Вы находитесь на странице: 1из 62

This research made possible through the generous support of:

Price $500.00 (free download for SIM members)

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Issues, Investments, Concerns, and Practices of Organizations and Their

Issues, Investments, Concerns, and Practices of Organizations and Their IT Executives: Results and Observations from the 2015 SIM IT Trends Study

Leon Kappelman, University of North Texas Vess Johnson, University of the Incarnate Word

Ephraim McLean, Georgia State University Natalie Gerhart, University of North Texas

“If your time to you is worth savin’; Then you better start swimmin’ or you’ll sink like a stone; For the times they are a-changin’.” – Bob Dylan

Executive Summary

Since 1980, the Society for Information Management’s survey of its members has helped IT leaders and other executives around the globe better understand important technology-related issues and trends. This report presents the major findings of SIM’s 35 th Anniversary IT Trends Study based on responses from 717 mostly U.S.-based organizations, representing nearly 25% of the U.S. economy’s Gross Domestic Product (GDP) and $200 billion in IT spending annually.

The Study finds that organizations continue to invest in IT to improve operations, reduce costs, and enable strategies. IT budgets, hiring, and salaries are modestly increasing and IT executives are cautiously optimistic that this trend will continue into next year.

The five most important IT management concerns of these organizations are:

1. Alignment of IT with the Business

2. Security and Privacy

3. Business Agility and Flexibility

4. Business Productivity

5. IT Time-to-Market/Speed of Delivery

Their five largest IT investments are:

1. Analytics and Business Intelligence

2. Data Center Infrastructure

3. Enterprise Resource Planning

4. Application Software Development

5. Cloud Computing

The Study and this report also include other important IT topics, including:

IT spending patterns, including sourcing and the use of cloud and shared services.

IT workforce trends, including retirement forecasts and specifics about the performance measures used for in-house and outsourced IT, as well as to evaluate IT executives.

To whom CIOs report, what they do with their time, with whom they spend it, what they do with them, and what they think about the role of IT in strategy and innovation.

Skill needs for the success of new IT hires, mid-level IT professionals, and CIOs.

The personal views of senior IT leaders about their most important or worrisome IT management issues and technologies.

Overall, the Study finds IT is becoming more strategic and business-focused; and it appears that organizations are becoming more digitized with their focus shifting away from tactical and operational IT issues like efficiency, service delivery, and cost reduction to more strategic and organizational priorities like business agility, innovation, the velocity change in the organization, IT time to market, and the value of IT to the business. Time will tell if this is a widespread trend, but it is here now among SIM members and their organizations; and it is confirmed by a corresponding shift in how CIOs are spending their time.

a corresponding shift in how CIOs are spending their time. A big “THANKS!” to all SIM
a corresponding shift in how CIOs are spending their time. A big “THANKS!” to all SIM

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study The 2015 SIM IT Trends Study: Issues, Investments, Concerns,
Comprehensive Report: 2015 SIM IT Trends Study The 2015 SIM IT Trends Study: Issues, Investments, Concerns,

The 2015 SIM IT Trends Study:

Issues, Investments, Concerns, and Practices of Organizations and Their IT Executives

Leon Kappelman, University of North Texas Ephraim McLean, Georgia State University Vess Johnson, University of the Incarnate Word Natalie Gerhart, University of North Texas

This research was made possible through the generous support of:

research was made possible through the generous support of: \ Comprehensive Report (Price: $500) ** Free
\
\

Comprehensive Report (Price: $500)

** Free download to SIM Members on simnet.org **

This is the complete report of the Society for Information Management’s 35 th Anniversary IT Trends Study. It is embargoed by SIM until after it is presented at their SIMposium conference in Denver on November 4, 2014. The slide deck of that presentation will be available to the public on <www.simnet.org> after the conference. An abridged version of this report will appear in the December 2014 issue of MIS Quarterly Executive and be available free of charge to all SIM members.

October 21, 2014

We have done our very best to make this report error free. But it is software; and you know how that goes sometimes. So if you find defects or have questions, please let me know via Leon.Kappelman@unt.edu.

(C) 2014 The Society for Information Management and Leon A. Kappelman

The Society for Information Management and Leon A. Kappelman A big “THANKS!” to all SIM members
The Society for Information Management and Leon A. Kappelman A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Table of Contents Executive Summary   i Introduction 1

Table of Contents

Executive Summary

 

i

Introduction

1

I. The Top IT Management Issues and Concerns

2

A. The Five Most Important IT Management Issues and Concerns of Organizations

3

B. The IT Management Issues Most Important or Worrisome to IT Leaders

4

C. Comparing Organization’s Key Issues to Those Most Important or Worrisome to IT

Leaders

 

5

II. The Largest IT Investments and Most Important Technologies

7

A. The Organizations’ Largest IT Investments

7

B. The Five Largest Technology Investments of Organizations

8

C. Comparing Organizations’ Largest IT Investments to Their Most Important Ones

9

D. The Most Worrisome Technologies for Senior IT Leaders

10

E. Comparing IT Leadership’s Most Worrisome Technologies to the Largest Technology

Investments of Organizations

11

III.

Participating Organizations and Their IT Practices

13

A. IT Organization Structure

14

B. Role of IT in Strategy and Innovation

15

C. IT Budgets and Staffing Trends

17

 

i. IT Budgets and Spending Trends

17

ii. IT Budget Allocations

18

iii. IT Staffing and Salary Trends

21

a. IT

Employees and Their Salaries

21

b. IT Contractors and Consultants

22

c. Turnover and Retirements, Education and Training

23

D. Use of Cloud, Shared Services, Service Catalogs, and Chargebacks

25

 

i. Cloud-Based IT Services and Solutions

25

ii. Shared Services for IT Delivery

26

iii. Service Catalogs and Chargebacks

28

IV.

CIO Reporting Relationships, Time Allocation, Background, Tenure and Performance

Measurement

 

30

A. CIO Tenure

30

B. CIO Reporting Relationships

31

C. CIO Previous Employment

32

D. Performance Measurement for CIOs

34

32 D. Performance Measurement for CIOs 34 A big “THANKS!” to all SIM members who completed
32 D. Performance Measurement for CIOs 34 A big “THANKS!” to all SIM members who completed

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study 36 V. Skills Needed for the Success of New

36

V. Skills Needed for the Success of New IT Hires, Mid-Level IT Professionals, and CIOs 42

E. How CIOs Spend Their Time, with Whom, and What They Do with Them

A. The Top Five Skills for the Success of CIOs, Mid-Level IT Professionals, and New IT

Hires

42

B.

Skills for Success and Career Progression

45

VI.

Summary and Conclusion

47

Appendix: Research Methods, Design, and Delivery of SIM’s IT Trends Study

49

Design, and Delivery of SIM’s IT Trends Study 49 A big “THANKS!” to all SIM members
Design, and Delivery of SIM’s IT Trends Study 49 A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Figures and Tables Figure 1: Organizations’ Top 10 Most

Figures and Tables

Figure 1: Organizations’ Top 10 Most Important IT Management Concerns, 2003-2014

2

Figure 2: IT Leaders’ Most Important or Worrisome IT Management Concerns (2013-14)

5

Figure 3: Comparison of Personal to Organization’s Top 10 IT Management Issues

6

Figure 4: Organizations’ Largest/Most Significant IT Investments, 2003-2014

7

Figure 5: Comparing Organizations’ Largest IT Investments to its Most Important (2014)

10

Figure 6: Personally Most Worrisome Technologies (2013-2014)

11

Figure 7: Comparing IT Leadership’s Most Worrisome Technologies to the Organization's Largest IT Investments (2014)

11

Figure 8: Percent of Revenue Allocated to IT Budget (2005-2014)

n=493

13

Figure 9: IT Organization Structure 2006-2014 (717 responding organizations)

14

Figure 10: IT Organization Structure with Averages 2006-2014 (717 responding organizations)

15

Figure 11: IT Alignment, Credibility, and Role in Strategy and Innovation

15

Figure 12: IT is Aligned with the Business (717 unique organizations)

17

Figure 13: Change in IT Budget from Previous Year (2004 to 2014 actual, 2015 projected)

18

Figure 14: IT Budget Allocations 2014 Actual and 2015 Projected (n = 366)

19

Figure 15: 2009-2014 IT Budget Allocation (Actual) and 2015 Projection

20

Figure 16: 2009-2014 IT Budget Allocations (Actual) and 2015 Projection, with Trendlines

20

Figure 17: Change in Number of Internal IT Employees

22

Figure 18: Full-Time IT Employee Actual Turnover Rate 2006-2014

23

Figure 19: Percent of IT Budget Spent on Training and Education

24

Figure 20: Distribution of Organizations by Percent of IT Delivered by Cloud (n = 528)

25

Figure 21: Percentage of External Cloud-Based IT Services Delivered In These Categories

26

Figure 22: Distribution of Organizations by Percent of IT as Shared Service (n = 452)

27

Figure 23: Delivery of IT Shared Services – Internal versus External Capabilities (n = 267)

28

Figure 24: The Use of Service Catalogs and Chargebacks (n = 615)

28

Figure 25: In my organization we have an IT services catalog (n = 615)

29

Figure 26: We charge users for the IT services they consume (n = 615)

29

Figure 27: Average Job Tenure of CIOs (2006-2014) (n = 451 CIOs)

30

Figure 28: To Whom the CIO Reports, 2005-2014 by percentage of respondents

31

Figure 29: To Whom the CIO Reports, 2005-2014 by percentage of respondents

32

Figure 30: CIOs with a Seat at the Strategy Table (n = 364 CIOs)

32

Figure 31: CIO Prior Employment (2010 to 2014) with Subtotals (n = 451 CIOs)

33

Figure 32: CIO Prior Employment (2010 to 2014)

33

33 Figure 32: CIO Prior Employment (2010 to 2014) 33 A big “THANKS!” to all SIM
33 Figure 32: CIO Prior Employment (2010 to 2014) 33 A big “THANKS!” to all SIM

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Figure 33: CIO Performance Measures (with Internal & Outsourced

Figure 33: CIO Performance Measures (with Internal & Outsourced IT Metrics)

35

Figure 34: Average Percent of a CIO's Time Spent Working with the Following (n = 305)

37

Figure 35: Summary: With Whom Do CIOs Spend Their Time? (n = 305)

38

Figure 36: Frequency of CIO Interactions with Other Executives

38

Figure 37: Frequency of CIO Interactions with Other Executives

39

Figure 38: Frequency and Value of CIO Interactions with Other Executives (2013-14)

39

Figure 39: Compare Two Calculations of Percent of CIO Time Spent Working with Whom

40

Figure 40: What CIOs Do with Their Time

41

Figure 41: Most Important Skills for the Success of CIOs, Mid-Level IT Professionals, and New

IT Hires

43

Figure 42: Top Five Most Important Success Skills for CIOs, Mid-Level IT Professionals, and New IT Hires

44

Figure 43: Top Five Most Important Success Skills for New, Mid, and CIOs Sorted by CIOs’ . 45

Figure 44: Top Ten Most Important Success Skills for New, Mid, and Top Sorted by Top 10 of

New

46

Figure 45: Response by Industry for 717 Unique Organizations

49

Figure 46: Total Revenue of Organization (n = 564)

50

Figure 47: Modifications to List of IT Management Concerns/Issues

50

Figure 48: Modifications to List of IT Investment Priorities and Concerns

51

Figure 49: Additions and Changes to the List of Performance Measures

52

Figure 50: Changes to the Lists of What CIOs Do and With Whom They Do It

53

to the Lists of What CIOs Do and With Whom They Do It 53 A big
to the Lists of What CIOs Do and With Whom They Do It 53 A big

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study “What we observe is not nature itself, but nature

“What we observe is not nature itself, but nature exposed to our method of questioning.” – Werner Heisenberg

Introduction

Since 1980, the Society for Information Management (SIM), in a joint effort with different universities, has conducted a Study of the key issues facing IT executives. Over time, these studies have expanded to include questions pertaining to spending, workforce sizing and salaries, sourcing, reporting relationships, performance measurement, and various other IT organizational and management practices. They also explored how IT executives spend their time, with whom they spend it, and what they do with them, as well as their assessment of the role and state of IT in their organizations. In addition to providing a snapshot of the state of IT, another important contribution of this multi-year research effort is its ability to identify important trends across the industry and the IT profession. This report presents the major findings and insights gained from the 35 th Anniversary SIM IT Trends Study, conducted in the second quarter of 2014, with comparisons to earlier SIM Study results, organized into the following five main sections, with an appendix describing the conduct of the Study.

