IT budgets will remain pretty flat for 2013, increasing by 1.8% next year, according to a survey conducted by research and advisory firm CEB. CIOs nevertheless are moving ahead with
In this Q&A, Andrew Horne, managing director at Arlington, Va.-based CEB, discusses how CIOs are reallocating resources to support IT transformation projects and rethinking traditional approaches to project management. The survey is based on 2013 IT budget plans from approximately 200 companies globally that represent $52 billion in IT spending.
If IT budgets are expected to remain flat year over year, where is this money for IT transformation coming from?
Andrew Horne: We are seeing less money going to traditional process automation projects -- ERP, manufacturing systems, CRM [customer relationship management] -- which traditionally have always been the biggest spend category, and more money going toward collaboration, business intelligence [BI] and customer-facing projects. That's a multi-year shift that has been happening for a few years now.
You mention collaboration as an IT transformation area. Are companies making new investments in collaboration platforms, or using what they have in place?
Horne: One of the implications of this move away from process automation projects is that companies are doing much smaller projects. Process automation projects tend to be large, multi-year investments -- rolling out ERP globally over three years, [for example]. In these other areas, whether collaboration, business intelligence or projects that touch the customer, these tend to be much smaller, quick-fire projects; and there are a lot more of them. So no, it isn't buying one huge new suite of collaboration tools for the enterprise. It may be experimenting with three or four different tools, or the business making requests for different tools and IT quickly cycling through those requests. All of this has implications on how IT runs projects, as well as for the IT budget.
[Transformation projects] tend to be much smaller, quick-fire projects and there are a lot more of them.
managing director, CEB
What are the implications for how IT runs projects?
Horne: There are many, such as the rise of Agile methodologies and the ability to quickly develop apps and projects. Business partners or people across the business tend to be more involved in these projects; some of them even try to do these projects themselves, so we are seeing more a blur between what IT does and [what] the rest of the organization does. So, IT has to adopt a variety of different stances to help people in marketing or manufacturing, for example, who may need a little or a lot of help with a project; and [IT] has to be able to flex with the organization's needs.
Organizations are starting to think that the traditional model of a project queues and project teams is beginning to suffer. The idea [instead] is to come up with services which deliver a particular business outcome and those services exist long-term and are owned by a service manager. At any given time, there could be a number of projects under way to enhance the service. So, you might have an employee collaboration service or a customer insight service, and these persist over a number of years; but the service manager's job is to work out what enhancements are needed -- a quick update or something bigger -- and work within IT to get that done. If you are in the business, what you see is IT offering you this service that gradually improves over time; the complexities of all these little projects is going on in the background within IT.
Another transformation project area you mentioned is business intelligence and its components -- data management and 'big data.' Talk about complexity behind the scenes! Are enterprises getting to the point where they know what to do with all the data they are collecting?
Horne: There is still a lot of foundational work going on. There are still organizations building data warehouses, putting in place information stewardship, trying to clean up the data.
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An interesting development is that traditionally, most of this was focused on a fairly narrow slice of transactional information. You took transactional information on your customers, products, finances, and moved that into your data warehouse and analyze[d] it. That misses a vast amount of information that people are using every day -- unstructured information like email, presentations, Word documents, content created in social media or on their desktops that they never share. There is a lot of value in that information. The vast majority of employees use those [unstructured] categories of information versus structured information.
So, there are efforts to get more serious about managing and exposing less-structured forms of information and to look at ways to bring structured and unstructured data together. In theory, you can get more powerful insight if you can map a comment your customer made in social media with an internal file you have on a customer, with the file on a product they bought. The technology is beginning to help with that, but what companies are struggling with is what to actually do with this information. It sounds great in theory -- 'I bring all this information together' -- but where to begin, what are the examples where companies can really make money or save money by doing this?
Where can an enterprise begin the process of collecting unstructured information and combining this with structured information?
Horne: The best place to start is with a use case, such as better response times to customers or gaining a better understanding of the customer. Product development is another place to start. But IT needs to start with promoting the opportunities and getting someone in marketing or sales or strategy interested in order to prove it out, build it and build on that success. Where it doesn't work is when you start with a massive effort to try to manage and harmonize unstructured information and then work out a business case for it later. That's never worked in information management, and it's an even worse approach when you're trying to do it with these vast amounts of unstructured information.
So, IT must find specific examples. Instead of saying, 'I have a lot of customer information what can we do with it?' turn it around and say, 'How can I more quickly spot when we have a product fault by listening to our customers?' We're seeing some smart data management and BI [business intelligence] teams doing that legwork to find niche business cases and working with other parts of the organization to spot those niche opportunities. Only after that do they begin to work out what data is available, how can they bring all of it together -- that's actually the easier part than spotting the opportunity in the first place.
So, you often see IT leading the charge with these projects?
Horne: Right now, IT understands the data and what some of these tools are capable of a little better, and so can at least start to see some of the ideas. Long-term, I don't see IT being in charge of this because there are people in the organization better suited for it.