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CIO outlook 2017: Five elements of the new IT operating model

CIO outlook 2017: Jettison the plan-build-run model, form fusion teams, hire agile learners, double down on IT risk and spearhead a plan to maximize the value of data. Here's how.

The CIO outlook for 2017 can be summed up in one word -- digitization. Next year's agenda will be shaped by companies' efforts to use next generation technologies to transform products, channels and operations. At the same time, all the work that IT has done in previous years won't have gone away, so the old adage about building the ship while sailing has never been more true.

In conversations with hundreds of CIOs globally, we've heard about their biggest priorities for 2017. Collectively, it's an impressive list of plans to change IT's operating model, adopt new ways of working, upgrade IT talent, and come to grips with some of digitization's most significant business implications. Here is our CIO outlook for the coming year in five steps.

No. 1: Stop doing plan-build-run

Changes to the IT operating model top many CIO agendas for 2017. Today, most IT groups are set up to plan against a set of business priorities, build a portfolio of projects, and manage ongoing run the business activities. This project-centric model worked best when demand was relatively stable and predictable. But in a world of rapidly changing -- and often business-led -- digital initiatives where requirements are unclear and hard to predefine, this model is on its last legs. CIOs find it slow, unresponsive and too inflexible for Agile, DevOps and continuous delivery.

In 2017, we expect to see up to two-thirds of companies begin to adopt a model that lines up funding, development resources and ongoing management support around a set of enduring product lines. These product lines -- also known as IT services, platforms, or value streams -- are aligned to the enterprise's most important business capabilities. Dedicated product-line or service managers work with business stakeholders to oversee the full lifecycle, including launch, ongoing performance management and retirement. They also manage the funding, which may lead to one of 2017's more delicate conversations for CIOs -- persuading the CFO to move IT budget allocation to business capability-aligned teams rather than to projects.

No. 2: Increase use of fusion team

Fusion teams will become an important way in which work gets done in 2017. A fusion team draws resources from across IT (or from IT, other parts of the business and third parties). The team may be temporary or standing, but team members report outside their organizational hierarchy and collaborate on overlapping tasks and responsibilities. Agile and DevOps teams are common examples. Others include technologists and marketers in a digital marketing team, or a digital product launch team comprised of IT, cybersecurity, product development and sales.

Fusion teams are on the rise because technology initiatives change quickly and have so many objectives, interdependencies and stakeholders that it's impossible to define a stable organizational structure to accommodate all of them. Instead, CIOs find themselves constantly reassigning resources, creating new groups and shuffling responsibilities between different roles. Fusion teams require staff that is versatile, comfortable with ambiguity and open to change -- not skills that all IT staff members have. But companies with the talent, culture and processes to make fusion teams work will thrive while others fall behind.

No. 3: Find staff with versatility and learning agility

In 2017, we expect to see up to two-thirds of companies begin to adopt a model that lines up funding, development resources and ongoing management support around a set of enduring product lines.
Andrew HorneIT practice leader, CEB

Every year, demand for certain skills and competencies spike as IT teams scramble to hire the talent they need. With fast-changing technology and significant upheaval in IT operations, two hot skills for 2017 will be versatility and learning agility.

We've already seen a 20% increase in IT job descriptions that seek candidates with multiple areas of technical expertise, or combine technical depth with competencies such as influencing, relationship management or communication. Learning agility -- the ability to rapidly acquire new knowledge or skills -- is also on the up. We've seen a 30% increase in references to this competency in recent job descriptions. The bad news is that only 60% of IT employees are proficient at learning agility, so demand already outstrips supply.

No. 4: Take IT risk management (not just cyber risk and compliance) seriously

As more revenue now goes through digital channels or relies on data, IT risks are no longer just in the back office, or confined to cybersecurity and compliance. 2016 saw a series of airlines, banks, and others temporarily unable to operate their businesses due to technology outages. And longer-term, companies in many sectors will disappear if they can't adapt to technology-driven disruption to their business models.

In response, in 2017 we'll see rising interest in IT risk management -- an approach to identifying and assessing all risks posed to the business by technology. While information security threats and compliance issues will feature prominently, other major risks will also rise, especially those relating to IT strategy, project delivery, legacy system maintenance, budget discipline, vendor performance, data quality and shortages of critical IT skills.

No. 5: Stand up business-wide data strategy

Thanks to smart sensors, social media, mobile and other sources of big data, companies now sit on a gold mine of insight that can be used to launch new products, reshape customer experience and optimize operations. As a result, they are investing in data lakes, analytical tools, and visualization engines, but many have yet to see much value. What's missing is a cohesive enterprise-wide data strategy to identify how to get value from information, so we expect a surge in data strategy efforts in 2017.

We also expect a 50% increase in the number of chief data officers next year. Some will be inside IT while others will report elsewhere, but the most effective of them will drive the development of data strategy and evangelize data's potential, not bury themselves in the thankless task of clarifying data ownership. They will also help develop the internal staff competencies necessary to analyze and extract value from data across the business.

All five of these trends are shaped by the ever-faster speed of change, and undoubtedly, there will be unanticipated change that will modify the CIO outlook in 2017. But CIOs who have a flexible, product-aligned model and versatile staff who have a good handle on risk and data and can quickly form into fusion teams will be set up to respond -- even to the unknown.

About the author:

Andrew Horne is an IT practice leader at CEB, a best practice insight and technology company. Since joining CEB in 1999, he has authored studies on topics including IT strategy development, performance and value measurement, business intelligence and big data, IT staff and leadership development and IT innovation.

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