The role of the information technology department is under scrutiny in a way that makes its past challenges seem almost quaint by comparison. Cloud computing services provide an alternative source of powerful technology. Employees are getting work done using free Web applications as well as their own laptops and smartphones. Executives can make many of their own technology decisions. Traditional IT function roles are being displaced. No wonder some analysts and executives are asking whether IT departments are necessary anymore.
It may be an exaggeration to say that IT departments should go the way of secretarial pools, but the function is certainly ripe for reinvention. In a new Accenture Institute for High Performance survey, IT was chosen most often, as the function business executives would most like to build from scratch. IT executives singled out their own function as a target for reinvention by an even bigger margin. (See Figure 1.) IT, the agent of change, is now the target.
But how should enterprise IT evolve? How will it be sourced five years from now, and what should be its roles, responsibilities and business goals? That is where many executives appear to be stuck. Less than a third say they have a clear vision of how their IT function will look by that time. Barely one in five business executives say they know what the CIO role will consist of in five years. (See Figure 2.)
Prepare for multiple futures
To arrive at a new vision of enterprise IT, senior business executives should center their efforts on creating enterprise IT functions that are “futures ready.” A futures-ready posture recognizes that it is folly to bet on a single outcome. It is much better to recognize the radically different ways in which the business environment could change, imagine how IT might adapt to those changes, and have the judgment, readiness and courage to evolve when the time comes. Enterprise IT doesn’t exist in a vacuum. Our research into the factors influencing business and technology uncovered more than 60 forces that could have an impact on enterprise IT’s agenda and the IT function’s own future. Eight large-scale forces in particular will have the greatest impact.
Force No. 1. The cultural impact of consumer IT. Smart phones, social networks like Facebook and China’s Renren, and other consumer technologies have already transformed how people work, play, learn, shop, share, talk and organize.
Force No. 2. Global, Internet-based competition. Companies with Internet-based models and emerging market multinationals are challenging and sometimes overtaking industry leaders.
Force No. 3. Vulnerable technology and information. Individuals, companies, governments and even IT security experts remain exposed to threats from cyber criminals and governments.
Force No. 4. Increasing pressure for quality and efficiency. Companies must improve productivity in the face of global competitors with cost advantages, while still improving product and service quality.
Force No. 5. The rise of data-driven decision making. Smart companies are applying sophisticated new analytical techniques to acquire valuable insights and are beginning to embed analytics into their processes and planning.
Force No. 6. New approaches to innovation. Companies are involving customers, suppliers and outsiders, employing talent from developing nations and turning products for emerging economies into new products for mature markets.
Force No. 7. The impact of geopolitics and state regulation. Geopolitical issues, government policies and regulations will have a big impact on the flow of information—and on talent, trade, technology, capital and ideas.
Force No. 8. The possibility of disruptive disasters. Natural catastrophes, wars and unrest could disrupt technology use for lengthy stretches. Their impact—including decreased foreign investment, recession and labor flight—could figure into IT deployment decisions.
A connected world?
Future IT needs will be determined by the interplay of these forces. Most of these forces are packed with uncertainty. In combination, they could lead to futures that are neither flat nor connected.
Many technologists and opinion-shapers believe they know what’s coming: a flat and increasingly connected world with exponential growth in data and computer intelligence.
This is the world that the IT industry, Silicon Valley and venture capitalists are investing in. We’ve certainly come a long way down that road: 35 percent of the world’s population was online as of 2011; nearly double the percentage of 2006.
But continued growth in connectivity isn’t assured; how flat the world really is remains to be seen. Many things could affect the flow of information online, including Europe’s strict data privacy regulations, America’s hodgepodge of laws (such as the Patriot Act and its industry-specific laws), China’s limits on the Internet and India’s push to monitor online and mobile communications.
Globalization could shift into neutral or reverse if the economic crisis in Europe worsens and the US dips into another recession. Just imagine a world in which the Euro breaks down, high unemployment leads to political instability and protectionist policies, relations between economic powers decline, or high energy prices undo global supply chains.
As International Monetary Fund managing director Christine Lagarde recently warned, without decisive action by the world’s policymakers we could easily slide into a “1930s moment—a moment where trust and cooperation break down and countries turn inward.” Even if our political leaders help us avert the most frightening possible futures, other events could occur that affect how companies use technology. Resistance to data-gathering on individuals, laws that harshly penalize companies when their customers misuse public networks, or even prolonged sunspot interference with electronic communications could cut consumer use of the Internet and compel companies to operate without it.
Executives may prefer to live in a technology-friendly world with a strong economy, vibrant international trade, and no technology barriers. But the future they want may not be the world they get. (See “Visions of the future.”)