I. The Top IT Management Issues and Concerns

II. The Largest IT Investments and Most Important Technologies

III. Participating Organizations and Their IT Practices

IV. CIO Reporting Relationships, Time Allocation, Background, Tenure, and Performance Measurement

V. Skills Needed for the Success of New IT Hires, Mid-Level IT Professionals, and CIOs

Last year, for the first time, the most important IT Management Issues and largest IT Investments sections were expanded to compare organizational priorities with the issues and technologies of greatest personal concern to IT leaders. This provided some intriguing results and we continued the practice this year, further expanding upon it to include the most important technologies of the organization. In the Performance Measurement section, in addition to the most important metrics for internal and outsourced IT, questions were added regarding the measures of IT executive performance. A new section was also added about the most important skills for the success of new IT hires, middle-career IT professionals, and the responding IT executives themselves, as well as some new questions about the role of IT in their organizations. In the pages that follow, these and other modifications and improvements are discussed further.

An invitation was distributed by individual e-mail with a personal link to all 4,612 SIM members. A record total of 1,002 complete responses were received for a 21.7% response rate, up from 655 the prior year. Of these, 839 were senior IT leaders from 717 unique organizations (represented by their highest ranking IT executive). We also analyzed separately the responses from 451 CIOs, who identified themselves as the “top or highest IT person, (e.g., the CIO)” among those who completed the questionnaire 1 . See “Appendix: Research Methods, Design, and Delivery of SIM’s IT Trends Study” for additional information about the research.

1 428 of these CIOs are from the 717 unique organizations while organization affiliation was not available for 23 of the CIOs.

affiliation was not available for 23 of the CIOs. A big “THANKS!” to all SIM members
affiliation was not available for 23 of the CIOs. A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study “We are entering a period of consequences. We cannot

“We are entering a period of consequences. We cannot avoid this period; we are in it now.” – Winston Churchill

I. The Top IT Management Issues and Concerns

The participants were asked to select, from a list of 40, up to three IT management issues that they considered “most important” to their organization and up to three issues that were “most important or worrisome” to them personally or that “keep you up at night.” This is similar to the approach used since the first SIM IT Trends Study in 1980; although the second, personal question was added for the first time last year. Capturing both the organizational and personal perspectives of the respondents provides additional insights. Some items on the selection list were modified or deleted (based on very low selection rates the previous year), and additional ones added for this year’s Study. A complete listing of these changes can be found in the Appendix.

The organization’s top 10 most important IT management concerns, from the perspective of the senior-most IT leader in each of the 717 organizations, are shown in Figure 1, together with the comparative rankings from prior SIM IT Trends Studies since 2003. Four new items appear in the top 10 list this year: Two of these are completely new (“Innovation” and “IT Value Proposition in the Business”) and two are the result of “Time to Market/Velocity of Change” becoming three separate selections (“Velocity of Change in the Business,” “IT Time-to- Market/IT Speed of Delivery,” and “Velocity of Change in IT”), the first two of which ranked in the top 10.

Figure 1: Organizations’ Top 10 Most Important IT Management Concerns, 2003-2014

IT Management Concerns/Issues

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

Alignment of IT with the Business

1

1

2

1

3

2

1

2

1

 

1 1

1

Security/Privacy (a)

2

7

9

8

9

9

8

6

3

2 3

 

3

Business Agility/Flexibility (b) (c)

3

2

3

2

2

3

13

17

7

 

5

7

Business Productivity

4

3

1

4

1

1

7

4

 

IT Time-to-Market/Speed of IT Delivery

5

(c)

New; was with “Velocity” in 2013, and “Agility” through 2012.

 

IT Value Proposition in the Business

6

New

 

Velocity of Change in the Business

7

(c)

New; was with “Time to Market” in 2013, and “Agility” through 2012.

Innovation

8

New

 

Business Cost Reduction/Controls

9

4

Combined with “Business Productivity” through 2012.

 

Revenue Generating IT Projects

10

10

4

9

6

8

17

 

(a)

“Security” and “Privacy” were recombined this year. Separated in 2013, “Privacy” was not selected by any respondent.

 

(b)

“Flexibility” added this year.

(c)

In 2013, “Business Agility & Speed to Market” became “Time to Market/Velocity of Change” and “Business Agility.” This year, “Time-to-Market/Velocity of Change” was separated and became three selections: “Velocity of Change in the Business,” “Velocity of Change in IT,” and “IT Time-to-Market/IT Speed of Delivery.”

(-)

Blank cells, unless otherwise noted, indicate that the issue was not asked in that year of the Study. n = senior-most IT leader in 717 unique organizations

Comparing this year’s remaining six top 10 with those of prior years, these issues have been relatively stable, although their rankings did shift a bit with “Security/Privacy” moving up to the number two slot from number seven and “Business Cost Reduction” moving from fourth to ninth. “Alignment of IT with the Business” remains in the number one position for a second straight year. New items “IT Value Proposition in the Business” and “Innovation” appear in the sixth

in the Business” and “Innovation” appear in the sixth A big “THANKS!” to all SIM members
in the Business” and “Innovation” appear in the sixth A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study and eighth positions respectively, and “Revenue Generating IT Projects”

and eighth positions respectively, and “Revenue Generating IT Projects” held steady at number ten.

Three items fell off the organizations’ top 10 list this year. “IT Cost Reduction and Controls,” which had appeared as a top 10 issue since 2003, dropped to 17 th position. “IT Service Delivery,” added to the list last year when it ranked eighth, became “IT Operations/ITIL/IT Service Delivery/‘Keeping the Lights On’” this year and fell to 22 nd place. Finally, “IT Efficiency,” in the top 10 since 2009, and ninth ranked last year after being separated from “IT Reliability,” dropped out of the top 10 to 21 st .

It appears that, aside from “Security” rightfully moving up, given the many high profile and costly breaches in the past year, there has been a shift in priorities and focus among organizations and their IT leadership away from tactical and operational IT issues like efficiency, service delivery, and cost reduction to more strategic and organizational priorities like business agility, innovation, the velocity of change in the organization, IT time to market, and the value of IT to the business. It seems that IT is becoming more strategic and business-focused and presumably the organization is becoming more digitized. Time will tell if this represents a widespread trend, but it is here now among SIM members and their organizations.

A. The Five Most Important IT Management Issues and Concerns of Organizations

Looking at the organizations’ top five most important IT management concerns in Figure 1, Aligning IT with the Business, which has ranked in the top three positions for over a decade, is ranked number one this year. Security/Privacy, which were recombined this year, ranks number two, up five positions. Business Agility ranks third and has appeared in the top three since 2009. Business Productivity, also in the top five since 2009, ranks fourth, and IT Time-to-Market is number five. It is noteworthy that only one of the selections, Alignment, was chosen by more than 20% of respondents. This suggests a significant amount of variance in focus and priorities across organizations in terms of the IT management issues they face. Even though over 95% of responding organizations are U.S.-based, this is not surprising given the relatively high degree of diversity in terms of industries and sizes in our sample of 717 organizations (see Appendix for details).

1. Aligning IT with the Business

Aligning IT with the Business has been a top ten concern since it first appeared in the SIM studies in 1984. It ranked number one in eight of the last twelve years, and second in all but one. This year, 188 of 717 organizations, or 26.2% of all the responding organizations, identified Alignment as one of their top three IT management concerns. The issue of IT Alignment with the Business has been of significant interest to both researchers and practitioners for decades and appears to be central to how IT executives view the purpose of IT and their own roles. Perhaps alignment is a persistent issue because organizations, markets, economies, and technologies are constantly changing, and thus getting and staying aligned is a continuous activity too. Although applicable and useful, we wonder if this decade’s old concept has perhaps overstayed its welcome, in some ways fostering a divisive us-them mentality rather than the holistic oneness required of a digitized, agile, fast, and efficient enterprise. On the other hand, perhaps the definition of the term will evolve as we are still discovering and inventing what it really means to align IT with the organization.

2. Security and Privacy

In this year’s Study, Security and Privacy were recombined into a single selection, since Privacy received no votes last year when listed separately for the first time. Security and

year when listed separately for the first time. Security and A big “THANKS!” to all SIM
year when listed separately for the first time. Security and A big “THANKS!” to all SIM

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Privacy has hovered between sixth and ninth position since

Privacy has hovered between sixth and ninth position since 2007, but moved up to number two this year. Security and Privacy was considered one of their top three issues by 126 (17.6%) of the participating organizations. This high ranking is not surprising given that in the past year significant breaches were reported at Adobe, Community Health Systems, Experian, Facebook, Home Depot, Neiman Marcus, PF Chang, Target, Twitter, the U.S. Department of Homeland Security, the U.S. Federal Reserve Bank, and countless other organizations. In fact, once could reasonably conclude that it is a surprisingly low response on the part of the respondents. Even so, it regrettably took these very high profile breaches and their high costs to reputations, brands, finances, and careers to help bring about this rise in the importance of cybersecurity to the organization; nevertheless, it is most welcomed and long overdue. Hopefully Security stays near the top going forward.

3. Business Agility/Flexibility

Business Agility has ranked in the top three positions since 2009. Although still in the top five, this year it fell from second to third position with 120 or 16.7% of organizations choosing Business Agility as one of their top three IT management issues. Agility’s continuously high ranking suggests that the greater uncertainly and increasing pace of change that characterize these times correspondingly increases the need for organizations to be more flexible and responsive to market, economic, regulatory, legal, and other changes. Thus Business Agility becomes ever more important in achieving business success. But on the other hand, organizational agility requires IT to be agile and fast also, not just in terms of understanding the business and its requirements, but also by having a technological infrastructure in place that can be quickly and economically changed as the business requirements change. Organizational agility also requires an agile culture.

