What LOB leaders really think about IT: IDC study

For IT leaders seeking to move beyond being order takers and instead meet business colleagues eye to eye, the time is now, as IT teams are at risk of being excluded when key business decisions are made, according to a new study by IDC.

Over 20% of North American line-of-business (LOB) leaders said that IT did not have a ‘seat at the table’ in their enterprise when it came to making key business decisions. Globally, 16% said that IT did not have a seat at the table, with only 43% saying it did, and the rest having no opinion.

That the executives surveyed were LOB leaders, not IT leaders, lends insight into how IT departments are viewed by their colleagues, and what is expected of them.

“It’s quite eye opening because they’re saying yes, there is a value in IT, but IT is still seen in that support role versus the business value role,” Jennifer Thomson, an associate vice-president at IDC and one of the report’s authors, told CIO.com. “Maybe that’s why there are so many people that are neutral, because they can’t see beyond the support role, what the value is in IT having a bigger seat at the table.”

As further evidence of the gap between IT and LOBs, only 47% of leaders surveyed said they prefer to use in-house IT resources rather than third parties, and only 42% said they were willing to collaborate with IT.

Leaders in manufacturing and supply chain, R&D, or security and compliance functions were the most likely to see IT as excluded from key decision making, according to the study, which was sponsored by systems integrator Insight. IDC surveyed 1,000 executives from director level up to the C-suite, 30% of them in North America and the rest across Western Europe. They represented manufacturing, healthcare, financial services, retail, hospitality, energy, mining, and public sector organizations, among others.

Shifting to a business value mindset

For many IT leaders, turning that tide may require a new approach. CIOs can demonstrate their value to the business and earn that seat at the table by tying what they do to business goals, Thomson suggested.

“One of the biggest challenges that IT people have is being able to communicate their business value in a language that the business understands,” she said. “Talking in business outcomes is the currency that enables IT to gain trust and show the value that they’re delivering.”

In addition to mastering business concepts and taking steps to prove the value of IT, CIOs who are succeeding at this are putting in place seamless teams where there’s no wall between IT and the business, she said. “It’s just seen as one cross-functional team where everybody understands the common goal that is driving all the business decisions.”

Such strategic maneuvers are essential to becoming a digital business, one where value creation is based on and dependent on the use of digital technologies, from how processes are run to the products, services, and experiences it provides, Thomson said.

So too is aligning IT to key business objectives. The most common goal for IT according to business leaders is greater efficiency, which was cited by 45% of survey respondents, first in all regions, most industries, and most business functions. Increased productivity was cited by 37% and topped the list of objectives in the energy and mining industries and the R&D function. Improved service quality (cited by 32%) was highly ranked in the public sector and in customer experience and R&D functions. Faster time to market was highly ranked in the financial services industry and the security function, while increased revenue topped the concerns in the manufacturing industry and manufacturing or supply chain functions.

Senior executives are taking a close interest in how digital transformation initiatives are helping achieve these company-wide goals. In 66% of organizations surveyed, the CEO is actively or personally involved in defining the digital strategy of the organization, and in 61% such initiatives are centrally orchestrated with a long-term plan and governance.

That high-level attention is on the up, too, with 48% of organizations reporting more C-suite scrutiny of digital initiatives over the past year, and only 20% less.

Metrics of success

With that attention has come increased scrutiny of digital progress. Roughly half (51%) of respondents say that metrics are becoming more specific and granular, with 44% saying metrics are being reported to the C-suite more frequently, and 39% that they are focused on a shorter time frame.

“We’ve seen a number of organizations move from yearly to six-monthly to quarterly and in some cases monthly measuring and reporting on metrics or KPIs,” Thomson said.

But there’s a danger here that more frequent or more granular reporting can cause executives to lose sight of the bigger picture.

“You need to have both short-term and longer-term metrics, so that your digital initiatives aren’t shortsighted, but they focus on the long-term business impact,” she said.

When it came to the technologies business leaders said were essential to their digital transformation efforts, there were also differences in the long and short term.

Over the next 12 months, cybersecurity was seen as essential by 63% of business leaders and SaaS applications by 43%, followed by edge technologies (39%), business analytics (37%), cloud infrastructure/IaaS (26%), private 5G networks (26%), intelligent automation (16%), and cloud-native development/PaaS (11%).

In the longer term the top technology was also cybersecurity, considered essential by 41% of respondents, but 3-5 years out those same leaders see private 5G networks (37%), edge technologies (36%), cloud infrastructure/IaaS (32%), and cloud native development/PaaS (30%) among the most important.

The need for cybersecurity also topped the list of drivers for digital business initiatives over the next 12 months, cited by 46%, followed by hybrid working models (42%) and sustainability or ESG (38%).

Is the skills gap closing?

Despite skills shortages being a top concern in many other surveys, only 12% of respondents in IDC’s survey cited it as a driver for their digital business initiatives, putting it in eighth place.

Cybersecurity also showed up as the No. 1 threat, cited by 56%, with the skills gap way down in sixth place.

Perhaps that’s because respondents were LOB managers, and the skills they need are easier to find than IT skills. In any case, when asked about the biggest challenges to completing their digital transformation initiatives, business leaders put lack of essential technology skills in second place, alongside a lack of resources for change management (both cited by 39% of respondents), and behind privacy or security concerns (53%).