the case for a service defined enterprise...the case for a service defined enterprise – logicalis...

The Case for a Service Defined Enterprise Findings from a Logicalis survey of Australian CIOs

The Case for a Service Defined Enterprise – Logicalis CIO Survey page | 2

“There is a real challenge in selling IT as a service. That will be a big thing for us over the next few years.” – Head of IT for a large franchise retailer

The world of the Chief Information

Officer is in flux. Leading analyst

firms are urging enterprises to

become digital at their core. They are

flagging cloud, mobile and social as

the new foundations of enterprise IT.

Marketing departments driven by the

need to deliver improved customer

experiences are exploiting IT's potential

to help them achieve their goals, and

taking control of increasing shares of

enterprise IT budgets. Cloud

computing and the services it enables

are leading to growth in shadow IT —

where business units bypass IT

departments to get the resources they

need, quickly and cheaply.

None of this can happen entirely

without the involvement of IT so CIOs

are struggling to facilitate,

accommodate and in some cases

resist these developments while they

juggle their own priorities: maintaining

current IT services, developing long

term strategies and seeking innovation

to make their enterprises more efficient

and competitive.

The Logicalis Survey

To understand how CIOs are coping

with and responding to these multiple

demands and to understand how they

view their roles and the future of IT in

this rapidly changing world Logicalis

surveyed 68 CIOs and IT professionals

of similar rank on the status quo of IT in

their organisations and their plans for

the future. (The full questionnaire is

attached at Appendix A and was

complemented by follow-up phone

interviews.)


What is a Service Defined Enterprise?

The Logicalis view of Enterprise IT

Today, most organisations are

‘technology defined’ — their agility is

defined and limited by their technology

and the applications platforms they

have chosen in the past. Maintaining

these systems — networks, storage

and data management — consumes

resources disproportionate to the

functionality they provide.

IT needs to be more agile to respond to

business needs. There needs to be a

transformation in technologies, and in

their operational and consumption

models to achieve new levels of agility

to create what Logicalis now calls the

'Service Defined Enterprise'.

The Service Defined Enterprise will

focus less on what IT systems an IT

department owns and operates, and

instead on the IT services to which it

has access and the speed at which

these services can meet overriding

business objectives.

The transition to a Service Defined

Enterprise does not mean that IT as a

business function will be any less

relevant in the future. In fact, if IT can

make the transition to fully supporting a

Service Defined Enterprise, its

relevance will increase significantly.

This change in thinking will allow CIOs

to deliver the business innovation their

organisations expect.


Taking the measure of the

Service Defined Enterprise

The figure on the previous page

illustrates the ways in which the Service

Defined Enterprise differs from the

Technology Defined Enterprise.

No organisation that embraces the

vision of the Service Defined Enterprise

will progress along these individual

transformations at the same rate and

no two organisations will have the

same set of transformation priorities. In

each case these will depend on the

nature of the business, its other

priorities and the current stage of

software and hardware refresh life

cycles.

The Logicalis CIO survey aims to

assess:

How far respondents' IT has

evolved along those paths

Their intentions for the direction

and speed of their transformation

The extent to which they view

transformation as desirable

The shift in responsibility for IT to

business managers

How respondents are restructuring

their IT resources to better align

with the emergence of the Service

Defined Enterprise.


“As a result of new technology being rolled out to lines of business they are able to make their own decisions about how they use the technology. That's why I believe business managers will gain a great deal more power of ICT decisions.” – IT Manager of a large enterprise

Insights from the 2014 Survey

Business Managers taking a

greater role in IT

It's very clear that business leaders are

taking an increasing role in IT decision

making. Today the CIO and the IT

organisation has by far the largest

share of responsibility for IT strategy

and decisions (69% of respondents)

and about a quarter (24%) share that

responsibility with line of business

managers.

However only 4% expect this state of

affairs to persist. The remainder were

equally divided between those who

expect to cede a great deal of power

over IT to LoB managers (45%) and

those who expect LoB managers to

have significant influence (43%).

Regardless of who wields the power,

LoB will need the expertise of IT in

order to make full use of the IT

resources at its disposal. But shifts of

power rarely occur without stresses,

and there already evidence of such

between CIOs and CMOs.

Accenture Interactive surveyed 1,100

senior marketing and IT executives, in

'Cutting across the CMO-CIO divide'.

The survey was a repeat of one a year

earlier. It found significant, and growing

tensions between the two. Forty three

percent of IT executives said marketing

requirements and priorities changed

too often for them to keep up, an

increase of three percentage points

from the previous year's survey.

Twenty five percent of CIOs believe

that CMOs lack the vision to anticipate

new digital channels. The prior year's

figure was only 11 percent.


“My issue is finding time to do the strategic stuff, especially because in the non-for-profit sector resources are pretty thin.” – IT Manager of a disability services organisation

The frustrated CIO

The survey revealed a massive

discrepancy between how CIOs divide

their time between 'keeping the lights

on' — managing IT day-to-day — and

focussing on strategic planning and

innovating. Today 46 percent of

respondents spend at least 50% of

their time on day-to-day management.