4. Business Productivity

Business Productivity, introduced into the SIM IT Trends Study in 2007, was selected as a top IT management concern by 113 organizations (15.8%) making it this year’s fourth most important concern, down from number three in 2013 and number one in 2012. Business Productivity has been in the top five in all but one year since its initial introduction, and ranked number one three times during that seven-year period. Its continued high ranking demonstrates that organizations are still striving to “do more, with less.”

5. IT Time-to-Market

IT Time-to-Market, an enabler of Agility (3 rd ), Productivity (4 th ), and IT Value Proposition (6 th ), is a critical component of coping with Velocity of Organizational Change (7 th ) and even of quickly-changing Security (2 nd ) needs. Therefore, it is not surprising that IT Time-to- Market ranks number five as a top organizational concern, selected by 107 (14.9%) of the participating organizations. It can be argued that it is also an important contributor to IT- Organization Alignment.

B. The IT Management Issues Most Important or Worrisome to IT Leaders

For a second year, we asked respondents to report not only on the IT management issues important to their organization, but also on issues that were personally “most important or worrisome to you (i.e., things that keep you up at night).” While we have only two years of data to present in Figure 2, the year-to-year changes are significant in that five new or revised selections moved into the top 10.

Security and Privacy moved from second into the number one position with 183 (25.5%) of 717 participating senior IT leaders selecting it as one of their three personally most important or

it as one of their three personally most important or A big “THANKS!” to all SIM
it as one of their three personally most important or A big “THANKS!” to all SIM

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study worrisome IT management issue. The IT Talent/Skill Shortage/HR moved

worrisome IT management issue. The IT Talent/Skill Shortage/HR moved up from third into the number two position with 150 (20.9%) participants selecting it as a top concern. Alignment of IT with the Business, a consistently top first or second organizational concern, fell as a personal concern from first to third. Rounding out the top five are the revised selection, IT Time-to- Market/Speed of IT Delivery, in fourth place and the brand new item, IT Value Proposition to the Business, in fifth.

Figure 2: IT Leaders’ Most Important or Worrisome IT Management Concerns (2013-14)

Most Important/Worrisome Concerns to the IT Leader

2014

 

2013

Security/Privacy

1

2

(c)

IT Talent/Skill Shortage/HR

2

3

Alignment of IT with the Business

3

1

IT Time-to-Market/Speed of IT Delivery

4

New 6 (a)

IT Value Proposition to the Business

5

New

Prioritization Process for IT Projects

6

5

Velocity of Change in IT

7

New 6 (a)

IT Strategic Planning

8

11

Velocity of Change in Business

9

New 6 (a)

IT Disaster Recovery

10

4

(b)

(a)

Last year “Time to Market/Velocity of Change” was one selection but it was neither IT- nor Business- specific. So this year, it became three items, all of which ranked in the top 10.

(b)

The selection “Business Continuity/Disaster Recovery” ranked fourth last year and was split this year into two separate selections, “Business Continuity” and “IT Disaster Recovery.”

(c)

This was simply “Security” last year.

n = senior-most IT leader in 717 unique organizations

The five items dropping out of the personal top 10 are Business Continuity/Disaster Recovery (was fourth last year), Business Agility (was sixth), IT Service Delivery (was seventh), Change Management (was eighth), and the CIO Leadership Role (was tenth). Particularly noteworthy is that all three of the selections that replaced last year’s Time-to-Market/Velocity of Change made the personal top 10, with IT Time-to-Market/Speed of IT Delivery (at fourth this year), Velocity of Change in IT (at seventh), and Velocity of Change in Business (at ninth). It seems the pace of change is increasing; but even if it is remaining constant, there is little doubt that coping with it is significantly on the minds of IT leaders.

Moreover, these changes in the top 10 personal concerns also point to a shift in priorities and focus among senior IT leaders away from tactical and operational IT issues like disaster recovery, service delivery, and change management to more strategic and organizational priorities like the IT value proposition, IT strategic planning, faster delivery, and coping with changing conditions.

C. Comparing Organization’s Key Issues to Those Most Important or Worrisome to IT Leaders

As discussed above, respondents were asked to select up to three IT management concerns that they considered most important both to their organization and most important or worrisome to them personally. Interestingly, as was also the case last year when this was done for the first time, this brought to light several significant differences between their personal concerns and their organizational concerns (see Figure 3). Only three items Security, Alignment, and IT

3). Only three items ― Security, Alignment, and IT A big “THANKS!” to all SIM members
3). Only three items ― Security, Alignment, and IT A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Time-to-Market ― appear in the top five of both

Time-to-Market appear in the top five of both the senior IT leaders’ most important IT management concerns and their organizations’ concerns, with two others, IT Value Proposition and Velocity of Business Change, in the top 10 of both lists, for a total of five in common.

Figure 3: Comparison of Personal to Organization’s Top 10 IT Management Issues

Most Important or Worrisome to IT Leaders (2013)

Most Important to the Organization (2013)

IT Management Issues

1 (2)

2

(7)

Security/Privacy

2 (3)

18

(16)

IT Talent/Skill Shortage/HR

3 (1)

1

(1)

Alignment of IT with the Business

4 (New) (a)

5

(a)

IT Time-to-Market

5 (New)

6

(New)

IT Value Proposition to the Business

6 (5)

14

(11)

Prioritization Process for IT Projects

7 (New) (a)

26

(a)

Velocity of Change in IT

8 (11)

14

(15)

IT Strategic Planning

9 (a)

7

(a)

Velocity of Change in Business

10 (4)

27

(14) (b)

IT Disaster Recovery

(a) Last year “Time to Market/Velocity of Change” ranked sixth, but was only one selection and neither IT- nor Business-specific.

(b)

The selection “Business Continuity/Disaster Recovery” ranked fourth last year and was split this year into two separate selections, “Business Continuity” and “IT Disaster Recovery.” n = senior-most IT leader in 717 unique organizations

Security/Privacy, selected by 183 (25.5%) of senior IT leaders is the top personal concern for IT management, and is the number two concern for organizations. IT Talent/Skill Shortage/HR is the number two personal issue, selected by 150 (20.9%) respondents. However, this issue ranks

18 th for the organization, which is not surprising since it is an IT operational issue. Alignment of

IT with the Business is number one for the organization and is the number three personal issue, having been selected by 143 (19.9%) of respondents. The fourth and fifth personal issues are IT Time-to-Market and IT Value Proposition to the Business respectively. These items appeared in the fifth and sixth position on the organizational priority rankings. The only other item that is common to both top 10 lists is Velocity of Change in Business. This issue ranked ninth as a personal issue and seventh as an organizational issue.

Not surprisingly, the five items in the personal top 10 but not in the organization’s top 10, are rather specific to the responsibilities of IT leaders; i.e., IT Skills Shortage, Prioritization Process for IT Projects, Velocity of Change in IT, IT Strategic Planning, and IT Disaster Recovery. Although clearly relevant to the organization too, they are the “table stakes” for the credibility of the IT department and its leadership. To fail on any of these, or on Security or IT Time-to- Market, is to be denied that coveted “seat at the table” of business strategy, and even the prospect of finding oneself looking for a new job.

even the prospect of finding oneself looking for a new job. A big “THANKS!” to all
even the prospect of finding oneself looking for a new job. A big “THANKS!” to all

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study “Data was always big. It was the thinking (and

“Data was always big. It was the thinking (and marketing) that was small.” – Howard Rubin

II. The Largest IT Investments and Most Important Technologies

A. The Organizations’ Largest IT Investments

Participants were asked to select, from a list of 47 technologies, up to three of their “organization’s largest /most significant current or near-future IT investments,” up to three that are “most important” to their organization, and up to three that cause “the greatest concern to me personally.” Some items on the selection list last year were deleted (based on very low selection rates the previous year) or modified, and additional ones added to this year’s Study. A complete listing of these changes can be found in the Appendix.

Figure 4 lists the top 15 technologies identified as the largest investments for the 717 participating organizations, along with their rankings since 2003. The ranking have shifted when compared to 2013, yet all but two entries in this year’s top 15 were also top 15 entries last year; specifically, a new item, “Data Center Infrastructure” which ranks second, and “Legacy Applications,” tied at 15 th . There are also two new entries in the top 10, (“Data Center” and “Security”), and two in the top 15 that fell out of last year’s top 10 (Mobile Applications and Portals).

Figure 4: Organizations’ Largest/Most Significant IT Investments, 2003-2014

 

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

 

2003

Analytics/Business Intelligence

1

1

1

1

1

1

2

2

2

3

2

 

1

Data Center Infrastructure

2

New

Enterprise Resource Planning

3

4

3

3

3

3

14

6

 

5

 

Application & Software Development (d)

4

6

11

 

Cloud Computing (f) (e.g., SaaS, IaaS, etc.)

5

3

2

2

5

17

 

(a)

Customer Relationship Management

6

2

5

5

9

13

 

Security/Cybersecurity (b)

7

14

 

11

8

 

8

 

1

 

Integration (c)/Application Integration

8

7

8

9

18

5

12

10

 

2

8

3

Network/Telecommunications

9

8

12

 

Big Data

10

5

10

 

Disaster Recovery

11

11

13

14

4

6

3

4

 

Virtualization

11

13

15

7

2

 

Mobile/Wireless Applications (e)

13

6

6

4

9

24

 

4

 

11

Customer/Corporate Portals

14

9

16

 

Collaboration Tools

15

12

4

8

7

7

 

Legacy Applications

15

16

 

(a)

Blank cells indicate that the technology was not asked about in that year of the Study.

 

(b)

In 2006 and 2008, this was listed as “Security Technologies” and simply “Security” in 2010, 2011, and 2013.

 

(c)

In 2013, “Enterprise Application Integration” (EAI) ranked 7 th and “EAI Management” (EAIM) 19 th ; in 2008-12 only EAI/EAIM appeared; in 2007, only “Integrating Applications”; in 2005, “System Integration” ranked 2 nd and EAI 10 th ; and in 2003, only EAI appeared.

(d)

In 2013, this was “Apps” and ranked 6 th and “Application Development” was 11 th in 2012.

 

(e)

“Mobile/Wireless Applications” appeared in 2003, 2005, and 2009 through 2013 ranking 24 th , 9 th , 4 th , 6 th , and 16 th . “Mobile Apps” also appeared in 2013 ranking 6 th .

(f)

In 2009, 2010, and 2011 “SaaS” was also included and ranked 15 th , 9 th , and 6 th . n = senior-most IT leader in 717 unique organizations

h . n = senior-most IT leader in 717 unique organizations A big “THANKS!” to all
h . n = senior-most IT leader in 717 unique organizations A big “THANKS!” to all

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Generally speaking, and consistent with last year, a relatively

Generally speaking, and consistent with last year, a relatively small percentage of the 717 respondents selected any one technology. This indicates that IT investments are well diversified across a broad number of options. Only the top nine were selected by more than 10% of the respondents. This is not particularly different than the IT management issues shown in Figure 1, of which only the top 10 were selected by more than 10% of the participating organizations.

