Support for enterprise analytics and development of IT talent are two priority areas for CIOs in 2018, as companies “seek to unlock the value of digital business,” according to new research. The downside, however, is that companies’ efforts to deploy and derive value from digital tools are likely to be handicapped by low capability maturity in these two key areas, as well as a lack of initiative to improve over the coming year, the study reports.
At the heart of the challenge of gaining the value of digital business, is a strategic disconnect between expectations and capabilities, according to The Hackett Group’s 2018 IT key issues research, “Driving Value from Transformation,” which is based on results gathered from surveying more than 160 executives in the U.S. and abroad—most at large companies with annual revenue of $1 billion or greater. Nearly 75 percent of the executives agreed that digital transformation will fundamentally disrupt their industry and the competitive landscape in which they operate, while 82 percent expect it to fundamentally change the operating model of their business.
The report recommends that IT organizations focus on improving enterprise analytics capabilities in 2018, including stronger governance around data management and architecture practices as well as supporting the foundational tools that help enable analytics in the business. It’s also vital that IT organizations improve their ability to develop and acquire talent, particularly in data management, advanced analytics and customer-centric design, the authors explain. Many companies strive to design services, products and delivery channels to enable digital customer experiences, which further requires IT departments to have more staff with customer-oriented design experience, including customer journey mapping and design thinking.
Indeed, the research found that in IT—and across the enterprise, for that matter—access to talent will rival cybersecurity as the greatest business threat within the next two years. Aligning talent with future business needs is a top three priority for IT. However, the research also found that efforts to improve talent are not getting commensurate attention in 2018. For instance, only 45 percent of study respondents across the enterprise have talent improvement initiatives underway or planned, and only 21 percent of IT leaders report plans to align IT skills and talent with changing needs of the business.
“The impact of digital transformation on talent is a critical factor,” says Scott Holland, The Hackett Group principal and Global IT Executive Advisory Practice leader. “IT roles are being transformed by digital—more than one in four IT roles are already affected. Current staff are aging out and millennials show little interest in employers that have not fully embraced digital, and in working for companies located outside of technology innovation centers such as the U.S. West Coast. Data savviness, agility/ability to change and creativity are increasingly critical skill sets that are lacking in most IT organizations. Companies which don’t address staffing challenges more aggressively will suffer, as they fall behind competitors in leveraging new tools, processes and business models.”
The good news is that IT organizations will be getting funds in 2018 to address these challenges. Study respondents said they expect operating budget increases of 1.8 percent in 2018, in stark contrast with other business services areas. Indeed, the research shows finance, procurement and HR are all expected to see flat or declining budgets in 2018, despite projected revenue growth of 3.6 percent.
What are your thoughts on the challenges of digital transformation? Do you agree a lack of analytics and sufficient staff with necessary skills are the two main challenges?