Only 11% would so if they had their

way. Fifty nine percent think the day-to-

day should consumer less than 25% of

their time. Only 23% claim to achieve

that at present.

CIOs will have to go some way to

achieving their time division goals if

they are to enable the transformation of

their enterprise to a Service Defined

Enterprise.

Logicalis believes that the shift to a

Service Defined Enterprise creates two

significant opportunities for the CIO.

Firstly, to transform how the IT

department builds and operates the IT

infrastructure and systems under its

control so it becomes as agile and

cost-efficient as an external services

provider. Secondly, to establish IT as

the trusted advisor to define, source,

engage with and manage external

service providers in order to maintain

and develop the organisation’s portfolio

of IT services and capabilities.

These transformations present

considerable opportunities for those

CIOs that are able to initiate and

implement them successfully and the

successful transition to a Service

Defined Enterprise depends to a large

extent on them doing so.


CIOs lukewarm on outsourcing

Given that most respondents are

striving to spend more time on planning

and innovation it should come as no

surprise that there was no aspect of IT

that most of them believed must be

managed in-house: the only

component of IT that more than 20%

wanted kept in-house was security.

However, this lack of a need to keep a

tight rein on IT was not matched by a

corresponding desire to let go: the

number of respondents willing to

outsource IT was nowhere near the

number that saw no need to keep IT in-

house.

Of the following technologies, which must be managed in-house? Which would you outsource?

Outsource Keep in house

Network infrastructure 17% 15%

Servers 21% 14%

Storage 19% 9%

Security 11% 32%

Network services 17% 12%

Mobile environment 15% 17%


“We have a strategic plan for the business generally and our IT strategic plan links in with that, but I think there needs to be some autonomy for technology decision-making by the business, within broad guidelines.” – IT Manager of a large enterprise

Service Defined Enterprise is

the go

There was broad agreement from

respondents that the Service Defined

Enterprise represents the way forward

for IT, but it was clear that

organisations are at very different

stages of the journey.

Given the importance placed on the

transition to a Service Defined

Enterprise, there would seem to be a

need to raise awareness: 21% of

respondents were unfamiliar with the

concept, but 77% were at various

stages on the journey to becoming a

Service Defined Enterprise.

However, the vision of the Service

Defined Enterprise is similar to those

put forward by a number of leading

analyst firms, so it is possible that

those who claimed no knowledge of

the Service Defined Enterprise may

have responded differently had the

concept of the Service Defined

Enterprise been spelt out on the

questionnaire, which was not the case.

Only 2% of all respondents said that

the Service Defined Enterprise was not

"a trend we have to worry about." Of

those respondents that were aware of

the concept, the results were as

follows.

What is your organisation’s view of the shift to a Service Defined Enterprise?

We embrace it fully and already have an articulated strategy. 19%

We understand its importance but have yet to formulate a strategy. 51%

We are in the education and assessment phase. 27%


“The term quite often used around here for IT is 'necessary evil'. The primary function of the organisation is selling to the customer through a staff person. They do not use IT for that. Only in the last year have we started looking at IT as an enabler for the sales staff.” – Head of IT for a large franchise retailer

To get a better understanding of

respondents' progress towards a

Service Defined Enterprise they were

asked to rate, on a scale of one to five,

their organisation's level of maturity on

a number of aspects of IT, all of which

are components of a Service Defined

Enterprise.

The results averaged out to be mid

range – reflecting the broad range of

overall progress towards the Service

Defined Enterprise.


We focus on delivering a 360 degree user experience (ie IT experience management) 3.4

We "sell" to the internal line of business owners on service value 3.4

We have moved from "managing technology to "Offering a service portfolio" 3.5

We embrace IT automation to drive IT and business agility 3.8

We adapt pre-validated architectures as our first choice of IT architectures 3.8

We have transitioned staff from experts in technology to a service delivery mindset 3.5

My own and my team's KPIs focus on business agility & improved user experience. 3.8

We look externally first for services that meet our IT needs 3.4


It was also clear that a significant

number of respondents have firmly

embraced these concepts and are

either implementing of have implement

them.

Over a third of respondents are already

moving to (or planning to adopt)

automation and pre-validated

architectures to simplify IT. Similarly, a

third of respondents are focusing on

the end-userr experience as a desired

outcome.


Already

implemented or planning to

No plans to implement

We focus on delivering a 360 degree user experience (ie IT experience management) 33% 9%

We "sell" to the internal line of business owners on service value 31% 21%

We have moved from "managing technology to "Offering a service portfolio" 34% 7%

We embrace IT automation to drive IT and business agility 43% 3%

We adapt pre-validated architectures as our first choice of IT architectures 42% 9%

We have transitioned staff from experts in technology to a service delivery mindset

36% 10%

My own and my team's KPIs focus on business agility & improved user experience 39% 7%

We look externally first for services that meet our IT needs. 27% 15%


“The big challenge for us is to not lose our effectiveness in the organisation. We may not be as agile people who can run up a server in a day, but how will they interface it to all the systems they want to talk to?” – Head of IT for a large franchise retailer

Conclusions – the bigger picture

The imperative to create the Service

Defined Enterprise takes many different

forms, and goes by a number of

names, but the impacts on enterprise

IT, the initiatives that CIOs need to take

and the issues they face are universal.