B. The Five Largest Technology Investments of Organizations

Analytics/Business Intelligence was selected by 30.1% of the respondents and it is the number one IT investment for the sixth year in a row. A new item, Data Center Infrastructure, ranks number two (selected by 19.1%) and Enterprise Resource Planning is number three (selected by 18.7%). Applications/Software Development is ranked fourth (18.4% of respondents); Cloud Computing, fifth (15.6%); Customer Relationship Management, sixth (13.8%); Security, seventh (11.9%); Integration, eighth (11.2%); and Network/Telecommunications, ninth (11%). The items ranked 10 th to 17 th were each selected by between 5% and 9% of respondents.

1. Analytics/Business Intelligence

Analytics/Business Intelligence (A/BI) remains in first place as the largest IT investment, a ranking it has held for six years straight. It has ranked in the top three since 2003, when it was first added to the list. A/BI was selected by 216 organizations (30.1%), as one of their three largest or most significant IT investments. However, the percentage of organizations selecting this is down from 42% last year. It is worth mentioning that potential synergies exist between A/BI systems and the data made available via investments in third-ranked ERP, sixth-ranked CRM, and ninth-ranked Big Data, as well as many of the other technologies listed in Figure 4.

2. Data Center Infrastructure

Data Center Infrastructure was added to the list of options this year and jumped into second place, selected by 137 or 19.1% of responding organizations as one of their three largest technology investments. These large investments in infrastructure are surprising in light of the significant growth of publically traded cloud providers and the many reported moves to “the Cloud” appearing in the business and IT press, where capital investments can be turned into current expenses. Increasing use of the Cloud is confirmed by this year’s IT Trends Study’s IT budget and cloud utilization data too, as reported below. Nevertheless, nearly 20% of the respondents reported making large investments in Data Center Infrastructure. It is noteworthy; however, that this year’s Study finds that nearly half of cloud-base IT services are delivered via in-house private clouds, and that only five responses separated the second- and fourth-ranked technology investments.

3. Enterprise Resource Planning (ERP)

Investments in ERP systems have ranked in third position in five of the last six years. This year it was selected as one of the three largest investments by 134 (18.7%) of the respondents. Like data centers, ERPs tend to be large investments. However, unlike data centers, ERP systems are designed to provide a vehicle for reducing business expenses and optimizing business processes, both important management objectives. Also, ERP systems, by virtue of the comprehensive and integrated data that they provide about internal operations, as well about supply chains and customers, enable second- and third-order benefits when used in combination with A/BI and other systems. Thus it is not surprising to see that ERPs continue to be large, significant investments for many organizations.

to be large, significant investments for many organizations. A big “THANKS!” to all SIM members who
to be large, significant investments for many organizations. A big “THANKS!” to all SIM members who

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study 4. Application and Software Development Selected by 132, or

4. Application and Software Development

Selected by 132, or 18.4% of the respondents, Application and Software Development is ranked fourth this year. Interestingly, software development has been moving up in the rankings since its introduction in 2012. This high ranking may come as a surprise in the world of off-the-shelf software, Software-as-a-Service (SaaS), and Cloud Computing; and yet, custom software development is still a critical undertaking in many organizations. Nearly 35% of the responding organizations are in industries where developing and/or using custom software is common. Figure 45 in the Appendix shows that 14.8% of the 717 responding organizations are in financial services; IT hardware, software, and services (9.1%); government (5.3%); and medical technology, telecommunications, and electronics (4.0% combined).

5. Cloud Computing

Cloud Computing was selected by 112 organizations (15.6%) as one of their three largest IT investments. As indicated in Figure 4, the first appearance of Cloud Computing was in 2009, when both “Cloud Computing” and “Software-as-a-Service (SaaS, PaaS)” appeared separately. These listings continued in 2010 and 2011; but in 2012, Cloud Computing was redefined to include SaaS, PaaS (Platform-as-a-Service), and IaaS (Infrastructure-as-a- Service). Despite this single, expanded definition, Cloud Computing dropped to fifth place this year as the largest or most significant investment, down from third place in 2013 and second place in both 2011 and 2012. That does not necessarily mean, however, that fewer IT budget dollars are going to Cloud Computing, or that fewer IT services or solutions are being delivered that way; and in fact, it appears quite the opposite is occurring (as discussed the “Participating Organizations and Their IT Practices” section below).

Last year, for the first time, respondents were asked to report on both their organization’s largest IT investments as well as those “of greatest concern” personally to the senior IT leaders themselves. This proved quite revealing 2 , and so it was repeated again in this year’s Study. Additionally, this year respondents we also asked to select up to three technologies that are “most important” to their organizations. By separately assessing organizations’ largest technology investments, those of greatest importance, and those of greatest concern to IT leaders, additional detail and granularity are added to the research. This also provided some interesting insights as detailed below.

C. Comparing Organizations’ Largest IT Investments to Their Most Important Ones

The technologies identified by the respondents as being most important to their organizations map fairly well to those technologies where the organization is making the largest investments. As indicated in Figure 5, nine of the top ten are present on both of the lists, but with different rankings. Also, Legacy Applications only appears on the most important list (at 10 th ) and Big Data only appears on the largest investments list (also at 10 th but 12 th on the importance list).

As for the differences in the rankings between the two lists, Data Center Infrastructure, a capital intensive item for an organization, ranks only sixth on the most important technology list (with 13.1% selecting it), but second on the largest IT investment list (selected by 19.1%). Legacy Applications, selected by 5.6% of organizations and ranking as the 15 th largest investment, was selected by 7.9% to rank 10 th as a most important technology. Big Data is 10 th on the top 10 list

2 Kappelman, L. A., McLean. E. R., Luftman, J., Johnson, V. (2013) Key Issues of IT Organizations and Their Leadership: The 2013 SIM IT Trends Study, MIS Quarterly Executive, 12(4), 227-240.

IT Trends Study, MIS Quarterly Executive , 12(4), 227-240. A big “THANKS!” to all SIM members
IT Trends Study, MIS Quarterly Executive , 12(4), 227-240. A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study of largest investments (selected by 8.8% of organizations), but

of largest investments (selected by 8.8% of organizations), but only ranks 12 th on the most important list (selected by 7% of responding organizations’ senior-most IT leaders).

Figure 5: Comparing Organizations’ Largest IT Investments to its Most Important (2014)

Most Important Technology to the Organization

Largest IT Investments for the Organization

Technology/Application

1

1

Analytics and Business Intelligence

2

3

Enterprise Resource Planning

3

4

Application and Software Development

4

6

Customer Relationship Management

5

8

Integration/Enterprise Application Integration

6

2

Data Center Infrastructure

7

5

Cloud Computing

8

7

Security and Cybersecurity

9

9

Networking and Telecommunications

10

15

Legacy Applications

 

n = senior-most IT leader in 717 unique organizations

D. The Most Worrisome Technologies for Senior IT Leaders

This year’s top six technologies that are most personally worrisome to senior IT leaders (“things that keep you up at night”) were selected by more than 11% of the respondents, with numbers seven thru 19 by between 5% and 10%. The top 10 most worrisome technologies remained fairly consistent when compared to last year. However, there are some differences. In particular, BYOD (18 th this year), Enterprise Architecture (15 th ), and CRM (13 th ) all dropped out of the top 10 to be replaced by Application Development (fifth, up from 15 th last year) and the two new items, “Data Center Infrastructure”(tenth) and “Innovative/Disruptive Technologies” (tied for seventh). Security moved up from second to first, being selected by 224 or 31.2% of the respondents, while second-ranked Analytics and Business Intelligence was selected by 160 respondents (22.3%). Disaster Recovery ranks third this year as the most worrisome technology, selected by 106 (14.8%). Integration is fourth with 14.5%; and rounding out the top five is Software Development, selected by 13.1%. The only other item selected by at least 10% of the respondents is Cloud Computing, at sixth with 11.6%.

Looking over this year’s rankings of the things that keep senior IT leaders up at night, they seem about evenly divided between “keeping the IT lights on” (i.e., security, disaster recovery, legacy, and infrastructure) and “increasing business capabilities” (i.e., analytics, integration, software development, innovation, and ERP). Cloud could be in both categories, and disruptive technologies could be seen as in a strategic IT-value proposition category of its own.

as in a strategic IT-value proposition category of its own. A big “THANKS!” to all SIM
as in a strategic IT-value proposition category of its own. A big “THANKS!” to all SIM

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Figure 6: Personally Most Worrisome Technologies (2013-2014) Information

Figure 6: Personally Most Worrisome Technologies (2013-2014)

Information Technology

2014

2013

Security and Cybersecurity

1

2

Analytics and Business Intelligence

2

1

Disaster Recovery

3

3

Integration

4

7(b)

Application Software Development

5

15 (a)

Cloud Computing

6

4

Legacy Applications

7

8

Innovative/Disruptive Technologies

7

New

Enterprise Resource Planning

9

9

Data Center Infrastructure

10

New

(a)

Last year, “Apps” ranked 15 th and “Mobile/Wireless Applications” ranked 14 th .

 

(b)

Listed as “Enterprise Application Integration” (EAI) last year. n = senior-most IT leader in 717 unique organizations

E. Comparing IT Leadership’s Most Worrisome Technologies to the Largest Technology Investments of Organizations

As was the case last year, the technologies that keep senior IT leaders up at night are somewhat different than the largest IT investments in their organizations 3 . Nevertheless, as indicated in Figure 7, the similarities in some ways outweigh the differences, with seven items on both top 10 lists and two on both top five listings. This is more than last year, when only four of the IT leaders’ top 10 were in the organizations’ top 10. However, there are still some interesting differences, with Disaster Recovery (third for IT leaders) and Legacy and Innovative/Disruptive Technologies (tied for seventh) appearing only on the personally most worrisome top 10, while CRM (13 th for IT leaders), Network/Telecom (17 th ), and Big Data (12 th ) appear only on the organizations’ top 10 largest investments list (as shown in Figure 4 above).

