Gartner is urging CIOs to change their IT budget to support a nexus of change arising from cloud, social, big data and mobile technology.
The analyst expects traditional IT will have to split its budget to support these emerging technologies along with maintaining existing systems.
Gartner predicts IT budgets will grow 1.4% driven by the take-up of mobile technology like smartphones and tablet computers. But rather than use 70% of their annual IT budget on keeping the lights on, Gartner is recommending IT directors and CIOs aim to allocate 50% of their budget to new projects.
Addressing 4000 CIOs at the opening of the Gartner Symposium in Barcelona, Gene Hall, Gartner CEO, warned delegates that organisations are having to adapt, given the state of the economy. In fact, data from the analyst firm shows that 85% of CEOs expect their organisations will be impacted by the economic conditions.
He said: “We are living in an environment of persistent change. CEOs realise they need disruptive information technology.” Hall believes CIOs will drive growth in their business.
Changing the face of IT
IT can no longer be prescriptive, according to Gartner head of research, Peter Sondergaard. While the IT department has traditionally set standards for the company, it must now support changes to the business that are occuring faster than the standards can be defined.
Gartner has identified four technology areas that businesses should grasp to grow. These four technologies, a nexus of forces according to Gartner are: cloud, social technologies, mobile and big data.
Quoting Winston Churchill, Sondergaard said: “This is the end of the beginning.”
In his address to CIOs at the conference he said: “You need to design your business around mobile. By 2016 two-thirds of workforce will own a smartphone.” Mobile technology changes applications and how they are delivered. Gartner expects 300 billion apps will be downloaded by 2016. Sondergaard believes monolithic software providers will struggle.
He said: “Some CIOs are placing orders of tens of thousands of iPads. By 2018 70% of mobile workers will use hybrid/tablet devices.”For the IT department, asset ownership will change. Gartner predicted that half of non PC devices by 2016 will be purchased by employees and by 2020 half of all devices will be owned by employeees. To support this change Sondergaard said: “You need to design for openness.”
Gartner expects that by 2014, a fifth of the top service providers will be displaced.
HP, SAP. Cisco, Microsoft and IBM are challenged. Sondergaard questioned whether these suppliers are putting the the brakes on a company's progress. He said: “Disruptive vendors will change how IT is delivered.”
Apart from when deployed on tablets Sondergaard said: “90% of businesses will bypass Windows 8 until 2013.
Social media is the second Gartner recommends users focus. Sondergaard said: “Social computing is moving to the core of business operations, changing management and how you motivate people.
Sondergaard believes that internal applications could exploit external social application. He added: “LinkedIn could be more accurate than your HR data.”
According to research from Gartner, CEOs admit they sometimes lack critical pieces of business insight. Sondergaard said leading companies will be valued by the quality of their predictive algorithms. He said: “Infocentric companies have doubled in value.”
Sondergaard believes there exists an opportunity to create a new information layer in the economy, where businesses are able to exploit and monetise the data they gather.
However he warned that CIOs will need to find the skills.
He warned: “There will be 1.3 million IT jobs in Europe in Big data, but our education systems are failing us. Only a third of Big Data jobs will be filled.”
Along with lack of big data skills, according to Sondergaard companies are missing key developer skills, for core back-end developer work. "We have difficulty attracting young people to run complex infrastructure. Worsened in some countries where we have gone for low-cost outsourcing because we have cut off the career path of junior developers. Large companies need to be more involved in the education process."
Cloud computing is the fourth disruptive technology in Gartner's nexus. Sondergaard said: “Today we have a clear distinction with what the business does in the cloud and IT. IT is still 80% private cloud, as it does not trust the public cloud, but individuals ignore the risk.” The security excuses IT uses against using public cloud services is holding IT back, according to Gartner.
The Chief Digital Officer
Sondergaard believes technology spending will be embedded in every product sold. As manufacturing firms creates smart products and digitise their supply chains, the spending on technology outside IT increases, he said. “Digitisation is becoming pervasive. Organisations are moving spending to digital. Every budget is an IT budget.”
As enterprises become digitised,they will create a role of chief digital officer (CDO), according to Sondergaard, responsible for the digital strategy of the company.
This role may be part of the CIO's responsibility because it will involve integrating the IT systems and processes that other areas of the business have acquired. It will need overall control of areas that have traditionally been the focus of IT such as a common data architecture, a framework for security and risk, an enterprise architecture.
Sondergaard said the role of CDO today is closest to that of a head of ecommerce who is responsible for customer environments. But the role will evolve as traditional companies start exploiting their data, such as the electricity firm providing consumption data from smart meters.