News | Information Technology | October 25, 2016

Digital Brings Fresh Challenges for Three-Fourths of CIOs

Logicalis survey shows distributed IT, shadow IT departments and data security risks are top of mind for IT leaders as businesses respond to threats from digital disrupters worldwide

Logicalis, CIO survey, chief information officers, information technology, digital disrupters

October 25, 2016 — A new study by Logicalis examined the significant challenges facing chief information officers (CIOs) worldwide as they enable businesses in every market segment to respond to threats posed by digital disrupters like Uber and Airbnb. The 2016 Logicalis Global CIO Survey, now in its fourth year, polled over 700 CIOs worldwide. According to the survey, distributed information technology (IT), shadow IT departments and data security are among the biggest issues facing CIOs today.

The study also revealed that the pace of digital transformation is gathering speed, with 73 percent of firms around the world to some extent now calling themselves “digitally enabled.” Overall, the survey showed that digital adoption conforms to an innovation bell curve in which:

  • Digitally enabled innovators, or digital disrupters, now account for 7 percent of businesses;
  • Early adopters comprise 22 percent of businesses worldwide;
  • An early majority accounts for 45 percent of firms, while 22 percent fall into the late majority category; and
  • Laggards, or those not digitally enabled at all, account for just 5 percent of businesses around the globe.

“This speaks both to the huge benefits that digital transformation brings,” says Mark Rogers, chief executive officer, Logicalis Group, “but also to the scale of the challenge posed by digital disrupters and early transformers – while such a rapid transformation almost certainly means big changes for CIOs and IT departments.”

Big Challenges for CIOs 

This rapidly changing environment does indeed pose big challenges for CIOs, the survey found. They have, for instance, less control over IT spending than ever before – 40 percent of CIOs now say they make 50 percent or fewer of their companies’ IT spending decisions.

This trend is also reflected in the frequency with which CIOs are bypassed altogether – with line of business buying technology without involving IT at all. The proportion reporting that this happens often, very often or most of the time has risen from 29 percent in 2015 to 39 percent in 2016.

Distributed IT and the Shadow IT Department 

One result of this loss of control is a move away from centralized IT, with more and more CIOs now operating in “distributed” IT environments. Perhaps surprisingly, this decentralization of IT, which is a natural extension of “shadow IT,” is no longer seen as subversive, however, and is instead viewed as a positive and essential element of digital transformation.

For example, though the vast majority of CIOs (83 percent) report that line of business departments now employ IT people whose role is to support business function-specific software, applications and cloud services – essentially acting as shadow IT departments – CIOs seem content to work with them. In fact, more than one-fifth of the world’s IT leaders (22 percent) report working with these “shadow IT departments” on a daily basis, while 41 percent report doing so at least weekly.

“The challenge for IT departments and CIOs is to find ways to support these specialists effectively,” said Vince DeLuca, chief executive officer, Logicalis US, “securing the infrastructure, applications and vital data without stifling the ‘shadow innovation’ their skills support.”

Security Challenges 

Together, the combination of the Internet of Things (IoT), distributed IT and the increased pervasiveness of applications into the very core of the business – along with an ever-evolving threat landscape – represents a perfect security storm.

As a result, the CIOs surveyed cited security as far and away the biggest challenge related to the increased use of cloud services.  More than three quarters (78 percent) pointed to security as a challenge, with related issues like data sovereignty (47 percent) and local data regulations (37 percent) coming in second and third.

Looking at security threats in more detail, CIOs expect the prevalence of increasingly sophisticated threats (61 percent) to be the No. 1 issue for the next 12 months, while issues like ransomware and corporate extortion were highlighted by more than half (56 percent).

Looking Outside for Help

The sheer range of issues facing CIOs as a result of their organizations’ digital transformation means the pressure to hand off day-to-day technology management, to focus on strategy, and to reframe IT departments as internal service providers is now greater than ever.

In response, CIOs are increasingly seeking partner-led and partner-delivered services. This year, one-fourth (24 percent) of the CIOs surveyed say they outsource most (more than 50 percent) of their IT, while the number outsourcing none or just 10 percent of their IT has dropped dramatically – falling respectively to 9 percent (compared to 13 percent in 2015) and 19 percent (compared to 26 percent in 2015).

“As digital innovation accelerates, the winners will create new customer experiences, make faster and better decisions through smarter collaboration, and create new digital business models and revenue streams securely,” Rogers said. “CIOs and IT leaders can play a leading role in enabling that innovation, drawing on skills from insightful partners to help shape their businesses and lead their sectors through the application of digital technologies.”

For more information: www.logicalis.com

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