Business Changing IT Spend

Business Changing IT Spend

How business outcomes are transforming IT spending

According to a recently released study by Datalink and IDG, business is playing a bigger role than ever in IT spending.

The relationship between business leaders and IT is equal parts necessary and contentious. More and more, though, decisions made on the business side are having an even greater impact on IT.

International Data Group IDG has just released the results of a study commissioned by Datalink, which showed just how closely linked IT investments are becoming with business results. The study polled more than 100 IT executives and senior level managers from large U.S. organisations and took place in Q4 2015.

When asked where they wanted to invest their IT dollars currently, respondents listed the following areas as their top five considerations:

  1. Improving of IT security – 70%
  2. Improving customer/client experiences – 59%
  3. Managing costs – 59%
  4. Boosting operational efficiency – 52%
  5. Mitigating risk – 44%

However, what may be more interesting is not where these organisations are making their investments in IT, but when. According to the report, 70% of respondents said it’s critical that they’re able to link IT investments to tangible business outcomes.

So, if an understanding of IT’s impact is this important, do these organisations feel that they are communicating that clearly enough? Well…not necessarily. Only 47% said that their organisations are doing an excellent or very good job at communicating how a particular IT investment impacted a business outcome. The remaining 53% said their organisation needs a least some, if not significant, improvement in doing so.

Not only did respondents say that identifying the impact on the business was important, but 68% of them said that, when making an IT investment decision, the business goals were more important than any of IT’s operational goals.

Since business is this important a consideration in each IT investment, let’s take a look at what the top running initiatives are, so far, among respondents. Here are the top five:

  1. Security
  2. Disaster recovery/business continuity
  3. IT governance/compliance management
  4. Cloud/virtualisation management
  5. Public cloud (including SaaS)

Of the projects currently in the build stage, the top three were agile development platforms, converged data center infrastructure, and process automation.

This, of course, begs the question of which IT initiatives are actually driving business outcomes. According to the report, process automation got top marks, and security, application performance management, and cloud/virtualisation management all got a nod as well. Although, all four of these were listed as the most difficult to deploy and maintain.

The IT lifecycle as a whole has its challenges, though. In building out an initiative, 41% said the planning stage was the most difficult, 36% claimed the building stage was the hardest, and 32% labeled testing the most challenging.

As businesses seek to tie in business success to IT investment, a few distinct roadblocks come up. Here is how respondents labeled the top five challenges in driving business outcomes through IT investments.

  1. Difficulty standardising/streamlining business processes – 34%
  2. Too many manual processes (need for more automation) – 33%
  3. Difficulty keeping up with demand for new application dev – 31%
  4. Poor communication between IT and lines of business – 29%
  5. Lack of support/sponsorship from executive management – 29%

Moving forward, as more of these leaders seek to connect the dots between their IT investments and how their business fares, most (56%) are looking to streamline the operational processes to make it more apparent. Others are increasing standardisation (38%) or moving away from legacy systems (37%) to accomplish the same.

Having spent a majority of my career working with and supporting the Corporate CIO Function, I now seek to provide a forum whereby CIOs or IT Directors can learn from the experience of others to address burning Change or Transformation challenges.

Craig Ashmole

Founding Director CCServe

The IT Clock Speed in 2015

The IT Clock Speed in 2015

How CIOs can raise their ‘IT clock speed’ as pressure to innovate grows

CIOs are facing pressure from the board to roll out IT projects increasingly quickly. How can they do that without running unacceptable risks?

I came across this article in the Computer Weekly based on cutting-edge research among leading businesses, such as CEB – formerly the Corporate Exectutive Board – and other industry experts which sums up the need for IT Speed and Agility very well indeed.” stated Craig Ashmole from IT Consulting CCServe Ltd.

Businesses are under pressure to radically rethink the way they manage information technology and the ability to introduce new technology quickly has become a boardroom issue.

More than three-quarters of business leaders identify their number one priorities as developing new products and services, entering new markets and complying with regulations, a CEB study of 3,000 business leaders has found. And the speed at which the IT department can respond to those demands is critical, says Andrew Horne, a managing director at CEB, a cross-industry membership group for business leaders.

