Global survey of almost 1,000 technology professionals reveals IT operations need significant overhaul

“Transformative” IT projects underway or completed at more than half of firms

Regardless of company size or geographical location, a majority of companies worldwide have realised that IT operations are in need of dramatic improvements to better deliver services to the business, and have undertaken measures to “transform”. This is the main finding of IT Transformation: Creating a strategy for success, a briefing paper published by the Economist Intelligence Unit and sponsored by Cisco. The paper is based on a survey conducted in January 2008 of 985 information technology professionals worldwide who were asked to share their experiences and opinions regarding IT transformation.

As businesses continue to expand globally, and non-IT workers grow savvier about technology, the increasing convergence of IT and business processes is challenging the traditional organisational model, where IT and business units operate separately. Efforts to reshape IT could include changing the department’s operating model (from centralised to decentralised, for example), reallocating budgets to hold business units more accountable for IT projects and shifting resources to allow for cross-functional teams that include IT and other departments.

According to the survey, 27% of companies are currently conducting an IT transformation programme to align better with business initiatives (such as faster growth, risk mitigation, corporate sustainability and so on). Another 27% have recently completed one or more of such projects, while 30% are considering a series of changes to their IT organisation and process. In a show of support for these efforts, 42% of respondents say they understand how IT transformation would benefit them and their department; while more than one-quarter (28%) have personally advocated for change.

Some of the report’s main findings include:

• Respondents are in favour of pursuing IT transformation. More than one-half of respondents have either recently completed an IT transformation programme or are in the process of doing so, and 30% are considering one. Only 18% feel that things are fine as they are or that the disruption would outweigh the potential benefits.
• Better relations with the rest of the business. As part of this transformation, IT organisations are focusing on their relationships with their non-IT business units. Fifty-seven percent of respondents said that improving IT’s responsiveness to new business requirements was their company’s top IT objective for 2008, more than any other response.

• Transformation, though, may require significant change. IT operating models-the method by which IT departments are organised and managed-play a key role in the IT department’s ability to serve the overall business. However, there are mixed reviews when it comes to the effectiveness of these approaches, indicating that enterprise IT departments need to reconsider their management frameworks.
• To make transformation effective, frontline workers need up-to-date information about company and division objectives. For example, 49% of chief information officers (CIOs) say that contributing to business process optimisation is one of three top objectives in 2008. But this perspective is shared by just 30% of frontline workers in IT. Meanwhile, IT architects (59%) are significantly more likely than CIOs (45%) to think that cost cutting is an objective in the next two years.
• Companies that have completed IT transformation initiatives report cost savings and smoother operations as a result. Forty-six percent of all respondents expect IT transformation efforts to result in cost savings and among companies that have recently completed such an initiative, 43% of respondents cite this as a top benefit, along with smoother, more flexible operations (40%), improved communication with customers and partners (32%), and increased profits (31%). In addition, more than one-quarter say IT transformation has improved their firm’s ability to respond to regulatory requirements and 25% report improved IT operational efficiencies. Only 2% of companies that have completed an IT transformation initiative report no tangible benefits.

“Many IT departments around the world are rethinking how they deliver services to the business and this underscores IT’s critical importance to overall business strategy,” says Debra D’Agostino, senior technology editor at the Economist Intelligence Unit.

Christian Oecking, who heads global operations at Siemens IT Solutions and Services and was interviewed for the report, agrees: “Transformation is key for turning IT from a cost centre to a strategic partner.”

IT Transformation: Creating a strategy for success
is available free of charge at
www.eiu.com/sponsor/cisco/ITtransformation/

Press enquiries
Joanne McKenna, press liaison, +44 (0)20 7576 8188; joannemckenna@eiu.com
Debra D’Agostino, senior technology editor, + 1 212 698 9751 debradagostino@eiu.com

About the survey
The survey, carried out in January 2008, polled 985 respondents worldwide from 21 industries. Twenty-three percent of respondents have C-level or senior management titles, 26% were mid-level managers (including IT architects), and 50% were frontline IT workers (such as operations staff). More than one-half (51%) of respondents work for companies with 1,000-4,999 employees; 31% work for firms with more than 10,000 employees. Thirty-five percent of respondents are from western Europe, 21% from Asia, 15% from north America, 11% from the Middle East and 13% from Latin America.

About the Economist Intelligence Unit
The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of more than 700 analysts and contributors, we continuously assess and forecast political, economic and business conditions in 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.