Figure 7: Comparing IT Leadership’s Most Worrisome Technologies to the Organization's Largest IT Investments (2014)

Most Important/Worrisome to Senior IT Leader:

Largest IT Investments for the Organization:

Technology/Application

Rank (% selecting)

Rank (% selecting)

1

(31.2%)

7 (11.9%)

Security and Cybersecurity

2

(22.3%)

1 (30.1%)

Analytics and Business Intelligence

3

(14.8%)

11

(6.7%)

Disaster Recovery

4

(14.5%)

8

(11.2%)

Integration

5

(13.1%)

4

(18.4%)

Application Software Development

6

(11.6%)

5

(15.6%)

Cloud Computing

7

(9.8%)

 

15

(5.6%)

Legacy Applications

7

(9.8%)

20

(4.3%)

Innovative/Disruptive Technologies

9

(8.6%)

3

(18.7%)

Enterprise Resource Planning

10 (7.3%)

2

(19.1%)

Data Center Infrastructure

 

n = senior-most IT leader in 717 unique organizations

3 Kappelman, et al., (2013), ibid.

unique organizations 3 Kappelman, et al., (2013), ibid . A big “THANKS!” to all SIM members
unique organizations 3 Kappelman, et al., (2013), ibid . A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study The percentage differences shown in Figure 7 are also

The percentage differences shown in Figure 7 are also revealing. Some technologies represent large investments, yet they’ve been around long enough that senior IT leaders are experienced with them and don’t feel that they need to worry about them. For example, ERPs have been with us for decades and most senior IT leaders have extensive experience with them. Although ERPs represent a large, expensive, and therefore risky technology project, it only ranks ninth (8.6%) on the personally most worrisome list, while third on the largest investment list with 18.7%. On the other hand, Analytics, a newer technology and typically involving projects that are much smaller and less risky than ERPs, was selected by over 30% of the respondents and is number one on the organizations’ largest investment list, and number two on their personally most worrisome list (22.3%). Some of the other differences are technologies that may not require a very large investment but are critical for keeping the IT lights on, and thus are fundamental for the credibility, reputation, and job security of senior IT leaders. Security is an example of this, as it ranks as the number one personal concern with 31.2% selecting it, compared to seventh with only 11.9% selecting it as one of the three largest technology investments of their organization. Similarly, Disaster Recovery ranks number third as a personal concern, with 14.8% selecting it, while 11 th on the largest investment list, with only 6.7% choosing it.

on the largest investment list, with only 6.7% choosing it. A big “THANKS!” to all SIM
on the largest investment list, with only 6.7% choosing it. A big “THANKS!” to all SIM

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study “We shape our buildings; thereafter they shape us.” –

“We shape our buildings; thereafter they shape us.” – Winston Churchill

III. Participating Organizations and Their IT Practices

We identified 717 unique organizations represented by a senior IT leader; these are the primary dataset for this report. Nearly all (95.1%) of these organizations are based in the U.S. Most economic sectors and industries are represented, with the top five making up 50.9% of the sample (Financial Services, 14.8; Manufacturing, 13.1%; Health/Medical, 9.9%; Education, 7.8%; and Government, 5.3%). Additional details about these organizations are in the Appendix, including their distribution by industry in Figure 45.

Their average revenue is $5.58 billion, for the 564 organizations that reported these data, up from $4.36 billion last year. Assuming that all 717 of the organizations in the respondent dataset have about the same average revenue as this smaller subset, they represent nearly $4 trillion in revenue or about 25% of U.S. Gross Domestic Product. As indicated in Figure 46 in the Appendix, the majority have revenue between $100 million and $5 billion; and their median revenue of $494 million is about the same as last year. Organizations of all sizes and industries are well represented, which is fairly uncommon in studies of this kind. All this speaks well to the diversity among SIM’s member organizations.

Their IT spending as a percentage of revenue averaged 5.145% for the 493 organizations that provided data, up from 4.95% last year, with a median of 2.50%, up from 2.24% last year. Assuming that all 717 organizations have about the same average percentage of IT spending to revenue, we estimate the average IT budget at about $287 million; so our sample represents over $200 billion in annual IT spending 4 .

Figure 8: Percent of Revenue Allocated to IT Budget (2005-2014)

n=493

Percent of Revenue Allocated to IT Budget (2005-2014) n=493 As indicated in Figure 8, average IT

As indicated in Figure 8, average IT spending as a percentage of revenue for the past three years has been significantly above the 10-year (2005-2014) average of 4.08%. This may represent a

4 On the other hand, the IT spending levels reported by 535 responding organizations averaged $105.2 million, with a median of $8.5 million. Assuming that all 717 organizations have about the same average IT spending levels, we estimate that the sample represents over $75 billion in annual IT spending. The difference in these two estimates is due to several factors, including that (1) there is a difference between the sample of respondents to the two questions as indicated by the different number responding to them; (2) in general there is a large variance in the data since there is a great diversity among the organizations of the responding SIM members as indicated above and in the Appendix; and (3) they are calculated differently as the $105 million is the average of the budgets reported and the $288 million is calculated by multiplying average revenue times the average percentage of IT spending as a percent of revenue (5.145%, which is the average of the individual calculation of this for each respondent who provided both of the required pieces of data). Reality is likely somewhere between these two estimates.

Reality is likely somewhere between these two estimates. A big “THANKS!” to all SIM members who
Reality is likely somewhere between these two estimates. A big “THANKS!” to all SIM members who

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study “new normal”; however, it may also to some extent

“new normal”; however, it may also to some extent be indicative of “catch up” IT investments making up for the lean “Great Recession” years of 2008 to 2010, when both revenue and IT investment contracted in most organizations (see Figure 13, Figure 15, and Figure 16). This increase is also being affected by new investments in cloud and shared services, digital marketing and analytics, and health care informatics, as well as the increasing digitization of organizations in general.

A. IT Organization Structure

As in previous years, the majority of organizations (71.1%) report having a Centralized IT organization structure (see Figure 9). This is up from 65.2% last year and above the 9-year (2006-2014) average of 69.7%. With 717 organizations responding, 28.9% report a Decentralized/Federated/Hybrid IT structure, down from 35% and below the 2006-2014 average of 30.3%. Although sample differences from year to year make trend analysis a bit problematic 5 , Figure 9 indicates that centralized structures declined from 2007 through 2012, while decentralized approaches tracked upward during that period. However, since 2012 centralized structures have tracked upward while the more-decentralized ones have declined.

Figure 9: IT Organization Structure 2006-2014 (717 responding organizations)

Structure 2006-2014 (717 responding organizations) This suggests that IT department structure could be

This suggests that IT department structure could be cyclical, and there is some anecdotal evidence of structure “fads,” with pendulum swings between centralization and decentralization. But changing IT organization structure is about changing behaviors in the host organization; and though it can certainly be worthwhile to do so, it is complex, time consuming, and costly. Thus structure change is not something most organizations do frequently, take lightly, or do simply because it is fashionable. Plotting the data with the averages, as shown in Figure 10, suggests that

5 For example, this year there are 717 responding organizations, 280 last year, and less than 200 the year before that. There is also a concern about the precision of the responses given that Weil and Ross noted (albeit a decade ago) that “our study of almost 300 enterprises around the world suggests that IT governance is a mystery to key decision makers at most companies. On average, just one in three senior managers knows how IT is governed at his company.… In this case, ignorance is definitely not bliss. When senior managers take the time to design, implement, and communicate IT governance processes, companies get more value from IT” (“A Matrixed Approach to Designing IT Governance,” Sloan Management Review, Winter 2005).

IT Governance,” Sloan Management Review , Winter 2005). A big “THANKS!” to all SIM members who
IT Governance,” Sloan Management Review , Winter 2005). A big “THANKS!” to all SIM members who

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study while IT is centralized in most organizations, there is

while IT is centralized in most organizations, there is a slow-moving trend toward more decentralized IT structures and fewer centralized ones. Time will tell whether that is in fact the case, or if that trend has begun to reverse. On the other hand, this distinction between centralized and decentralized/federated IT organization structures (as shown in Figure 9 and Figure 10) may be blurring, as IT governance becomes more federated and IT delivery becomes more centralized. That is a matter to explore in future SIM IT Trends Studies.

Figure 10: IT Organization Structure with Averages 2006-2014 (717 responding organizations)

with Averages 2006-2014 (717 responding organizations) B. Role of IT in Strategy and Innovation New in

B. Role of IT in Strategy and Innovation

New in this year’s Study, some questions were added regarding the role of IT with respect to strategy and innovation. Respondents were provided with several statements and asked to identify the degree to which they agreed or disagreed with them on a five-point Likert scale as indicated at the top of Figure 11, which also summarizes the responses of the most-senior IT leader in the data set of 717 unique organizations.

Figure 11: IT Alignment, Credibility, and Role in Strategy and Innovation

       

Neither

       

Agree

Strongly

nor

Strongly

Don't

Average Score (out of 5)

Disagree

Disagree

Disagree

Agree

Agree

Know or

N

= 1

= 2

= 3

= 4

= 5

N/A

IT leadership is involved in strategic business planning.

717

5.2%

11.7%

12.4%

35.0%

35.7%

0.0%

3.84

IT helps shape business strategy.

614

3.9%

14.2%

18.6%

36.3%

25.9%

1.1%

3.67

IT enables business strategy.

614

1.1%

3.7%

8.6%

45.6%

39.6%

1.3%

4.20

IT & business strategy are done together, as one.

615

8.5%

18.7%

18.9%

34.8%

17.7%

1.5%

3.35

IT is involved in providing innovation.

614

2.6%

6.5%

10.9%

47.1%

31.9%

1.0%

4.00

IT has high credibility with executive leadership.

717

5.4%

9.3%

12.4%

35.8%

36.7%

0.4%

3.89

In my organization IT is aligned with the business.

717

4.0%

6.1%

9.1%

40.2%

40.4%

0.2%

4.07

The average scores for all the questions in Figure 11 are positive (being greater than 3.0), with a range of 3.35 to 4.2 out of a possible 5.0. When asked about IT leadership’s involvement in the strategic planning process, the average score is quite positive at 3.84, with 70.7% responding either Strongly Agree or Agree (35.7% and 35.0%, respectively). However, more than one-sixth (16.9%) indicate a lack of involvement, with 5.2% answering Strongly Disagree and 11.7%

involvement, with 5.2% answering Strongly Disagree and 11.7% A big “THANKS!” to all SIM members who
involvement, with 5.2% answering Strongly Disagree and 11.7% A big “THANKS!” to all SIM members who

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Disagree that IT leadership is involved in strategic business

Disagree that IT leadership is involved in strategic business planning. The average rating of these senior IT leaders regarding IT’s role in helping to shape business strategy is 3.67, with 62.2% selecting either Agree or Strongly Agree (36.3% and 25.9%, respectively). Still, nearly 19% neither Agree nor Disagree and over 18% responded negatively.

However, when asked about IT’s role in enabling business strategy, over 85% of the responses are positive, with the average score a very positive 4.2 out of 5.0 possible. Less than 5% of the responses are negative and 8.6% are neutral. This is the most positive response for the seven questions in Figure 11. Slightly more than half (52.5%) of the organizations report that IT and business strategies are developed together. Although undoubtedly positive with an average score of 3.35, this is lowest of the scores and positive response rates in the table. This is not altogether surprising since this is the one question most sensitive to organization size. The negative response rate is 27.2% and nearly 20% are neutral. Respondents were much more sanguine with respect to IT’s role in providing innovation to the organization, with almost 80% positive (31.9% Strongly Agree and 47.1% Agree). The average score was an even 4.0, although nearly 11% are neutral and almost 10% negative.

Interestingly, the credibility of IT with executive leadership mirrored closely the results seen with respect to IT’s involvement in strategic planning, with an average score of 3.89. This suggests that the more that IT leadership is involved in the strategic planning process, the more credibility they build with upper management. However, the opposite may be true; it may be more likely that their credibility earned them a seat at the strategy table. The majority (72.5%) of the respondents chose a positive response agreeing that IT has high credibility with executive leadership; however, nearly 15% are negative and nearly one-eighth are neutral.