“We are increasingly hearing from CEOs that their biggest concern is how organisations can change faster. The thing slowing them down and helping them speed up is technology,” he tells Computer Weekly.

Agile is not enough

The CEB – formerly the Corporate Exectutive Board – argues that traditional ways of managing IT are no longer able to meet the demands of modern businesses. Even agile programming techniques, which do away with long-winded development cycles in favour of rapid programming sprints, are not enough to get companies where they need to be.

A new model for IT is beginning to emerge, which is helping organisations speed up project roll-outs and free up reserves from maintenance to spend on innovative, high-impact IT projects.

Why the IT department needs a faster clock speed

IT departments have always been under pressure to respond more quickly to business demands.

Ten or 15 years ago, they hit on the idea of standardising their IT systems to cut down development time. Rather than roll out multiple enterprise resource planning (ERP) systems in different areas of an organisation, it made much more sense to roll out a single ERP system across the whole organisation.

That worked for CIOs back then, says Horne, but the emergence of cloud computing, analytics and mobile technology means IT can no longer keep pace with the demands of the boardroom. “Now the environment is so competitive. You have legacy systems, big data, analytic tools, technology for customers. You can’t standardise that. You can’t globalise that,” he says.

The rise of the two-speed IT department

Faced with this recognition, companies have opted for a two-speed approach, carving out specialist teams within the IT department to work exclusively on urgent projects.

The fast teams, often dubbed “tiger teams”, focus on innovation, use agile programming techniques and develop experimental skunkworks projects. CEB’s research shows the idea has worked, but only up to a point. Once more than about 15% of projects go through the fast team, productivity starts to fall away dramatically.

We are increasingly hearing from CEOs that their biggest concern is how organisations can change faster. The thing slowing them down and helping them speed up is technology states Andrew Horne, from CEB

“You start off with agile tiger teams, top people, and they deliver at speed. They are glamorous, they get a lot of accolades from senior management,” Jaimie Capella, managing director for CEB’s US IT practice, told a masterclass for CIOs in October 2015. “And then we hit the valley of despair.”

Fast teams cannot work in insolation. They rely on other IT specialists in the slow team to get things done, and they need to work with other parts of the business that do work in an agile way. Once their workload grows, the teams find themselves dragged back by inertia in the rest of the organisation.

There is another problem too. As Capella pointed out, no IT professional with any sense of ambition will want to work in the slow team. “You create the fast team, give it a cool name, put it in new offices. Then everyone on the slow team wants to be in the fast team. That creates morale issues,” he says.


The emergence of adaptive IT

The answer that is beginning to emerge from this growing complexity is called adaptive IT. It allows the whole organisation to respond quickly to projects, if it needs to. CEB’s Horne describes it as “ramping up the IT clock speed”.

IT teams will either work at a fast pace or a slow pace, depending on the needs of their current project, and they will be comfortable changing between the two different modes of working.

What is IT clock speed?

IT clock speed is the overall pace at which IT understands business needs, decides how to support those needs and responds by delivering capabilities that create value.

“In any given situation the team can make a call whether speed is most important thing, and trade that off against cost or reliability,” says Horne. Building an adaptive IT department is difficult, and needs a radical rethink of the way CIOs manage their own part of the organisation and their relationships with the rest of the business.

Research by CEB suggests that 6% of organisations have made the transition, while some 29% are taking active steps towards it.

Eliminate communication bottlenecks

Companies can achieve the biggest improvements in IT clock speed by systematically identifying bottlenecks in the IT development cycle. Typically, the sticking points occur when agile IT teams collide with other parts of the organisation.

“Sometimes the problem is conflicting timelines. The IT team needs an architecture decision next week, but the architecture team only meets once a month. Or it needs an urgent risk review, but there is only one person in the organisation doing risk reviews,” says Horne.

The next step is to minimise the red tape. As Horne points out, IT has become extremely process-orientated. Techniques such as ITIL and agile development are in fashion. “And for good reason,” he says. “It helps IT departments keep control.”

