges from senior management issues through tactical implementation. Dr. Luftman most recently pioneered the vehicle for assessing the maturity of IT-business alignment; where he has a benchmark repository of over one-third of the Global 1,000 companies. He also serves on the Executive Board of several companies, associations, and publications. Dr. Luftman’s last responsibility at IBM, after being a CIO, was a key speaker at their Customer Executive Conference Center in Palisades, N.Y. While responsible for management research, he played a significant role in defining and introducing the IT Strategy and Planning, and Business Process Re-engineering practice methods for the IBM Management Consulting Group. His framework for applying the strategic alignment model is fundamental in helping clients understand, define, and scope the appropriate strategic planning approach to pursue. Dr. Luftman’s annual global IT trends research sponsored by SIM,CIONET, and other CIO associations is recognized internationally as an industry barometer.
Barry Derksen’s career includes positions as research scientist, management consulting, senior management, managing director, director research, manager Architecture & Business Processes and educator. Dr.lec. Barry Derksen MSc MMC CISA CGEIT is associate professor at the Vrije Universiteit in Amsterdam, professor at Novi University of Applied Sciences, research director of the Business & IT Trends Institute (bitti.nl). He worked as manager on several organizations and programmes all related on realizing business value with IT. As management expert he advised several large and medium organizations on IT investments with evidence based research and consultancy (e.g. business case development / six sigma / etc.). Barry is speaker and teacher at several Dutch universities and author of several books. The book ‘Trends in IT, invest in time in the right technology’ is the bestseller with over 300,000 sold copies. Barry previously worked as senior manager within KPMG Information Risk Management. With his company BITTI, he and his colleagues focus on research benchmark, assessment, audit and consultancy / project management. Barry is also manager of Architecture & Business Processes at Stedin, a Dutch energy supplier working on smart grids. Barry’s work area is an expert on Alignment, IT Strategy, IT Trends, strategic Information architecture, IT governance and IT sourcing.
About BITTI The Business & IT Trends Institute (BITTI.nl) is a benchmark, assessment, audit and consultancy organization located in the Netherlands. IT’s goal is to be an added value organization towards Business & IT questions organizations have with the instruments benchmark, assessment, audit and consultancy. These services are
47 delivered on a wide range such as alignment, (cyber) security, value of IT and IT costs, governance and other. dr. Barry Derksen (author of this report) is founder and CEO of BITTI.
About GIIM The objective of the Global Institute for IT Management (GIIM) is to impart a complete, flexible, and immediately actionable set of best practices by an international group of over 250 prominent academics, practitioners, and management consultants, to prepare IT thought leaders and business executives for the challenges and opportunities that lie ahead. The institute provides a comprehensive set of 32 IT management certificates, with each frequently considered as being the single most important educational experience in the attendees’ professional life.
The courses within the 32 respective certificates (130 courses) are delivered face-to-face (online is available) in concert with affiliate IT management associations, individual company groups/cohorts, or universities (where Masters Degrees can also be awarded). The learning opportunities are in close proximity to the job, on a justin-time basis, and integrated into the clients broader learning and development objectives. We partner with our clients to deliver the right solutions to meet their education objectives. See www.globaliim.com.
About CIONET We are CIONET, the biggest community of IT executives in Europe. Bringing together over 4200 CIOs, CTO’s and IT directors from wide ranging sectors, cultures, academic backgrounds and generations, CIONET’s membership represents an impressive body of expertise in IT management. CIONET’s mission is to feed and develop that expertise by providing top-level IT executives with the resources they need to realise their full potential. CIONET develops, manages and moderates an integrated array of tools and services from the online CIONET platform – the world’s first social network for CIOs – to a range of offline networking events, conferences,
workshops and executive education programmes all tailored to top-level management. CIONET also provides exclusive access to the latest research through regular online and offline publications and a number of value adding partnerships with key players from the academic and corporate worlds. Faced with the rapidly changing role of today’s IT executive, CIONET not only helps its members keep up with the pace of change but empowers them to take an active role in shaping the future of their field, always challenging them with “What’s next.”
The world continues to experience profound chances. The economic conundrum endures. Overall, IT is becoming more strategic as organizations around the globe evolve from applying IT to reduce backoffice expenses to leveraging it for innovative revenue generating initiatives. It is clear that the role of IT (and the CIO) is going through a transformation. Some suggest that IT is the business. The purpose of this 4th annual IT trends report produced by the authors for CIONET is to provide important insights on these changes, focusing on the European considerations. It is those organizations and individuals (IT and non-IT) that are prepared who will prosper.
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MOST IMPORTANT IT MANAGEMENT CONCERNS
Global
Europe
1. Business & IT Alignment 2. Business Agility 3. Velocity of change in IT 4. Business Cost Reduction / Controls 5. Business Productivity
3. Business Cost Reduction / Controls 4. Business Productivity 5. Infrastructure Capability
5
MOST INFLUENTIAL TECHNOLOGIES
Global
Europe
1. Analytics / Business Intelligence 2. Application / Software development 3. Data Centre Infrastructure 4. Cloud Computing 5. Enterprise Resource Planning
2. Big Data 3. Customer Relationship Management 4. Cloud Computing 5. Bring Your Own Device