Predictions: People & Process Trends - 2015
The global economic headwinds in 2015 will constrain IT budgets; yet more business executives recognize the need for collaboration with IT and for IT to be included in the strategic initiatives. To address both issues IT executives must examine the people and process issues for productivity improvements. Externally IT executives will have to work with non-IT teams to improve and restructure processes to meet the analytics and mobile/social requirements that demand more collaborative, interactive and predictive real-time information. Simultaneously, IT executives will have to address the data quality and service level concerns that impact business outcomes, productivity and revenues so that there is more confidence in IT. Internally IT executives will need to increase their focus on automation, operations simplicity, and security so that IT can deliver more (again) at lower cost while better protecting the organization from cybercrimes.
As mentioned in the Experton Group research report "IT and the Global Economy – 2015" the global economic environment will remain weak outside of the U.S., thereby keeping IT budgets contained or shrinking. Additionally, the unexpected collapse of oil prices to below breakeven for some drilling sites (along with the plunge of the Russian rouble and other oil-driven currencies) will ripple through multiple industry sectors causing revisions to strategies, revenue projections, budgets, and IT initiatives and staffing. Therefore, IT executives must invest in process improvements to help contain costs, enhance compliance, minimize risks, and improve resource utilization. Below are the top dozen areas Experton Group believes will be the focus of people and process improvement initiatives in 2015.
Automation/simplicity – Productivity in IT operations is a requirement for data center transformation. To achieve this IT executives will be pushing vendors to deliver more automation tools and easier to use products and services. Over the past decade some IT departments have been able to improve productivity by 10 times but most lag behind. In support of this, staff must switch from a vertical and highly technical model to a horizontal one in which they will manage services layers and relationships. New learning management techniques, sensors and systems will be needed to deliver content that can be grasped intuitively. Furthermore, the demand for increased IT services without commensurate budget increases will force IT executives to pursue productivity solutions to satisfy the business side of the house. Thus, analytics software for IT, automation software, virtualization techniques, and integrated solutions that simplify operations and/or prevent potential problems from occurring will be attractive initiatives for many IT executives.
Chargebacks – The movement to clouds is enabling the implementation of chargebacks and cost accountability. IT executives will need to embrace this and gain buy-in from the executive management team to roll this out across the board so that there is accountability and IT cost containment becomes a performance measurement for line of business executives. IT executives that are able to implement financially-meaningful chargebacks will be better at linking IT expenditures to business initiatives and thereby improve funding sources and enable better allocation of IT resources. However, while chargebacks are gaining momentum across all industries, there is still a long way to go, especially for in-house and hybrid clouds, systems and solutions.
Cloud Management – The inclusion of clouds into the IT management mix has complicated the management of operations. Regardless of whether IT is the cloud service provider or outsources it or both, IT has assumed a user and vendor relationship management role. This will require trained staff to address requirements gathering, analysis, and priorities plus brokering of services and management of the procurement and delivery cycles. IT should have been performing these functions anyway but most have not; thus, the shift to cloud computing will have a major impact on organizational structures and job descriptions, roles and responsibilities.
Compliance – Once again thousands of new regulations take effect on January 1, making compliance even tougher. Keeping up with the constant change is not only a major challenge but also can be a major risk exposure. The Obama administration plans on initiating more executive orders in the new year and the Republican-led Congress anticipates breaking the legislative logjam that has existed over the past few years. Thus 2015 has a high probability of being a growth year for regulatory changes – and this is just in the U.S. alone. With the global economic uncertainties hitting most countries, it is highly likely that new protectionist legislation will crop up around the world. Thus, IT executives will be hard pressed to keep up with compliance requirements globally and to improve users' support for compliance. IT executives will need to work with auditors and regulators to find ways to be more collaborative and proactive to reduce the cost of compliance.
Data quality – An ongoing study by Experton Group and Principal Consulting on the negative business outcomes of poor data quality finds a majority of users find data quality suspect. This has been confirmed by other studies on data quality. Most respondents believe inaccurate, unreliable, ambiguously defined, and disorganized data are the leading problems to be corrected. This was partially addressed in 2014 by some users that looked at data confidence levels in association with the type and use of the data, but the surface is just being scratched. Moreover, the increase in reliance on analytics and big data findings places a greater burden on the quality of the data sources. IT, working with line of business executives, must fix this problem if people are to trust data, recommendations and results coming from the business intelligence applications. This is not just an IT problem as it is costing companies dearly, in some cases more than 10 percent of revenues. Some IT executives will begin to capture the metrics required to build a business case to fix this while others will implement data quality solutions aimed at fixing select problems that have been determined to be troublesome. Furthermore, IT executives should plan for chief marketing officers (CMOs) to knock on their doors to correct the data quality problems they are finding are impairing their effectiveness and performance.