But how much process do CIOs really need? Adaptive companies have found they can manage with much less than they might think. They make streamlined processes the default. And if developers want something more rigorous, they have to argue the business case for it.

How CIOs can become faster

CEB’s research shows that CIOs can encourage a culture of speed by delegating more decisions. That does not mean losing control of IT, but it does mean setting clear goals and guidelines that allow other parts of the IT department to make their own decisions.

At the same time, CIOs need to think about the way they communicate with their IT teams. That might mean congratulating people on rapid delivery of projects, rather than focusing on the quality of the project. Horne poses the question: “What are the things on top of the IT score card – is it speed or reliability?”

If that sounds like a lot to do, it is. But companies can start off in a small way and still achieve some of the benefits. “It does not have to be big bang,” says Horne. The transition is not always easy. As one CIO put it: “The co-existence of agile with waterfall projects means we can’t devote people 100% to agile. People work two hours on waterfall, then two hours on agile. It’s hard to manage it.”

One mistake IT departments frequently make is to create a fast-track IT process and then “forget” to tell other parts of the business about it. “I can’t tell you how many times I have heard CIOs say they have a fast-track, but don’t tell business about it because then everyone will want it,” says Capella.

In other cases, IT departments have created such an onerous process for businesses to request fast-track IT – often involving answering questionnaires that can be hundreds of pages long – that business leaders simply don’t bother applying.

The benefits of IT triage

Those companies that have been successful at introducing adaptive IT have taken a cue from the medical world and are triaging their IT projects into streams of urgency.

One US company, for example, assesses each IT project against the following criteria:

  1. The value the business will gain if the project is rolled out quickly.
  2. Whether the risk of the project is contained.
  3. Whether it affects multiple areas of the company.
  4. How frequently the requirements are likely to change.

It has been able to speed up projects by creating self-service portals for urgent, frequently requested projects. They allow marketing people, for example, to create new marketing campaigns as they need them, without the need to wait for a developer.


Business professionals can also use pre-defined checklists to set specifications for commonly requested IT projects, which then go through fast-track development, with the minimum testing. Only the most business-critical systems which affect wide sections of the business go through a full rigorous development and testing process.

In another case, a large energy company has decided to do away with formal business cases for all but the most complex 10% of projects. It approves urgent, high-value projects as a matter of course. Non-urgent, low-value projects are simply not approved. A large consumer goods company has taken a different approach. It prioritises only projects that have the greatest impact on customer experience.

Adaptive IT increases efficiency

For those companies that have been able to take up the adaptive model, CEB’s research shows the benefits can be huge. Business can typically roll out a project 20% more quickly – a saving of one month on a six-month project.

They also have more freedom to re-allocate cash to the most urgent projects. Traditional IT departments can re-allocate about 15% of their budget if a new project comes up. For adaptive organisations, the figure is 40%.


“Adaptive organisations are also more efficient. If you have a £100m IT budget, they are spending £2m less than average on IT legacy systems, which means they are spending more on collaboration, cloud and big data,” says Horne.

The pressure for IT to become faster is coming down from the CEO and their fellow board directors. “They are frustrated at how slow the company is changing. When they ask why it’s slow, technology is coming up as the answer,” says Horne.

But to succeed, organisations require a strong CIO, with strong leadership skills. “It needs someone willing to lead change rather than just keep IT stable; someone who can work well with business leaders and communicate with their teams. If you are an old-style CIO, interested in technology, keeping the lights on, you are going to be in trouble,” he concluded.

Having spent a majority of my career working with and supporting the Corporate CIO Function, I now seek to provide a forum whereby CIOs or IT Directors can learn from the experience of others to address burning Change or Transformation challenges.

Craig Ashmole

Founding Director CCServe

Corporate Boardroom Tech Challenge

Corporate Boardroom Tech Challenge

Are Chairpersons Preparing their Boards for Technology Readiness

The shocking truth about the lack of technology awareness on many corporate Boards in top British firms is exposed!

Executive directors are usually selected for their leadership qualities; they often have experience with general management or leadership experience rather than narrow expertise or technical acumen. So the big question is why should knowledge of IT be an exception?

