Only 38% of Irish CIOs believe their organisations view IT as a value adding partner, according to the findings of the second annual CIO survey by Deloitte. While this represents a modest improvement on last year’s survey (24%), the findings indicate that IT departments may still not be fully demonstrating their value to the overall organisation.
This year’s findings also show that the worst of reductions in IT Budgets may be over. Last year’s survey found that that nearly 60% of respondents expect their IT budgets to be cut by up to 20% in 2010, while a smaller proportion (6%) expected even bigger cuts. This year, while 58% expect a decrease in the 2011 IT budget, most respondents (47%) are optimistic that this will be a more modest cut of between 0 and 10%.
Enabling business cost reduction will continue to be the top priority for IT departments in 2011. Security has become an increased priority and now ranks second. Perhaps the most striking result is that IT business alignment is actually seen as less of a priority compared to last year, despite the fact that only 38% of respondents thought that the business viewed them as a value adding partner. IT cost reduction has also become less of a priority and has moved from second position in 2010 to fourth position in 2011.
Harry Goddard, Partner, Consulting, Deloitte commented on the survey findings: “Businesses are still looking for IT departments to further reduce costs and align themselves with the business. While this presents very real challenges for CIOs and IT departments, as they juggle the task of reducing costs across the business with smaller IT budgets, there is also a very real opportunity for them to showcase just how much they can contribute to the strategic running of the organisation. By achieving this objective, IT departments will successfully align themselves with the business and demonstrate their full value. However, the time for CIOs to prove their value is now. By failing to address these issues now, the opportunity to do so may be lost.”
The survey also investigated CIO sentiment towards cloud computing. The findings show that despite the fact that adoption among participants was relatively low – 33% of respondents are currently using cloud computing in their organisation – 80% of those that are view cloud computing as a strategic change in terms of delivering IT services. They are also realising the expected benefits including reduced costs, increased efficiency and scalability.
For those who are using cloud computing, the main areas being used are infrastructure as a service (46%) and software as a service (45%). The primary drivers for adoption of cloud computing were reducing operating and capital costs; scalability, increased efficiency, and greater flexibility in expanding and contracting services. The types of information being held in the cloud include customer, order and product data. Few expect to hold employee data.
One of the most surprising results was that respondents didn’t anticipate any IT organisational changes as a result of cloud computing, despite the fact that many commentators expect it to have a profound effect on IT operating models. Encouragingly, the greatest impact cloud computing will have on IT budgets is that it will allow greater investment capacity, as identified by 36% of respondents. 29% indicated it would have no impact on the IT budget.
For those respondents that have yet to implement cloud computing, 70% are currently researching using it, with software as a service being the primary focus. That said, deploying cloud computing technologies actually ranked last amongst CIOs with regards to IT priorities in 2011. Issues preventing the adoption include security and loss of data control.
“The fact that cloud computing is not a priority for many Irish CIOs is somewhat surprising. The danger of this may be that cloud computing initiatives will be driven by the business and not by the IT department. CIOs need to remain masters of their own destiny and drive its adoption. By doing so, they will be able to shift their role from the provision of IT systems and infrastructure to one that delivers competitive advantage through technology. The opportunity to do this is now, and cloud computing can offer very real solutions to the challenges that currently exist,” said Harry Goddard.
Further findings of the survey include:
38% of respondents indicated that their organisation makes use of social media to interact with employees and/or customers. However, nearly half of respondents do not have a formal social media usage policy, despite the fact that they regarded brand risk and the loss of intellectual property as the key risks of social media usage. The most popular social media applications were Facebook, LinkedIn and Twitter. Collaboration and communication were seen as the primary benefits.
Nearly 80% of respondents indicated that that they are not aware of the impact of IT on their firm’s carbon footprint. In addition, nearly 60% also indicated that green IT was not on their agenda in the next 12 months. For those respondents that are undertaking green initiatives, the main driver was to reduce operating costs, rather than driving their corporate social responsibility agenda. Virtualisation and reduced printing were identified as the most popular green initiatives.
Over two thirds of respondents are required to produce regulatory reports, and within this group, 74% have seen an increase in regulatory reporting requirements. In addition, a similar percentage believe that this will continue in the near future. It’s clear that this task is becoming increasingly onerous for IT departments – of those producing regulatory reports, 29% of respondents advised that they struggle to meet regulatory reporting deadlines and 58% struggle to gather data across disparate IT systems.
Notes to editors
About the research
This is the second survey of CIOs and IT managers in Ireland carried out by Deloitte. The online survey took place in June and July 2010. 45 CIOs or IT managers participated across a range of industries, from the public sector to financial services, property, and environment & resources. The number of employees ranged from fewer than 250 to 2,000+. The combined annual turnover of the organisations which participated was in excess of €50 billion.