Forecasting the Future of Enterprise IT

 
 
By Allan Alter & Jeanne Harris  |  Posted 2012-07-17
 
 
 
By Allan E. Alter and Jeanne G. Harris

If you could pick one business function to rebuild completely from scratch, which would it be? Accenture posed this provocative question to 152 IT executives and 164 other executives in four countries. The top pick by far, especially among technology executives, was the IT organization. Half of the respondents to our survey also said they are or soon will be revamping enterprise IT. 

Executives are eager to overhaul their IT departments, but what will tomorrow’s IT organizations look like after they are overhauled? What will be their roles, responsibilities and priorities?

Most executives are still scratching their heads. Sixty-eight percent don’t have a clear vision of what the IT function will look like by 2016. Even more lack a clear vision of the future role of the CIO.

Who could blame them? There are plenty of questions about how cloud computing, mobile systems and consumer technologies will affect IT organizations.

The uncertainties extend beyond technology. IT organizations are affected by the same mercurial social, political and economic forces that shape the business world. Planning for a flat, connected and tech-enabled future, without considering what businesses will require from IT as a result of shifting social, economic and political forces, is at best naïve and at worst dangerously myopic. 

Global integration and economic cooperation aren’t givens. We hope they continue, but we may not be that lucky if today’s economic crises and geopolitical tensions intensify and lead to a more fragmented world. That could force companies to cut back on foreign IT labor and vendors, and might cause executives to restructure business and IT operations.

Take consumer technology. It could continue to transform everyday life and IT expectations.  Or, data security and privacy worries could make people and companies wary of the Internet. It’s difficult to imagine a world without the Internet, but some executives are trying.  Twenty-seven percent of the executives we surveyed expect to start seeking alternatives to the Internet by 2016.

Another uncertainty: how competition from multinationals based in the developing world will challenge established companies and the way they manage IT. Forty-two percent of the IT executives we polled think global multinationals are likely to radically lower their IT costs. That will catch the eye of your CFO.

No wonder it’s so hard to envision the future of the IT organization and the CIO. There are many possible futures, and each could affect IT priorities and operations.

How can your IT leadership team start planning your company’sfuture IT organization? By working with other executives to envision the possible future business environments. Then they’ll have to think about the pressures each will place on your IT organization, and the different decisions that will compel IT leadership to make.

The following 10questions will help executives start making connections between future visions and basic IT decisions about organizational structure, IT investments, skills and technologies such as cloud computing. Some questions focus on the fundamentals of how IT creates value. Others are more timely questions for running tomorrow’s IT organization. Together, they can help you envision your revamped IT organization, anticipate possible changes and design a more agile IT function.

 

1. Why will IT matter to my company? Companies can do more with IT than ever before, but they are relying less often on their IT organization to provide and decide on technology. Clarifying the purpose of the IT organization will focus the redesign effort.

If the future is globally connected and extremely competitive, IT organizations will help industry leaders stay on top through innovation and analytics. Back-office IT will become a globally managed commodity. But if the world becomes fractured, disconnected and more insecure, IT can still earn its keep—by helping companies restructure, reduce their business costs and keep operating through the transition.

2. What would our IT organization look like if we could rebuild it from scratch? Would any company design its IT organization and systems to look just as it does now? Probably not. So what would IT look like if the CEO and CIO could do it over, without any constraints?

Think of the best-fitting organizational structure for the futures you are exploring. Depending on the legal, political and technical environment, it may be a streamlined global IT organization supervising a cloud-and-outsourcing services model, or a decentralized IT department with powerful local IT units. The security function might need a more controlling hand if crippling cyber-attacks are a threat.

3. How will our IT executives and other executives share and approve technology decisions? The IT chain of command is getting crowded. Social media and analytics are pulling chief marketing officers into more IT decisions. Companies are hiring chief innovation and chief digital officers. Employees are comfortable making IT decisions for themselves.  

Executives need to focus on governance, not fight for power. This question helps envision which IT decisions need to be made on global or country level, and which technology decisions are best made by employees and line managers instead of the IT function. It also helps answer questions about the CIO’s role, and whether IT needs to be overseen by a particular executive, such as the chief strategy officer or a chief risk officer.