“Scouting the net to see what topics I could find on the subject of bringing the CIO to the Board table I came across an interesting article from Jean-Louis Bravard, Chairman for DotLondon.” States Craig Ashmole, Founding Partner of London-based CCServe Consulting. “I could not agree more with some of the findings from Jean-Louis so Non-Executive Board members should be actively targeting sound Technology experts.”

A few months ago Jean-Louis decided to look into the professional experience of non-executive directors at the major banks listed in Britain. Like almost every other major industry today, banking relies on hugely complex, enormously expensive technology.

Jean-Louis goes on to say; So I was curious as to whether the individuals charged with corporate governance would have any more than a layman’s knowledge of IT. I discovered that only one bank had a board member with some direct experience in technology and in that case it was as a sales executive.

I’m afraid this is typical not just in banking but across most major industries. Technology is the most important agent of change today; hardly any industry is immune to both its value-creating and disruptive potential. Yet I perceive a large gap between the direct experience of non-executive directors and the experience required to challenge and support chairmen and CEOs in their quest to bring the best technology to their business.

The truth is that many industries today employ outdated technology. Consumer banking is one — layers of technology have been implemented since the 1960s and almost nothing has been taken out. A total overhaul is required. There are countless other examples. Fax machines remain the preferred way to share health care data in most countries despite the fact that the cloud could theoretically allow clinicians to instantaneously share medical records. Chalk remains the technological tool of choice in most education settings. Utilities have only recently begun to add sensors throughout the electric grid and add smart meters in homes and business.

The main reason for this lag is that the project horizon of most IT overhauls goes beyond executive tenures. The cost of overhauls can run into the billions of dollars, the risk of overruns and even failure is high, and that means that many executives kick technology refreshes into the tall grass. Of course, this leaves too many companies vulnerable to technology-fuelled disruption. Few expected Apple to disrupt the music industry (with the iPod and iTunes), communication (with the iPhone) and now potentially consumer banking with ApplePay. Amazon dramatically impacted not just book shops but shopping; Google is now a verb. Who would argue against a future in which disruptive services continue to impact everything from healthcare to retail to personal finances?

Only a multi-year, board-level sponsored effort can ensure a responsible IT overhaul. But without IT expertise at the director level, how can a board truly make an educated decision and, more importantly, follow it through until the end of the project, adapting the design of the overhaul over the course of years to take advantage of rapidly changing technology and consumer behaviour?

The Remedy

Craig Ashmole goes on to suggest, “We need to ensure that corporate governance includes sufficient oversight of technology, and companies should be following basic principles” such as:

  • Hire a technology expert to your board. That is probably the most difficult task and it is very industry dependent. Give priority to individuals with experience scars, both success and failures and who continue to be involved with technology. This means look ‘Outside the Box”, be receptive to new talent, perhaps those new to NED or Board roles. Technology moves too fast for “stale” talent, however well-informed innovation leaders should be sort who can rapidly educate the board. Be prepared to rotate this role every few years.
  • Don’t rely entirely on Big-5 advisers. Many boards rely on technical advisers and Big-5 consultants to assess their firm’s technology needs. Too often the corporate advice these advisers offer is generic. It’s often focused on the competitive environment — used to reassure management that it is not falling behind rivals. This leads to the predominance of the lowest common denominator.
  • Ask tough questions about technology spending. Using Moore’s Law, zero-based budgeting would call for technology spending to fall each year by about 30%; in most companies spending goes up by at least 5% annually. Part of the reason is that CIOs are not rewarded for taking out old code and old hardware; instead they “layer” old technology on top of ancient technology, bad on top of worse.
  • Understand the cyber threat. Unfortunately, new technology opens up vulnerabilities even as it creates value. Total security is not possible, but understanding the risk-benefit trade-off is essential. A recent survey by the Ponemon Institute, sponsored by Raytheon, found that 80% of boards do not even receive briefings on their company’s cyber security strategy.

Poor corporate governance remains a problem at many companies and is a complicated challenge that goes beyond a shortage of technology expertise. But this scarcity of technology experts is one of the easiest problems to fix.