With respect to IT’s alignment with the business, over 80% of the 717 responding senior IT leaders either Strongly Agree or Agree that IT is aligned, with just over 10% responding negatively, and about 9% neutral. Nevertheless, other C-suite executives appear to be less positive about IT’s contribution to strategy, innovation, and organizational performance. 6 This perceptual divergence between IT leadership and many others in the C-suite raises questions

6 Unlike this IT Trends Study, which is limited to SIM members and their organizations, consider the following quotes from other sources: A 2014 survey of 3500 executives by Forrester found that “a majority of business leaders

think that their IT departments are more of a burden than a help…. CIOs are considered to be gatekeepers; they’re not seen as innovators or helping with driving new business for the company. The criticism of IT was nearly unanimous. Among customer service, product development and sales, 79, 78 and 74 percent said respectively, that IT is not helping them to succeed. Among R&D and marketing managers, 69 and 51 percent say that IT doesn’t factor into the technology projects that they’re working on” http://formtek.com/blog/it-business-cios-get-no-respect/; “Only about a quarter [of CFOs] said their IT department ‘has the organizational and technical flexibility to respond to changing business priorities,’ or ‘is able to deliver against the enterprise/business unit strategy’” http://www.itbusinessedge.com/cm/blogs/hall/survey-cio-cfo-relationship-still-prickly/?cs=47533; “[O]nly 13% [of financial executives] view their IT function as transformational (up from 8% in 2012)”

Imperatives.aspx; “[O]nly 43 percent [of CEOs] say that IT actively collaborates with the business side on organizational strategy and innovation,” http://www.oneconnectinc.com/blog/the-good-and-bad-news-disparities- regarding-cio-perceptions/; “[O]nly 32% of CFOs have a close relationship with their CIO”

“most CEOs still regard their CIOs as itinerant specialists.… Few thought they would move on to a business leadership role,” Mark Raskino & Jorge Lopez (2012). CEO Survey 2012: The Year of Living Hesitantly, Gartner Group, http://www.gartner.com/newsroom/id/1984416; “Almost half of CEOs feel IT should be a commodity service purchased as needed [… and] rate their CIOs negatively in terms of understanding the business and understanding how to apply IT in new ways to the business,” Jim Stikeleather (2013) “The IT Conversation We Should Be Having,” HBR Blog Network, April 25, http://blogs.hbr.org/2013/04/corporate-it-and-the-conversat/.

A big “THANKS!” to all SIM members who completed the IT
A big “THANKS!” to all SIM members who completed the IT

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study about how IT leaders are defining “alignment” and how

about how IT leaders are defining “alignment” and how thoroughly they understand the goals and requirements of their organizations.

Figure 12: IT is Aligned with the Business (717 unique organizations)

IT is Aligned with the Business (717 unique organizations) C. IT Budgets and Staffing Trends i.

C. IT Budgets and Staffing Trends

i. IT Budgets and Spending Trends

Economic conditions have a significant impact on IT budgets. As indicated in Figure 13, prior to the “Great Recession” (2004-2007), the majority of organizations reported increasing IT budgets. However, as the economy slowed in 2008 only 46% of respondents reported an increase in IT budgets; and in 2009 only 25% of organizations reported increases, with 75% of the respondents indicating that their IT budgets had remained flat or decreased. Things tentatively improved in 2010 with 34% reporting increases, but 66% still indicated flat or decreasing IT budgets from the prior year.

In 2011 the trend improved further with 56% of the respondents reporting increasing IT budgets, 27% flat, and only 17% decreasing (less than half of the 2010 rate of decreases). The percent of organizations reporting increases pulled back a bit in 2012 with nearly 48% of organizations seeing budget increases and 34.5% decreases. In last year’s SIM IT Trend Study, 61% of the respondents reported increasing budgets; and when respondents were asked to forecast budgetary changes for this year, they accurately predicted a slight improvement.

this year, they accurately predicted a slight improvement. A big “THANKS!” to all SIM members who
this year, they accurately predicted a slight improvement. A big “THANKS!” to all SIM members who

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Figure 13: Change in IT Budget from Previous Year

Figure 13: Change in IT Budget from Previous Year (2004 to 2014 actual, 2015 projected)

from Previous Year (2004 to 2014 actual, 2015 projected) This year, the number of organizations reporting

This year, the number of organizations reporting IT budget increases is 62.9%, up slightly from last year’s 61% and above the 2005 high of 62.5%. Organizations with budget allocations remaining flat are up slightly to 12.7% and decreasing budgets are down from 27% to 24.4%. However, when asked to project next year’s IT spending, the outlook of these senior IT leaders is more pessimistic. Only 52.4% of organizations anticipate an IT budget increase in 2015. This represents a 16.7% decline in the number of organization’s currently reporting budgetary increases. Moreover, 17.3% (36% more than this year) are projecting flat budgets and 30.3% anticipate a decrease in IT spending (nearly 25% more than this year). This could be a signal of increasing economic uncertainty, an anticipated overall weakening in the broader economy, or the end of the “catch up” period in IT investments making up for the lean investment years early in the Great Recession.

ii. IT Budget Allocations

Since 2009 when the SIM IT Trend Study first began gathering IT budgetary data, the survey focused on two major categories: people and things. These two categories were then further subdivided into In-House, Outsourced, Foreign, and Domestic spending. However, this approach could not properly track the increasing IT budget outlays that were going to cloud- based services that combine people and things into a single expense 7 . Therefore, this year we separated location, sourcing, and budget allocation into separate questions and added a new budget category for “Services (SaaS, PaaS, IaaS, cloud, processes, etc.).” These changes expand the precision and granularity of the data collected and provide improved analytical capabilities as well. However, this does make comparisons to prior years a bit problematic

Overall, with 512 organizations reporting, IT budgets are up 1.88% this year, with a median increase of 2.0%. IT spending is expected to grow next year, but at a slower pace with 485

7 In last year’s IT Trends Study, it was reported that 26.5% of all IT services and solutions were cloud-based:

12.1% delivered via internal/private clouds and 14.4% via public/external ones (Kappelman, L. A., McLean, E. R., Luftman, J., Johnson, V. (2013) Key Issues of IT Organizations and Their Leadership: The 2013 SIM IT Trends Study, MIS Quarterly Executive, 12(4), 227-240).

IT Trends Study, MIS Quarterly Executive , 12(4), 227-240). A big “THANKS!” to all SIM members
IT Trends Study, MIS Quarterly Executive , 12(4), 227-240). A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study organizations projecting an average increase of 0.91%, with a

organizations projecting an average increase of 0.91%, with a median of 1.0%. But this projected change is not evenly distributed across all budget categories. This year, for the first time, respondents were asked to report the allocation of their current year’s IT budget and forecast next year’s IT spending in the following seven categories: “Hardware, Software, Facilities (including supplies and consumables), Employees, Consultants, Contractors, [and] Services (SaaS, PaaS, IaaS, cloud, processes, etc.)”. The results are shown in Figure 14.

Figure 14: IT Budget Allocations 2014 Actual and 2015 Projected (n = 366)

 

% Allocated to Category

 
   

Projected

Percent Projecting 2015 Allocations Will:

Change

Budget Categories

2014

2015

2014-

Decrease

Flat

Increase

Actual

Projected

2015

Hardware

15.7%

15.4%

-0.3%

25%

66%

10%

Software

17.9%

17.6%

-0.3%

18%

67%

14%

Facilities (including supplies and consumables)

5.6%

5.4%

-0.2%

13%

82%

5%

Employees

38.5%

38.8%

0.3%

13%

68%

19%

Consultants

6.5%

6.1%

-0.4%

12%

77%

11%

Contractors

5.8%

5.4%

-0.4%

12%

81%

7%

Services (SaaS, PaaS, IaaS, cloud, processes, etc.)

10.1%

11.3%

1.2%

6%

68%

26%

While overall IT budgets are expected to rise, spending contractions are predicted in all categories except Employees and Services. Not surprisingly, most of the increase is expected to go to a larger allocation for Services, presumably in large part to the Cloud, since Facilities, Consultants, and Contractors are now separate categories. The increase in spending for Employees is consistent with their projections that both total and average IT salaries will also rise next year about 1.3% (with medians for both at 2.0% and with 480 and 474 organizations responding respectively). Yet despite the positive message in theses averages, Figure 14 makes clear that the vast majority of these senior IT leaders (66% to 82%) expect IT budget allocations in all categories to remain flat next year in their respective organizations, with more organizations decreasing than increasing in every category, except as noted Employees and Services.

More than twice as many respondents expect a decrease in Hardware allocations next year (25% versus 10%), but two thirds are predicting no change at all. Similarly, more than eight out of ten project flat expenditures on Facilities; while a mere 5% anticipate an increasing allocation. The projections for Contractors, Consultants, and Software are similarly down, though generally more positive than the outlook for Hardware. Even next year’s anticipated budget bright spots for Employee and Services, show only 19% and 26%, respectively, of organizations expecting increases, while the rest are flat or down.

As for how these numbers stack up against the data from 2009 to 2013 8 , the people-related budget categories (Contractors, Consultants, and Employees) align fairly well when the Domestic and Offshore subcategories from prior years are combined for each category. Since Hardware, Software, and Facilities were combined in prior years, and then subdivided into In- House, Outsourced, Domestic, and Offshore this year, adding them all into a single number and

8 For details about the budget allocations previously used in the IT Trends Study, see last year’s report in Kappelman, L. A., McLean, E. R., Luftman, J., Johnson, V. (2013) Key Issues of IT Organizations and Their Leadership: The 2013 SIM IT Trends Study, MIS Quarterly Executive, 12(4), 227-240.

IT Trends Study, MIS Quarterly Executive , 12(4), 227-240. A big “THANKS!” to all SIM members
IT Trends Study, MIS Quarterly Executive , 12(4), 227-240. A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study doing the same with this year’s Hardware, Software, and

doing the same with this year’s Hardware, Software, and Facilities categories, also yields a reasonably comparable situation. The results of this are show in Figure 15.

Figure 15: 2009-2014 IT Budget Allocation (Actual) and 2015 Projection

               

2009-14

2009-

2015

average adjusted

2014

Projected

2014

2013

2012

2011

2010

2009

to 100% 9

Average

Employees

38.8%

38.5%

40.3%

40.0%

40.0%

46.0%

43.0%

38.1%

41.3%

Contractors

5.4%

5.8%

9.5%

11.0%

5.0%

12.0%

12.0%

8.5%

9.2%

Consultants

6.1%

6.5%

3.1%

9.0%

11.0%

10.0%

12.0%

7.9%

8.6%

Hardware, Software, Facilities

38.4%

39.2%

47.1%

40.0%

44.0%

32.0%

33.0%

36.2%

39.2%

Cloud Services

11.3%

10.1%

         

9.3%

10.1%

Albeit an imperfect mapping, especially since there is no way to calculate what amount in prior years should go into the new Services category, some insights can be gleaned from this analysis. Not surprisingly, in light of the inclusion of this new category, every spending category except “Things” (i.e., the combined Hardware, Software, and Facilities category) is below its 6-year (2009-2014) average, and spending on Things is only at its average. Even when weighing the six-year (2009-2014) averages so that they total to 100%, this year only the Employees and Things are above their averages; and this holds true for next year’s projections as well. This may be unexpected since one would reasonably expect that spending on things like Hardware, Software, and Facilities would contract when cloud-based services increase. However, with 31.1% of all IT services and solutions cloud-based this year (up from 26.5% last year) and about 55% of that delivered via public/external capabilities (about the same as last year’s 54.3%), that leaves nearly 83% all IT services and solutions delivered via in-house capabilities. A graph of the data series in Figure 15 is shown in Figure 16.

