A new study by Logicalis, an international IT solutions and managed services provider, examined the significant challenges facing CIOs worldwide as they enable businesses in every market segment to respond to threats posed by digital disrupters like Uber and Airbnb. The 2016 Logicalis Global CIO Survey, now in its fourth year, polled over 700 CIOs worldwide. According to the survey, distributed IT, shadow IT departments and data security are among the biggest issues facing CIOs today. Download a copy of the report, "Digital Enablers: The Challenges Facing CIOs in an Age of Digital Transformation," at www.us.logicalis.com/CIO2016.
The Logicalis study also revealed that the pace of digital transformation is gathering speed with 73% of firms around the world, to some extent, now calling themselves "digitally enabled." Overall, the survey showed that digital adoption conforms to an innovation bell curve in which:
• Digitally enabled innovators, or digital disrupters, now account for 7% of businesses.
• Early adopters comprise 22% of businesses worldwide.
• An early majority accounts for 45% of firms, while 22% fall into the late majority category.
• And laggards, or those not digitally enabled at all, account for just 5% of businesses around the globe.
"This speaks both to the huge benefits that digital transformation brings," says Mark Rogers, CEO of Logicalis Group, "but also to the scale of the challenge posed by digital disrupters and early transformers—while such a rapid transformation almost certainly means big changes for CIOs and IT departments."
Big Challenges for CIOs
This rapidly changing environment does indeed pose big challenges for CIOs, the survey found. CIOs have, for instance, less control over IT spending than ever before—40% of CIOs now say they make 50% or fewer of their companies' IT spending decisions.
This trend is also reflected in the frequency with which CIOs are bypassed altogether—with line of business buying technology without involving IT at all. The proportion reporting that this happens often, very often or most of the time has risen from 29% in 2015 to 39% in 2016.
Distributed IT and the Shadow IT Department
One result of this loss of control is a move away from centralized IT, with more and more CIOs now operating in "distributed" IT environments. Perhaps surprisingly, this decentralization of IT, which is a natural extension of "shadow IT," is no longer seen as subversive, however, and is instead viewed as a positive and essential element of digital transformation.
For example, though the vast majority of CIOs (83%) report that line of business departments now employ IT people whose role is to support business function-specific software, applications and cloud services—essentially acting as shadow IT departments—CIOs seem content to work with them. In fact, more than one-fifth of the world's IT leaders (22%) report working with these "shadow IT departments" on a daily basis, while 41% report doing so at least weekly.
"The challenge for IT departments and CIOs is to find ways to support these specialists effectively," says Vince DeLuca, CEO of Logicalis US, "securing the infrastructure, applications and vital data without stifling the 'shadow innovation' their skills support."
Together, the combination of the Internet of Things (IoT), distributed IT, and the increased pervasiveness of applications into the very core of the business—along with an ever-evolving threat landscape—represents a perfect security storm.
As a result, the CIOs surveyed cited security as far and away the biggest challenge related to the increased use of cloud services. More than three quarters (78%) pointed to security as a challenge, with related issues like data sovereignty (47%) and local data regulations (37%) coming in second and third.
Looking at security threats in more detail, CIOs expect the prevalence of increasingly sophisticated threats (61%) to be the No. 1 issue for the next 12 months, while issues like ransomware and corporate extortion were highlighted by more than half (56%).
Looking Outside for Help
The sheer range of issues facing CIOs as a result of their organizations' digital transformation means the pressure to hand off day-to-day technology management, to focus on strategy, and to reframe IT departments as internal service providers is now greater than ever.
In response, CIOs are increasingly seeking partner-led and partner-delivered services. This year, one-fourth (24%) of the CIOs surveyed say they outsource most (more than 50%) of their IT, while the number outsourcing none or just 10% of their IT has dropped dramatically—falling respectively to 9% (compared to 13% in 2015) and 19% (compared to 26% in 2015).
"As digital innovation accelerates, the winners will create new customer experiences, make faster and better decisions through smarter collaboration, and create new digital business models and revenue streams securely," Rogers says. "CIOs and IT leaders can play a leading role in enabling that innovation, drawing on skills from insightful partners to help shape their businesses and lead their sectors through the application of digital technologies. I am delighted that Logicalis is already helping clients to plan their digital journeys, releasing the creativity that runs through their workforces and using digital technology to deliver outstanding results."
Want to Learn More?
Compare this year's results to the third annual 2015 Logicalis CIO survey, "The Shadow IT Phenomenon." And, if you're looking for trends, explore Logicalis' 2014 CIO report, "Establishing the Internal Service Provider," as well as its 2013 report, "Embracing a New IT Reality."
Learn more about the service-defined digital transformation organizations worldwide are undergoing in this WatchIT video featuring Logicalis US CEO Vince DeLuca.
Read a Logicalis white paper: "Why Every CEO Wants to Lead a Service-Defined Enterprise and Why the CIO Needs to Make It Happen."