The Board Chairperson Challenge

The Board Chair should test their company’s preparedness to handle technological change by mapping current and future challenges to their current non-executive directors’ pool. They will almost surely discover there is a gap between their team and their corporate needs; using the suggestions above should help the board bridge the gap.

Having spent a majority of my career working with and supporting the Corporate CIO Function, I now seek to provide a forum whereby CIOs or IT Directors can learn from the experience of others to address burning Change or Transformation challenges.

Craig Ashmole

Founding Director CCServe

Whos running corporate tech strategy

Whos running corporate tech strategy

Gartner’s views on who will be running corporate technology

CIOs are fully aware they need to change in order to succeed in the digital business, 75% of IT executives say that they need to change their leadership style over the next three years

In August 2013 Gartner came up with three distinct roles that it thought would much more closely define the job of the digital chief or CDO in a rapidly changing tech world. So where does that put the CIO now in 2015.

According to a report that Gartner produced on the topic there were three new executive roles potentially filling the gaps left by CIOs who are more interested in ERP than accepting the challenges of the broader digital strategy of the business.

Gartner’s survey of 2,800 CIOs in 84 countries showed that CIOs are fully aware that they will need to change in order to succeed in the digital business, with 75% of IT executives saying that they need to change their leadership style in the next three years.

There has been much discussion and blogging on where the businesses were going with regard to their CIO existence and this was driven largely by CIOs not prepared to move away from historic comfort zones like application services and ERP. There is no doubt that the evolving digital world has exposed gaps in digital leadership and has in many cases led to the creation of the chief digital office (CDO) role, which the analyst house said would exist within 25 percent of enterprises by mid-2015.

“The exciting news for CIOs,” says Gartner, “is that despite the rise of roles, such as the chief digital officer, they are not doomed to be an observer of the digital revolution.”

According to the survey, 41% of CIOs are reporting to their CEO. Gartner notes that this is a return to one of the highest levels it has ever been, no doubt because of the increasing importance of information technology to all businesses.

So where are we now? Is that percentage correct? Probably not far off but Gartner see that figure rising to 50 percent in heavily regulated industries such as banking and insurance.

Gartner believed 18 months ago that the role of the CDO would need to be broken down even further into three distinct roles rather than just one, into digital strategy advisers (DSAs), digital market leaders (DMLs) or digital business unit leaders (DBULs). In effect these roles replace three distinct ones from the pre-digital technology age: The back office, front office and head office.

The Digital Strategic Adviser (DSA) is there to advise the board, CEO and executives on the question, “How will we survive and thrive in an increasingly digital world?” Gartner said this exec “may also lead teams executing on this digital vision particularly when combined with another role, such as CIO or digital business unit leader”.

The Digital Marketing Leader (DML), will ensures that the end-to-end marketing strategy and its execution is as good as it can be with top-notch design and creation of digital products and a focus on new markets and channels. The DML will have a special responsibility for market retention – holding on to customers, and so may have a marketing background.

The Digital Business Unit Leader (DBUL) is “the CEO of online/digital business units”, Gartner said. The DBUL is defined as focusing solely on online or digital channels and digital products and services. The business model and products sold by this business unit “may or may not be the same as those sold by other business units”. says Gartner. This could be a role filled by the CIO — at a stretch.

Reports from the Gartner Symposium in 2014 highlighted another Gartner finding: While CIOs say they are driving 47% of digital leadership only 15% of CEOs agree that they do so.

Similarly, while CIOs estimate that 79% of IT spending will be “inside” the IT budget (up slightly from last year), Gartner says that 38% of total IT spending is outside of IT already, and predicts that by 2017, it will be over 50%. This is a “shift of demand and control away from IT and toward digital business units closer to the customer,” says Gartner.

One of the interesting shifts noticed is being driven from outside the company’s control, as Gartner further estimates that 50% of all technology sales vendors are actively selling direct to the business units, not IT departments.

Having spent a majority of my career working with and supporting the Corporate CIO Function, I now seek to provide a forum whereby CIOs or IT Directors can learn from the experience of others to address burning Change or Transformation challenges.

Craig Ashmole

Founding Director CCServe