Figure 16: 2009-2014 IT Budget Allocations (Actual) and 2015 Projection, with Trendlines 50% 40% Employees
Figure 16: 2009-2014 IT Budget Allocations (Actual) and 2015 Projection, with Trendlines
50%
40%
Employees
30%
Hardware, Software, Facilities
Contractors
Consultants
20%
Cloud Services
10%
0%
2009
2010
2011
2012
2013
2014
2015
Projected

9 For details about the budget allocations previously used in the IT Trends Study, see last year’s report in Kappelman, L. A., McLean, E. R., Luftman, J., Johnson, V. (2013) Key Issues of IT Organizations and Their Leadership: The 2013 SIM IT Trends Study, MIS Quarterly Executive, 12(4), 227-240.

IT Trends Study, MIS Quarterly Executive , 12(4), 227-240. A big “THANKS!” to all SIM members
IT Trends Study, MIS Quarterly Executive , 12(4), 227-240. A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Recall that these data represent the relative amount (out

Recall that these data represent the relative amount (out of 100%) of the average IT budget going to these different categories, not the absolute amount of money actually being spent. In fact, the budget of an individual organization, as well as the total for all organizations as a whole, could be increasing or decreasing while the percent of those budgets going to different categories would always total 100%. So Figure 14, Figure 15, and Figure 16 represent the relative amounts going into each budget category. Thus it is noteworthy that only the relative amounts of spending on the Hardware, Software, and Facilities category is rising during this period, while the others are contracting as a relative percentage of the total. And that trend may have turned in the past few years too.

However, given the very low IT spending levels, especially on capital investments during 2009, but also in 2010, as shown in Figure 13 and Figure 15, one would expect some spending is still taking place to “catch up” on replacements and upgrades. Add to this all the new investments in electronic medical records, marketing management, analytics, big data, the Internet of things, and countless other technologies (see Figure 4 for a list of the largest IT investments this year and those of the previous decade), it is no wonder that IT spending on Things, as opposed to People, has been growing. Nevertheless, as indicated in Figure 16, spending on IT Things has fallen below the trendline this year for the first time since 2010, and is predicted to continue downward next year. Going forward, separately tracking these three categories of Things (Hardware, Software, and Facilities), in combination with the new Cloud Services category, will make possible a better understanding of actual IT spending patterns in this time of change.

iii. IT Staffing and Salary Trends

a. IT Employees and Their Salaries

In order to provide greater insight into IT personnel practices, IT staffing is another area that was refined and expanded considerably in this year’s IT Trend Study. The average number of “full- time IT employees (IT FTEs, not including contractors or consultants)” who “report under or to the top IT person” is 342, with the senior-most IT leader in 648 unique organizations responding. Despite this high average, nearly 70% of respondents reported 100 IT FTEs or less. Given the diversity among responding SIM member organizations, it is also noteworthy that the median is 40, and the range is from one to 21,000. Moreover, 40.6% have 25 or fewer IT FTEs, 28.4% between 26 and 100, 21% between 101 and 500, and only 10% 501 or greater.

On average 10.44% of these IT FTEs are “located outside your home country (i.e., offshore).” Interestingly, this includes the nearly two-thirds of the 648 responding organizations (65.1%) reporting that none of their full-time IT employees work outside of their home country, and over 76% report 10% or less. Moreover, 11% report that between 1% and 10% work offshore, 12.8% between 11% and 20%, 4.8% between 21% and 50%, and 6.3% report that between 51% and 100% are based outside the organization’s home country. Thus it is not surprising that the median is zero and the standard deviation more than twice the average at 20.96%.

Nearly forty-six percent (45.7%) of the 508 organizations that responded report an increase in the number of internal IT employees this year and only 21.1% report a decrease, while 33.3% report no change at all. This is very similar to the numbers reported in last year’s SIM IT Trend Study. On average, internal IT employment rose 0.9% (median 0%, standard deviation 4.2%). Looking to next year, the outlook for 2015 is fairly consistent with 2014. Nearly forty-seven percent (46.7%) of the 486 organizations responding anticipate an increase in staffing, while only 23.5% anticipate staffing reductions, with 29.8% expecting no change. The average projected increase is 0.7% (also with a median of 0% and a standard deviation of 3.8%).

(also with a median of 0% and a standard deviation of 3.8%). A big “THANKS!” to
(also with a median of 0% and a standard deviation of 3.8%). A big “THANKS!” to

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Ninety-three percent of the 499 organizations responding report that

Ninety-three percent of the 499 organizations responding report that average IT salaries either remained flat or increased in 2014, with 79% reporting increases and 14% reporting no change. This is down from last year, when 89% reported increases and 7% reported no change. This year, 7% reported average salaries decreasing, which is up from the 4% reported in last year. The average increase reported this year is 2.03%, with a standard deviation of 2.3% and a median of 2%. Looking forward, the outlook is less positive, yet still bright with 69.8% anticipating increases in average IT salaries and 9.5% expect salaries to remain flat. Nevertheless, 20.7% anticipate decreases in the average IT salary in 2015. The average increase projected for next year is 1.32% with a standard deviation of 2.8% and a median also of 2%.

Figure 17: Change in Number of Internal IT Employees

(2013-14 actual, n = 508; 2014-15 projected, n = 486)

(2013-14 actual, n = 508; 2014-15 projected, n = 486) The data indicate a similar situation

The data indicate a similar situation for total IT salaries. Nearly 78% of responding organizations report an increase in total IT salaries this year, while only 11% report a decrease and 11% no change. However, looking forward to 2015, only 67.9% forecast an increase in total IT salaries and 22.9% forecast a reduction. The average increase in total IT salaries this year is 2.13%, with a standard deviation of 3.1. As with their average salary projection for 2015, it is expected that total IT salaries will increase on average only 1.3%, with a standard deviation of 3.4%. Still, the IT employment outlook of these senior IT leaders is positive; but cautiously so, and consistent with their IT budget projections for 2015, which anticipate an overall average increase of 0.91%, (as reported above) and small increase of 0.80% in the percent of IT budget spent on “IT employees” (as per Figure 15 above).

b. IT Contractors and Consultants

The average number of contractors and consultants utilized by the 476 responding organizations is 63.7, but the median is only five and the standard deviation is a large 257. Nearly 20% (19.3%) of the 476 organizations report utilizing no contractors or consultants at all, 36.1% reported between one and five, 12.2% reported between six and ten, 19.7% reported between 11 and 50, and 12.6% reported over 50. More importantly, the IT budget projections of these senior IT leaders are less sanguine when it comes to contractors and consultants in 2015. As also indicated in Figure 15, they project rather large decreases in the percent of IT budget going to both contractors and consultants, decreases of 6.9% and 6.2%, respectively. Still, 42.6% of 491

of 6.9% and 6.2%, respectively. Still, 42.6% of 491 A big “THANKS!” to all SIM members
of 6.9% and 6.2%, respectively. Still, 42.6% of 491 A big “THANKS!” to all SIM members

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study responding organizations report an increase in the number of

responding organizations report an increase in the number of contractors and consultants this year when compared to last year; only 21% report a decrease and 36.1% report no change. Looking to 2015, the outlook is similar, with 40.2% projecting an increase in the number of contractors and consultants, 23.7% projecting a reduction, and 36.1% anticipating no change. The size of the average increases are small, however, with this year only 0.78% above last year, and a projected average increase in 2015 of only 0.53% in the number of contractors and consultants.

Since the calculation of the average increase or decrease does not take into account the number of contractors and consultants employed by an organization, the decreases projected in Figure 15 may be more indicative of what is to come. Moreover, the cost of a contractor or consultant can be highly variable, depending on the providers and their locations. Currently, only 14.8% of contractors and consultants are reported as “located outside your home country (i.e., offshore)” with 67.2% reporting none offshore at all, 21.4% between 1% and 50%, and only 11.3% of the 476 organizations responding indicate that more than 50% of their contractors and consultants are located offshore.

c. Turnover and Retirements, Education and Training

Last year we saw a significant (greater than 25%) increase in the IT turnover rate over 2012. That trend continues, as this year’s turnover rate for full-time IT employees is 8.97%, up more than 36% over last year. As indicated in Figure 18, with 539 senior IT leaders responding, this is the highest IT turnover rate since the Study began tracking it in 2006, and well above the nine- year average rate of 6.26%. Moreover, the 8.97% average rate includes nearly 22% of the 539 unique organizations reporting a zero turnover rate.

Figure 18: Full-Time IT Employee Actual Turnover Rate 2006-2014

18: Full-Time IT Employee Actual Turnover Rate 2006-2014 Increasing average turnover rates are often seen as

Increasing average turnover rates are often seen as an indication of an improving job market, with more job opportunities inducing some employees to consider switching employers; although retirements and other factors could also be at play. In order to better understand this, respondents were also asked what percentage of their turnover rate was “involuntary (i.e., the result of downsizing, layoffs, terminations, etc.)” or “voluntary (i.e., quitting, retirements, etc.).” For the 419 organizations reporting more than zero turnover, their average voluntary turnover accounted for nearly twice the involuntary turnover rate, 66.55% versus 33.45%. Using this

involuntary turnover rate, 66.55% versus 33.45%. Using this A big “THANKS!” to all SIM members who
involuntary turnover rate, 66.55% versus 33.45%. Using this A big “THANKS!” to all SIM members who

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study ratio, one could estimate that this year about 5.97%

ratio, one could estimate that this year about 5.97% of turnover is voluntary and 3.0% is involuntary. This further supports the premise that turnover is being heavily driven by voluntary movements in the job market.

What about voluntary turnover due to retirements? For the first time last year, senior IT leaders were also asked to estimate “what percentage of the IT employees in your organization (IT FTEs) are going to retire within the next five years?” Surprisingly, in light of baby boomers reaching retirement age 10 , the average five-year retirement estimate in 2013 was 5.46% (or about 1.09% per year on average), with 32% predicting 1% or less of their IT employees retiring over the next five years. This year, the average increased more than 26.6% to 6.91% (or about 1.38% per year on average), with over one third (33.6%) of the 471 responding organizations predicting zero retirements in the next five year, 28.2% predicting 5% or less, and 20.4% predicting more than 10%. Again, this is somewhat surprising in light of our alleged aging workforce; but perhaps, the IT workforce is actually younger than we thought or aging boomers plan to work longer. Using the estimate that 1.38% of the voluntary turnover rate is due to retirements, then it appears that the remaining 4.59% of the 5.97% voluntary rate (or about half of the 8.97% total turnover rate for IT FTEs this year) is due to IT employees moving to what they believe are better employment opportunities.

Investments in employee education and training are believed to be an effective way to increase the retention of IT workers. Increasing investment in IT training has historically been seen as an indicator of an improving IT employment picture. In last year’s IT Trends Study, spending on IT education and training increased a significant 63% over the previous year to 4.68%, and more than 1% above the 2009-2013 average of 3.47%. As indicated in Figure 19, this trend continues this year as 537 organizations report that on average 4.99% of their IT budgets are allocated to education and training. This further supports the notion of a bright IT job market, driven by increasing investments in information technologies, increasing IT budgets, and IT skill shortages, coupled with only moderate increases in IT salaries and CIOs losing sleep over this skills gap. Thus it is not surprising that we see increasing investments in the education and training of IT workers in order to increase retention and reduce voluntary turnover.