Rethinking IT delivery
IT will almost certainly need to stretch its capabilities to meet tomorrow’s business needs, whatever future arises. Take the “race to innovate” future: IT groups will be under incredible pressure to quickly complete projects. A CEO might ask the CIO to create a new IT-enabled business service in a week, or build a new corporate IT infrastructure in one month. The very idea would have been laughable five years ago. Now, 34 percent of IT executives think companies will probably be able to do that by 2016, and another 30 percent think it’s at least a possibility. (See Figure 3.)
If business executives and employees get tired of waiting for IT to give them what they need, they will take matters into their own hands. Our global study of consumer technology found that 43 percent of employees now say they feel comfortable making technology choices on their own.
Indeed, in the not-too-distant future, it will be even easier for non-IT managers to manage IT. Cloud services combined with data integration and data stream publishing technologies could make it possible for divisions within companies to select technology the way a consumer shops, as opposed to having technology handed down by a centralized IT department.
Simple, standard personal productivity and enterprise applications could be available for download by the equivalent of an Apple AppStore or Google Market. Complex applications and needs could be custom-built by service providers and specialized contractors. Employees could build their own apps by creating mashups out of information streams. This storefront of applications could be managed by a broker who selects the best services to put in the store’s virtual aisles.
This model won’t work in every situation. Companies cannot rely on cloud services without a reliable security and legal environment. Certainly there are some core applications, which would need to be managed centrally, if only to provide consolidated reporting and information. But if the trends continue, much of the work that IT organizations now do could evaporate in the future.
What makes an organization futures-ready isn’t a particular IT organizational structure, management model or technical architecture, but a certain focus in how it thinks and plans its enterprise IT future. In particular, the futures-ready IT organization will:
Be worldly visionaries. Futures-minded IT leaders think about technology’s future without being techno-centric. When they plan enterprise IT’s future, they will weigh social, political, economic and demographic forces and uncertainties that will affect their company’s business, not just the technological ones. When they plan their future IT function, they will plan it with multiple futures in mind.
Open up the process of creating the new enterprise IT. The executives who forge the new enterprise IT will make sure the process is inclusive, not insular. It will be engage business line managers and users from many geographic regions and cultural backgrounds alongside IT architects and emerging technology experts. Planners will seek input from employees, customers and other members of their business ecosystem.
Seize the future that has already arrived. Not all futures support IT innovation. But whenever possible, a futures-ready IT organization will take advantage of new technologies that create new business possibilities, such as context-based services (cloud services that recognize where you are and what you are doing), social IT (Facebook, LinkedIn and other new communication channels) and platform-as-a-service (cloud services for building or running new cloud services). They will also apply new management and information-gathering tools like crowdsourcing. This new kind of IT organization will be eager to explore new ideas and driven to test them.
Shatter the boundaries of the possible. Like athletes breaking world records, IT leaders will accept the challenge of performing at a level once considered out of reach. They will investigate radical ways to reorganize IT to attain radical goals. How would they meet a demand to cut the IT budget by 90 percent? A challenge to create new IT infrastructure in a week? Permission to toss all their legacy systems and rebuild their IT from scratch? These companies will explore how to do the seemingly impossible. And as they do, they will find breakthrough IT practices and invent the IT organization of the future.
Make IT roles fit business needs, not technologists’ ambitions. Some companies need strategic, transformational CIOs. But in some futures and with some business strategies, companies may have more modest IT needs and will instead need IT leaders who are more focused on specific goals, such as cost reduction or ensuring security. These companies will be better served by a CIO who is more of a manager than a strategist, and there is nothing wrong with that.
An epoch-making technology transition—the advent of cloud computing and consumer IT, which puts low-cost, powerful and simple-to-use computing into the hands of billions of people around the world—is intersecting with a moment of geopolitical, macroeconomic and legal uncertainty. Throw in the joker in the deck—the potential downsides of our dependence on the Internet—and the uncertainty for enterprise IT grows exponentially.
Becoming futures-ready is a tough task. It will require the imagination to challenge old assumptions and the courage to act upon new insights. But it’s a task that no responsible IT leader can shirk.
About the Author
Jeanne G. Harris is an executive research fellow and director of research at the Accenture Institute for High Performance. With Thomas H. Davenport and Robert Morison, she is the co-author of Analytics at Work: Smarter Decisions, Better Results (Harvard Business Press, 2010). She is based in Chicago. Allan E. Alter is a research fellow with the Accenture Institute for High Performance. He is based in Boston. Stéphane J.G. Girod and Iris A. Junglas are former research fellows at the Institute.