4. How do you get all available data anywhere it’s needed? In the era of smartphones and analytics, people expect all kinds of data to be available everywhere, on any device. It doesn’t matter whether it’s structured transactions or unstructured video, massive databases or a few key insights. IT’s job is to figure out how to bridge old and new architectures so usable, secure data can get to where it needs to go, securely and reliably.

Those expectations will be scaled back in any future where legal restrictions, security problems and service disruptions get in the way. Even so, IT will need to find a way, in any future, to come as close as possible to the ideal of ubiquitous data and insight.

5: Are we winning or losing the fight for information security? IT’s future will be greatly affected by the severity of the cyber-security problem. Will companies and governments keep cyber-crime a manageable problem via technological advances and international cooperation? If so, then security fades into the background. 

But what if cyber-crime, or even cyber-warfare, grows out of control? Then it’s no longer business as usual for companies, their customers and IT functions. If things get bad enough, companies will cut back or redesign many Internet-dependent activities and processes. IT departments will focus on creating alternatives to today’s Internet-based network infrastructure to minimize the damage.

 

6: What kinds of cloud services will dominate? Some futures are friendly or hostile to cloud services. A flat, connected, unregulated world favors public cloud computing and services. There’s nothing to stop companies from using global cloud services anywhere there is high-speed broadband.

However, companies may be forced to use private clouds or local services if tight data regulations, protectionist economic policies or the establishment of national Internets interfere with using global cloud services. And while large cloud companies can afford to invest in state-of-the-art security and reliability, that won’t matter if their customers can’t safely transmit their data to a public cloud.                                                                        

7: How urgently must we accommodate consumer technologies? Consumer IT is where lifestyle, business and innovation intersect, and that makes it an unpredictable phenomenon for IT departments. It’s hard to visualize what social networks and smartphones will be able to do in five years—and even harder to anticipate what new applications employees will want to use.

Nevertheless, IT planners can think about whether demand for consumer IT will require organizations to accommodate employees and experiment with new trends. Cost, broadband and mobile network access, the pace of innovation, access to consumer applications and data from other countries, censorship, and confidence in IT security will all affect the supply and demand for consumer IT in the workplace and the market.

8: Which IT skills will we needto succeed, and where will we need them? Ask this question after answering the others. Start by dividing IT activities into leading, managing, designing, building, analyzing and operating. Then ask what needs to be done, and which skills will be needed where.

For example, what needs to be managed? Service providers? Infrastructure? Where are they managed: globally or locally? Take the design side of IT: What skills will architects and network engineers need to design a cloud-server hybrid or to migrate to a proprietary network? What kinds of backgrounds best prepare a leader for fostering innovation: leading a centralized or decentralized environment, or managing a security crisis?

9: Where willIT talent come from? Today, businesses assume they can tap into a pool of IT professionals in low-cost locations or easily move IT employees across borders. But what if globalization unravels, new regulations prevent you from tapping foreign talent pools or long-distance collaboration becomes difficult? What if businesses can’t find local workers when required for security or cultural reasons?

If companies aren’t permitted to import IT talent or use offshore services, they will need to invest more in training at home or in relocating workers. More companies will have to work with universities to produce job-ready graduates.

10: How will our spending priorities change? At the end, step back and confirm what each future means for your budget. In each future you are exploring, where will you need to invest to achieve business goals, meet operational needs or legal requirements? Will it be in infrastructure, applications, services orthe workforce? Or, in some combination of these?

Also, where can you reduce spending, either because lower-cost options are available or because the need has declined? In some futures, reducing IT expenses—or giving employees and managers direct control of IT-related spending—will become an important priority in its own right.

Don’t take for granted that the future will be flat, connected and technology-friendly. Don’t assume tomorrow’s business and IT environment will be a continuation of today’s. The world often changes in unpredictable and unlikely ways, and it’s not just technology that changes. Planning your future IT organization on a single future, without considering others, is a dangerous move.

Allan E. Alter is a Boston-based research fellow at the Accenture Institute for High Performance.Jeanne G. Harris is a Chicago-based senior executive research fellow at the Accenture Institute for High Performance and the co-author of Competing on Analytics and Analytics at Work.