Research firm Forrester says ‘the future

of every business is digital’ and warns

that organisations failing to realise this

and failing to act accordingly face

extinction with a decade.

"Business leaders don't think of digital

as central to their business because in

the past, it hasn't been. But now your

customers, your products, your

business operations, and your

competitors are fundamentally digital,"

it says.

Gartner talks of a 'digital dragon', a

force of digital disruption that is

reshaping all industries and that is

"potentially very powerful if tamed but a

destructive force if not."

IDC's concept of the 'third platform' - a

combination of cloud, social and

mobile, highlights the fact that for any

consumer-facing enterprise, this

disruptive force is largely external, not

internal. Empowered with smart mobile

devices, constantly sharing views and

information via social networks and

able to tap into a vast reservoir of

online information, today's consumers

are super smart and expect the

organisations they deal with to be as

tech savvy as they are.

IDC estimates that 61% of technology

spend is influenced or directly

controlled by lines of business and that

17% is pure shadow IT – where IT is

not involved at all. It says that, in the

most forward thinking companies CIO

and CMO co-operate closely, but this

is not always easy.


“The whole Service Defined Enterprise is a bit beyond us now, but it would be very much on the cards in the next IT lifecycle.” – IT manager of a disability services organisation

Recommendations – the way forward

The role of IT is similar in all the

paradigms put forward to describe the

enterprise of the future, but there are

many variations that can significantly

effect the transformation and the role of

the CIO.

Ideally the impetus for change should

come from the top, but in many cases

the impetus is coming from marketing

and customer service divisions, where

the pressure of 'digitisation' – from

customers and competitors – is felt

most keenly.

In any scenario it's necessary for CIOs

to 'bridge the gap' between the

technology and its business-enhancing

capabilities and to be proactive in

pushing for their implementation.

How this is achieved in practice

depends to a large extent on politics

and personalities, and there is a large

volume of literature devoted to the

topic – especially to the relationship

between CIO and CMO.

Gartner vice president and Gartner

fellow Tina Nunno has produced a

book of advice for CIOs wanting to

survive the tumult of digital

transformation: 'The Wolf in CIO's

Clothing: A Machiavellian Strategy for

Successful IT Leadership'. The wolf,

she argues, is "a social animal with

strong predatory instincts," and

therefore "an ideal example of how a

CIO, or any leader, can adapt and

thrive."

If that approach sounds too

aggressive, Vodafone UK – which

commissioned a survey into the

changing roles of IT directors – came

up with something that is perhaps

more practical, and palatable. "To be

truly effective, you need to get under

the skin of how your business works

and think about where IT can improve

it. You can help your organisation

create a competitive edge by

collaborating across different functions,

listening closely to suppliers and

customers, and monitoring the

competition to look for gaps in the

market that the business (and IT) can

address.”

Logicalis Australia Pty Ltd www.au.logicalis.com

Appendix: CIO Summit ICT Survey Name : ……………………………………………………………..

Organisation : ……………………………………………………………..

Position : ……………………………………………………………..

Email : ……………………………………………………………..

Phone: : ……………………………………………………………..

Who in your organisation is responsible for ICT strategy and decisions?

CIO & IT organisation Line of Business Managers Combination

Do you think line of business managers will gain more power in terms of ICT decisions over the next 3-5 years?

Yes – A great deal more power Yes - Will exert influence but power stays with IT

No – IT has the power over ICT decisions Don't know

Approximately how is your time split between day-to-day management of technology (rather than strategic planning/innovation?)

Currently (day-to-day mgt) In an ideal world, what would it be?

0-10%

11-25%

26-50%

51-75%

More than 75%

Number of IT Staff : Total Staff:

IT budget : Increasing

Flat

Decreasing

Logicalis Australia Pty Ltd www.au.logicalis.com

Which of the following technologies do you think must be managed and supported in-house (select all that apply)

Network infrastructure Servers Storage

Security Network services Mobile environment

…...and which of the following technologies would you be prepared to put into the hands of a trusted partner? (select all that apply)

Network infrastructure Servers Storage

Security Network services Mobile environment

What is your organisation’s view of the shift to a Service Defined Enterprise (SDE)?

We embrace it fully and already have an articulated strategy

We understand its importance but have yet to formulate a strategy

We are in the education and assessment phase

We don’t see SDE as a trend we have to worry about yet

I am not familiar with the concept

How would you rate your organisation against the following statements? Where 5 = strongly agree, 4= Planned but not implemented, 3= Considering but no plan, 2= No plan, 1 = Don’t know

We focus on delivering a 360° user experience (ie IT experience management)

We “sell” to the internal line of business owners on service value

We have moved from “managing technology” to “Offering a service portfolio”

We embrace IT automation to drive IT and business agility

We adapt pre-validated architectures as our first choice of IT architectures

We have transitioned staff from experts in technology to a service delivery mindset

My own and my team’s KPIs focus on business agility & improved user experience

We look externally first for services that meet our IT needs.


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