Operations efficiency – This will be an overriding theme for many IT operations units. As has been the case over the years the factors driving improvement will be automation, cloud computing, standardization, and consolidation along with virtualization. However, for this to become mainstream and effective, IT executives will need to measure and monitor the key data center metrics, which for many will remain a challenge despite all the tools on the market. IT executives could reduce operational costs by 50 percent if they had the right tools and applied the resources to address the problem points. However, Experton Group expects minor advances in efficiency overall due to resource and funding constraints but for those IT executives addressing operations efficiency there will be major double-digit operational gains.
Organization and job descriptions – The paradigm shift from administrators or operators handling vertical stacks – from databases, networks, and infrastructure to applications – to horizontal stack management will transform IT operations. A restructuring from the inefficient siloed approach to horizontal cross-domain layered operations is a massive restructuring of operations and changes the job descriptions and responsibilities of the operations teams. It will turn out that this process causes self-elimination of excess staff, as those concerned about their new responsibilities tend to voluntarily depart. One of the big challenges in this type of reorganization is finding the skills required for the new positions. Whereas in the old world in-depth IT knowledge is key but in the new horizontally layered world business knowledge, oral and written communications, and negotiation skills are paramount. The majority of existing IT staff at most companies do not possess the required skills, which will have to be backfilled. Nonetheless, the restructuring will occur, mostly driven by the movements to cloud.
Procurement – With the requirement for agility and the move towards cloud computing, more attention will be paid to the procurement process and supplier relationship management in 2015. Experton Group expects a majority of cloud procurement efforts to lead to disappointment later on as shortfalls in vendor-biased contract terms and conditions come to the fore during the implementation phase. Business and IT executives need to establish procurement and vendor performance metrics that can be effectively measured and monitored so that year-over-year improvements can be made.
Security – The use of big data analytics and more collaboration will help improve real-time analysis but security issues will still be evident in 2015. The fallout from the Home Depot, Sony, and Target breaches will further fuel the fears of identity theft and personal information exposures and impair ecommerce growth. It is evident from examining the breaches that companies do not have a technology problem but a people and process failure. The firing of the Target CEO for security breaches and other failures had minimal impact on the business community in terms of addressing accountability for security failures. Unfortunately, for most the ball will remain in the auditors', IT's, the CISO's and CRO's courts. The use of cloud computing will add layers of complexity to the already complex compliance efforts. While there are some players coming together to find automated, proactive ways to enforce and validate compliance, Experton Group expects little improvement for most IT organizations and instead, the cost of compliance will increase.
Staffing – IT executives will do limited hiring again this year and will rely more on cloud services, consulting, and outsourcing services. There will be some shifts on suppliers and resource country-pool usage as advanced cloud offerings, geopolitical changes and economic factors drive IT executives to select alternative solutions. Instead, most organizations will look to retraining (on the job training or e-learning) of key staff to address the new organizational demands for the new IT roles and responsibilities.
Standardization – More and more IT executives recognize the need for standardization but advancement will require a continued executive push and involvement. The shift to clouds is exposing the fact that standardization is a complex topic with multiple options (similar to the standard keyboard – of which there are 86 varieties) and can result in undesired proprietary choices. Experton Group expects 2105 to be a year where large enterprises attempt to sort through the options and find standards that can be used corporate-wide. IT executives should recognize standardization projects are multi-year initiatives that can be baked into other projects.
SLAs – Most IT executives and cloud providers have yet to provide the service levels businesses are demanding. More and better SLAs, especially for cloud platforms, are required. IT executives should push providers (and themselves) for SLAs covering availability, accountability, compliance, performance, resiliency, and security. IT executives should not relax their SLA requirements if they hope to meet or exceed the business needs; nor should business executives lower the bar. Companies that address these issues correctly will be the winners in 2015; others will fall behind.
Experton Group POV: 2015 will likely be a daunting year for IT executives. People and process issues will have to be addressed if IT executives hope to achieve their goals for the year. This will require IT to integrate itself with the business and work collaboratively to enhance operations (whether onsite or in the cloud) and innovate new, simpler approaches to doing business. Additionally, IT executives will need to invest in process improvements to help contain costs, enhance compliance, minimize risks, and improve resource utilization. IT executives should collaborate with business and financial executives so that IT budgets, plans and strategies dovetail with the business and remain tightly integrated with the business throughout the year.