Demands to reduce costs and the increasing need to innovate and transform business operations through IT will see outsourcing firms struggling to prove their worth, according to the latest KPMG report.
While IT outsourcing is part of 'business as usual' CIO strategies in the aftermath of the recession, two-thirds of the 450 technology leaders polled by the consultancy said they will pay "far more attention" to what they are getting for their money.
Getting value from suppliers is by far the main concern for 80% of those surveyed, followed by cost optimisation a distant second with 58% of responses and portfolio management (51%).
Availability of in-house skills is the most important element of the value proposition CIOs are seeking, cited by 90% of respondents and followed by applications and processes with 75% and 69% respectively, ahead of hardware with 21%.
"Successful IT value creation needs to integrate and align the organisation's technology, people and processes. One of the major potential pitfalls is the inability of many organisations to find suitably skilled people to take this forward," said KPMG Advisory partner Bryan Cruickshank.
"Often, precious time to create value is lost as organisations embark on ambitious projects with the wrong people at the helm. CEOs and CIOs need to ensure that sufficient importance is attached to this aspect during project initiation," said Cruickshank.
Though reducing cost is no longer the top priority, the report notes that not all CIOs are moving from an operational focus to a transformational one. For example, financial sector IT teams are heavily involved in risk and compliance issues, while their peers in manufacturing claim to be innovating and transforming their businesses through IT.
Balancing innovation and transformation
According to the report, striking a balance between these two sets of priorities is part of a new reality whereby regulatory objectives are combined with commercial and business goals.
"This is leading to a fundamental change in the way in which businesses approach the twin challenges of innovation and transformation within their organisation," said Cruickshank.