IT to Focus on Three Areas in 2014 --
Redefining the IT Value Proposition, Enhancing the Enterprise
Information Architecture, and Realigning Talent
IT leaders are striving to reinvent themselves in 2014, as they
struggle to support innovation-based corporate growth efforts with
improved information and analytics, according to 2014 IT Key Issues
research from The Hackett Group, Inc. (NASDAQ: HCKT). At the same
time, IT organizations are facing another year of staff cuts and
only small budget increases, in the face of moderate revenue growth
expectations.
According to The Hackett Group's research, companies are
focusing on three IT strategy areas for 2014: redefining IT's value
proposition, including developing business relationships necessary
to support innovation and adopting metrics to better measure IT
value contribution; development of enterprise information
architecture and analytics capabilities to help their company
support top-line revenue growth; and talent realignment.
The Hackett Group's research showed that IT organizations are
being expected to improve efficiency in 2014, as they consistently
have since 2008. Budgets are expected to increase by 1.7 percent
and staffing is expected to be cut by 2.0 percent. But once the
expected enterprise growth rate of 6.7 percent is factored in, the
result is a productivity gap of 8.7 percent and an efficiency gap
of about 5 percent for 2014. These gaps will require them to focus
on reducing IT costs in traditional IT delivery service areas, and
redeploy resources so they can largely self-fund any reinvention
and transformation efforts.
"IT organizations have a long history of challenges keeping up
with the changing needs of the business. That's truer today than
ever before. As companies focus on improving innovation to drive
growth, IT must shift towards a true service mentality which
enables enterprise strategy and deepens the IT/business
partnership. It's no longer enough to be simply a utility to the
enterprise, with a strict focus on low cost," said The Hackett
Group Global IT Advisory Practice Leader Scott Holland.
"Changes in technology have also undermined the total control
that IT used to have over critical assets and services," Mr.
Holland explained. "Technology has become pervasive, and there are
so many new options available to the business, from the cloud to
SaaS to tablets and smart phones. IT needs to up its game and
change its mindset. A deeper understanding of the business is
required, as is the ability to translate that knowledge into
technology solutions that are virtually transparent to the user.
Then IT needs to make sure it all hangs together. "
Shifting and Better Quantifying the IT Value
Proposition
IT has historically had significant difficulty modeling,
projecting, and measuring its value contribution to the enterprise.
With companies looking to technology as a source of innovation and
competitive differentiation, this weakness must be addressed, The
Hackett Group's research found.
The study identified a range of initiatives currently underway
to change IT's value proposition. First and foremost, it's critical
for IT to collaborate more effectively with other business
functions and departments, identify new opportunities, and keep
projects on track. Similarly, IT planning processes must be aligned
with enterprise strategy and operational plans in order to
establish a direct connection between IT goals/priorities and
business success.
According to The Hackett Group's research, the most significant
change being made in this area is in key performance indicators
(KPIs) and performance reporting. IT organizations are finding that
tracking basic operational IT metrics is no longer sufficient. IT
leaders have to be able to discuss the transformative impact of
their efforts: the amount of value expected, the effect of IT
projects on business outcomes, and the importance of technology to
business strategy, including innovation. This need is driving
significant changes in performance measurement.
Develop Enterprise Information Architecture and Analytical
Capability
To drive innovation, companies are more and more relying on
business insights garnered from the wealth of information they
collect. This trend has profound implications for IT organizations,
and explains the high priority given to business
intelligence/analytics and information quality by business services
organizations. According to The Hackett Group's research, IT
leaders rank BI/analytics as their top investment priority. Master
data and data quality is second.
As the custodian of the enterprise information architecture,
IT’s business value contribution is a direct function of its
ability to develop and maintain a robust information architecture
that meets business needs. While master data is owned by the
business, IT plays a pivotal role in establishing effective master
data management. The same is true for analytics, where IT is
instrumental in implementing and supporting tools and ensuring the
integrity of source data.
Moreover, the demands on IT are not limited to supporting the
structured data components of the enterprise information
architecture. The volume of unstructured data from a wide range of
sources will continue to grow dramatically, severely testing IT’s
ability to keep up with demand.
The Hackett Group's research showed that data management
standardization levels currently trail the process and technology
components of their architecture. Recognizing the importance of
data quality, companies expect to focus on data standardization
during the next two to three years, after which The Hackett Group
estimates they should be largely caught up.
Realign Talent
Without talent of the right caliber, transformation and
recalibration of the IT value proposition cannot succeed. The best
that IT can hope to achieve is incremental efficiency improvement.
The Hackett Group's key issues research identified several talent
management techniques that IT organizations plan to deploy or
enhance in 2014. To address long-term talent issues, many are
emphasizing initiatives such as: rethinking job profiles and
competencies, strategic workforce planning, and functional
succession planning. More tactically-oriented techniques such as
reward programs and employee performance evaluation are also being
prioritized, but at a lower level.
The central importance of talent reflects a broader issue in the
IT field today: a structural mismatch between in-demand roles and
the skills and experience of the talent available in the
marketplace. The Hackett Group believes that a comprehensive
strategic workforce plan is required if IT organizations are to
avoid the anticipated talent shortage associated with the IT
service delivery model of the future..
"CIOs are struggling to meet demands for revenue-driving
innovations with IT organizations that, during the Great Recession,
were stripped down to do not much more than support back-office
transactional systems," said The Hackett Group IT Transformation
Practice Leader and Principal Mark Peacock. "Every company's IT
transformation will be different. But the three themes we've
identified will be front and center on most companies'
transformation roadmaps."
The Hackett Group's 2014 IT Key Issues research is based on a
study conducted in late 2013. Study participants included
executives from over 150 large companies in the US and abroad, on
their business strategies, revenue and budget expectations, and key
initiatives for 2014. A complimentary copy of The Hackett Group's
research insight, "Reinventing IT to Support Sustainable,
Innovation-Based Growth," is available with registration at this
link:http://www.thehackettgroup.com/research/2014/pr/keyissues-it/.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT), a global strategic business
advisory and operations improvement consulting firm, is a leader in
best practice advisory, business benchmarking, and transformation
consulting services including strategy and operations, working
capital management, and globalization advice.
Utilizing best practices and implementation insights from more
than 10,000 benchmarking studies, executives use The Hackett
Group's empirically-based approach to quickly define and implement
initiatives that enable world-class performance. Through its REL
group, The Hackett Group offers working capital solutions focused
on delivering significant cash flow improvements. Through its
Archstone Consulting group, The Hackett Group offers Strategy &
Operations consulting services in the Consumer and Industrial
Products, Pharmaceutical, Manufacturing, and Financial Services
industry sectors. Through its Hackett Technology Solutions group,
The Hackett Group offers business application consulting services
that help maximize returns on IT investments. The Hackett Group has
completed benchmark studies with over 3,500 major corporations and
government agencies, including 97% of the Dow Jones Industrials,
84% of the Fortune 100, 87% of the DAX 30 and 48% of the FTSE
100.
More information on The Hackett Group is available: by phone at
(770) 225-7300; by e-mail at info@thehackettgroup.com.
The Hackett GroupGary Baker, 917-796-2391Global Communications
Directorgbaker@thehackettgroup.com
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