Analytics and Talent are Two Top Priorities
for 2018; IT Budgets Expected to Grow by Nearly 2 Percent As
Spending Shifts Away from “Run” and Towards “Build”
Support for enterprise analytics and development of IT talent
are two top priority areas for CIOs in 2018, as companies seek to
unlock the value of digital business, according to new key issues
research from The Hackett Group, Inc. (NASDAQ: HCKT). But
companies’ efforts to deploy and derive value from digital tools
are likely to be handicapped by low capability maturity in these
two key areas and a lack of initiative to improve over the coming
year.
The research also found that IT budgets are expected to rise by
1.8 percent in 2018. In addition, IT work and FTE resources are
expected to shift in 2018, growing most in business units and
centers of excellence, largely in support of digital transformation
efforts. Meanwhile, outsourced FTEs are expected to contract. At
the same time, IT organizations are shifting allocation of their
operating budgets away from running operations and towards planning
and building new systems.
A complimentary version of the research is available for
download, following registration, at this link:
http://go.poweredbyhackett.com/keyit1801sm.
Strategic Disconnects in Analytics & Talent
At the heart of the challenge of unlocking the value of digital
business is a strategic disconnect between expectations and
capabilities, the research found. Nearly three out of four study
participants in The Hackett Group’s 2018 Key Issues research agreed
that digital transformation will fundamentally disrupt their
industry and the competitive landscape in which they operate, while
82 percent expect it to fundamentally change the operating model of
their business. But the majority (60 percent) lack confidence in
the resources and competencies of their businesses to execute their
transformation strategy. Even more concerning to IT leaders, 64
percent of respondents express a lack of confidence in their IT
organization’s ability to support transformation execution.
Enabling the enterprise-wide use of analytics for decision
support is a top enterprise priority and business support objective
for IT in 2018. Study participants predict a mainstream
(widespread) adoption rate of advanced analytics technology over
the next 2-3 years that is 11x the current adoption rate – the
highest growth rate of any digital tool. Data visualization tools,
and adjunct of analytics, had the second-highest growth rate.
However, enterprise analytics capability improvement is not among
IT’s most common planned improvement initiatives for 2018 – only 29
percent report ongoing or planned analytics capability improvement
efforts in the coming year.
The Hackett Group’s research recommends that IT organizations
focus on improving enterprise analytics capabilities in 2018,
including stronger governance around data management and
architecture practices as well as supporting the foundational tools
that help enable analytics in the business. IT leaders need to
field more resources, build more analytics platforms, and manage
the data to feed machine learning algorithms, to help companies
unlock the value hidden in enterprise data.
The Hackett Group’s research also found that in IT and across
the enterprise access to talent will rival cybersecurity as the
greatest business threat within the next two years. Aligning talent
with future business needs is a top three priority for IT. However,
the research again found that efforts to improve talent are not
getting commensurate attention in 2018. Only 45 percent of study
respondents across the enterprise have talent improvement
initiatives underway or planned, and only 21 percent of IT leaders
report plans to align IT skills and talent with changing needs of
the business.
It’s critical that IT organizations improve their ability to
develop and acquire talent, particularly in data management,
advanced analytics and customer-centric design, the research found.
Many companies are seeking to design services, products and
delivery channels to enable digital customer experiences, requiring
IT to have more customer-oriented design experience, including
customer journey mapping and design thinking.
“These two areas are fundamental to digital transformation, and
the wide chasm between their perceived importance and the ability
to implement is very disconcerting. But it’s not hard to
understand,” said Richard Pastore, The Hackett Group senior IT
research advisor. “Implementing analytics is taking a back seat to
more fundamental IT infrastructure efforts, like business platform
modernization. And the challenges in implementing analytics
effectively, including data architecture and management, are deeply
embedded in enterprise infrastructure.”
According to Scott Holland, The Hackett Group principal and
Global IT Executive Advisory Practice leader, “The impact of
digital transformation on talent is also a critical factor. IT
roles are being transformed by digital – more than one in four IT
roles are already affected. Current staff are aging out and
millennials show little interest in employers that have not fully
embraced digital, and in working for companies located outside of
technology innovation centers such as the U.S. West Coast. Data
savviness, agility/ability to change, and creativity are
increasingly critical skill sets that are lacking in most IT
organizations. Companies that don’t address staffing challenges
more aggressively will suffer, as they fall behind competitors in
leveraging new tools, processes and business models.”
Shifts in IT Spending
IT organizations will be getting funds in 2018 to fuel
transformation. Study respondents expect operating budget increases
of 1.8 percent in 2018. This is a significant contrast with other
business services areas covered by The Hackett Group. Finance,
procurement, and HR are all expected to see flat or declining
budgets in 2018, despite projected revenue growth of 3.6
percent.
The Hackett Group’s research predicts a significant shift in IT
spending allocation, away from operational or “run” processes such
as application and infrastructure maintenance, and towards
processes associated with planning and building systems. Spending
on plan and build processes is expected to rise by just over 5
percent, while run process spending is down 0.6 percent, a
significant reduction given that is currently the largest spend
category, representing 76 percent of IT’s annual operating budget.
This shift should be an ongoing process, The Hackett Group
recommends that IT organizations constantly strive to improve the
efficiency of “run” processes, to self-fund their own
transformation efforts.
The research shows a shift in the location of IT resources as
well. The largest 2018 increase in IT staff and workload will occur
in the business units, not in corporate IT. IT leaders anticipate a
reduction in staff that are outsourced, with the outsourced
workload remaining relatively flat.
The Hackett Group’s 2018 IT Key Issues research, “Driving Value
from Transformation,” is based on results gathered from more than
160 executives in the US and abroad, most at large companies with
annual revenue of $1 billion or greater. A complimentary version of
the research is available for download, following registration, at
this link: http://go.poweredbyhackett.com/keyit1801sm.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual
property-based strategic consultancy and leading enterprise
benchmarking and best practices digital transformation firm to
global companies, offering digital transformation including robotic
process automation and enterprise cloud application implementation.
Services include business transformation, enterprise
analytics, working capital management and global
business services. The Hackett Group also provides dedicated
expertise in business strategy, operations, finance, human capital
management, strategic sourcing, procurement and information
technology, including its award-winning Oracle and SAP
practices.
The Hackett Group has completed more than 15,000 benchmarking
studies with major corporations and government agencies, including
97% of the Dow Jones Industrials, 89% of the Fortune 100, 87% of
the DAX 30 and 59% of the FTSE 100. These studies drive its Best
Practice Intelligence Center™ which includes the firm's
benchmarking metrics, best practices repository and best practice
configuration guides and process flows, which enable
The Hackett Group’s clients and partners to achieve world-class
performance.
More information on The Hackett Group is available at:
www.thehackettgroup.com, info@thehackettgroup.com, or by
calling (770) 225-3600.
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The Hackett GroupGary Baker, 917-796-2391Global Communications
Directorgbaker@thehackettgroup.com
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