Figure 19: Percent of IT Budget Spent on Training and Education

19: Percent of IT Budget Spent on Training and Education 1 0 “Roughly 10,000 Baby Boomers

10 “Roughly 10,000 Baby Boomers will turn 65 today, and about 10,000 more will cross that threshold every day for the next 19 years,” http://www.pewresearch.org/daily-number/baby-boomers-retire/, December 29, 2010.

December 29, 2010. A big “THANKS!” to all SIM members who completed the IT
December 29, 2010. A big “THANKS!” to all SIM members who completed the IT

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study D. Use of Cloud, Shared Services, Service Catalogs, and

D. Use of Cloud, Shared Services, Service Catalogs, and Chargebacks

i. Cloud-Based IT Services and Solutions

Last year questions were added to determine “what percentage of ALL IT services is delivered to your organization through either a public or private “cloud”? These questions were included and expanded upon in this year’s Study in one of the optional sections of the questionnaire. Although it appears anecdotally that cloud-based delivery of IT services and solutions is increasing, with the addition of these questions, we will be better able, in future SIM IT Trends Studies, to understand empirically the strength of this trend. This is important since over 10% of IT spending this year is going to cloud-based services, presumably from external providers, with significant growth projected into next year, as indicated above in Figure 15.

In this year’s Study, organizations on average deliver 31.1% of all their IT services via the cloud, up from 26.5% last year. The distribution is somewhat u-shaped and skewed to the left (as indicated in Figure 20), with a median of 19% and a standard deviation 31.7%. Of the 528 organizations responding to this use-of-cloud question, 90.5% indicate that they utilize “the cloud” to some extent, up from 81% in 2013. More than one-third (33.9%) obtain more that 30% of all IT services via the cloud, up from 27% in 2013; nearly one-fourth (23.5%) obtain more than 50%, while almost 42% (41.7%) obtain 10% or less of all IT services via the cloud, which is down nearly 18% from 51% last year. Clearly, the use of cloud-based capabilities to deliver IT services and solutions is growing.

Figure 20: Distribution of Organizations by Percent of IT Delivered by Cloud (n = 528)

Organizations by Percent of IT Delivered by Cloud (n = 528) A big “THANKS!” to all
Organizations by Percent of IT Delivered by Cloud (n = 528) A big “THANKS!” to all
Organizations by Percent of IT Delivered by Cloud (n = 528) A big “THANKS!” to all

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study The 478 respondents who indicated that they utilized cloud-based

The 478 respondents who indicated that they utilized cloud-based services to some extent were then asked “what percentage of the cloud-based IT services are provided in each of the following [two] categories” (which were required to total 100%): “internally/private cloud, externally/public cloud.” Of the 405 respondents who answered this question, 52.1% indicated some combination of internal and external cloud, 35.2% indicated external only, and 12.7% indicated internal only. On average, 45% of cloud-based IT is delivered via internal private cloud-based capabilities and 55% via external capabilities. Therefore, with 31.1% of all IT services and solutions being cloud-based this year, and about 55% of this being delivered via external capabilities, then nearly 83% all IT services and solutions currently are being delivered via in-house capabilities.

Despite the fact that more than half of the respondents indicate that they use a combination of public and private clouds, it appears that organizations tend to rely more on one or the other. So, of the nearly two-thirds of the organizations that utilize internal private clouds to some extent (261 of 405), 67% indicate that more than 50% of their cloud-based IT is provided in-house, and almost 59% indicate that it is more than 70%. Of the nearly 87% that report using external public clouds to some extent (352 out of 405), more than 55% report that more than 50% of their cloud-based IT is delivered via external public clouds, and almost 51% indicate that it is more than 70%.

The respondents were also asked to indicate what “percentage of the external cloud-based IT services are provided in each of the following categories: Software as a Service (SaaS), Platform as a Service (PaaS), Infrastructure as a Service (IaaS), and Process as a Service.” Again, each respondent’s answer was required to total to 100%. The results are shown in Figure 21. The vast majority (77.7%) use SaaS, with far fewer utilizing IaaS (27.7%), PaaS (18.5%), and Process-aaS (6.5%). Interestingly, 2.7% selected “other” and provided suggestions to improve next year’s questionnaire. Not including those who do not use a particular cloud capability at all in the averages (as shown in Figure 21), those who use SaaS use it for 75.5% of their external cloud capabilities, IaaS for 12.2%, PaaS for 7.4%, and 3.3% for Processes. Given that on average 17.1% of all IT is external cloud-based (55% of the 31.1%), then (as shown in the bottom row of Figure 21) about 12.9% of all IT services and solutions are external SaaS delivered, 1.3% PaaS, 2.1% IaaS, and 0.9% as Process services or Other.

Figure 21: Percentage of External Cloud-Based IT Services Delivered In These Categories.

 

SaaS

PaaS

IaaS

Pr-aaS

Other

 

% of those using it at all

77.7%

18.5%

27.7%

6.5%

2.7%

Average utilization (including those with zero use)

62.4%

6.1%

10.1%

2.7%

1.3%

 

Average utilization of those using it

75.5%

7.4%

12.2%

3.3%

1.6%

 

Average of all IT delivered this way

12.9%

1.3%

2.1%

0.6%

0.3%

 

n = senior-most IT leader in 260 unique organizations

ii.

Shared Services for IT Delivery

Respondents were also asked “What percentage of ALL IT services are delivered as a ‘shared service’ to your organization?” With 452 senior IT leaders responding, 83.4% indicated that their organizations deliver some level of IT shared services. This is a significant increase from the 70.1% reported last year. As indicated in Figure 22, the average amount of all IT services delivered as shared services this year is 46.9%. The distribution in the figure is plainly u-shaped, with a median of 40 and a large standard deviation of 38.3%.

with a median of 40 and a large standard deviation of 38.3%. A big “THANKS!” to
with a median of 40 and a large standard deviation of 38.3%. A big “THANKS!” to

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Figure 22: Distribution of Organizations by Percent of IT

Figure 22: Distribution of Organizations by Percent of IT as Shared Service (n = 452)

Organizations by Percent of IT as Shared Service (n = 452) Respondents who indicated that some

Respondents who indicated that some IT is delivered as a shared service, were then asked what percentage of those services were delivered via either an “internal/private cloud” or an “external/public cloud.” Responses from 267 organizations, as shown in the similarly u-shaped Figure 23, indicate that on average 62.2% of IT shared services are hosted internally (median 80%, standard deviation 40.7%) and 36.1% externally (median 20%, standard deviation 40.2%), with “other” providing the remaining 1.7%. Interestingly, 22.1% don’t use internal capabilities at all and 30.7% don’t use any external capabilities for IT shared services. Over one-third (34.8%) deliver 90 to 100% of their shared services via internal private systems and 77.9% use internal capabilities to deliver at least some of their IT shared services. Not surprisingly, the use of an external capability for IT shared services delivery was lower, with only 21.7% reporting 90 to 100% utilization and only 69.3% of respondents reporting at least some use of external delivery capabilities.

at least some use of external delivery capabilities. A big “THANKS!” to all SIM members who
at least some use of external delivery capabilities. A big “THANKS!” to all SIM members who

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Figure 23: Delivery of IT Shared Services – Internal

Figure 23: Delivery of IT Shared Services – Internal versus External Capabilities (n = 267)

Services – Internal versus External Capabilities (n = 267) iii. Service Catalogs and Chargebacks In this

iii. Service Catalogs and Chargebacks

In this year’s SIM IT Trend Study, new questions were added related to the use of service catalogs and chargebacks. Specifically, on a five-point scale, respondents were asked to what degree they agree or disagree with the following statements: “We have an IT services catalog” and “We charge users for the IT services that they consume.” Results from the 615 respondents are shown in Figure 24, which also includes the scale from one to five used in the calculation of average score.

Figure 24: The Use of Service Catalogs and Chargebacks (n = 615)

     

Neither

       

Agree

Strongly

nor

Strongly

Don't

Disagree

Disagree

Disagree

Agree

Agree

Know or

Average

= 1

= 2

= 3

= 4

= 5

N/A

Score

In my organization we have an IT services catalog

21.3%

25.2%

13.8%

25.9%

10.4%

3.4%

2.78

We charge users for the IT services they consume.

38.7%

22.1%

11.9%

17.7%

7.0%

2.6%

2.30

Interestingly, although tilted toward Disagree with an average score of only 2.78 out of 5.0 possible, the results are somewhat divided for the use of IT services catalogs, with 46.5% selecting either Strongly Disagree or Disagree and 36.3% either Strongly Agree or Agree. This dichotomy can be seen in Figure 25, with the remaining 17.2% selecting either neutral (i.e., “Neither Agree nor Disagree”) or indicating that they did not know.

Agree nor Disagree”) or indicating that they did not know. A big “THANKS!” to all SIM
Agree nor Disagree”) or indicating that they did not know. A big “THANKS!” to all SIM

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study Figure 25: In my organization we have an IT

Figure 25: In my organization we have an IT services catalog (n = 615)

In my organization we have an IT services catalog (n = 615) With respect to charging

With respect to charging users for IT services, with an average score of only 2.3 out of 5.0, this practice is less common than IT services catalogs. Only 24.7% Strongly Agree or Agree that they utilize chargebacks, while 60.8% Strongly Disagree or Disagree. As evidenced in Figure 26, the results are strongly skewed toward not using chargebacks.

Figure 26: We charge users for the IT services they consume (n = 615)

We charge users for the IT services they consume (n = 615) A big “THANKS!” to
We charge users for the IT services they consume (n = 615) A big “THANKS!” to
We charge users for the IT services they consume (n = 615) A big “THANKS!” to

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study "The first responsibility of a leader is to define

"The first responsibility of a leader is to define reality; the last is to say 'Thank you.' In between the two, the leader must become a servant." – Max De Pree

IV. CIO Reporting Relationships, Time Allocation, Background, Tenure and Performance Measurement

The 717 unique organizations provide insights into what the IT organization is doing and how it is performing and interacting with the business. To better understand the role and activities of IT leaders in organizations, we turn to the data set consisting of the 451 people who responded that they are the “top IT person (e.g., the ‘CIO’)” in their organizations. Hereafter, we will refer to them as the “top IT executive” or the “CIO.” This data set contains 47 CIOs (10.4%) who do not consider themselves as “IT employees,” but who never the less identified themselves as the top IT person. This CIO data set also includes 23 people who are not included in the 717 unique organizations data set since their organizational affiliation is not known.

A. CIO Tenure

The average time these 451 CIOs have been in their current position increased this year by over 4% from last year, from 5.20 to 5.41 years (see Figure 27). The average tenure since 2006 is

4.75 years, up from last year’s average of 4.66 years. Overall, CIO tenure appears to be on an

upward trend over the last decade. This trend is confirmed by other studies; although, CIO job

tenure varies across studies 11 . The 451 respondents in this year’s Study reported longer tenure as CIO than any year in the last nine, except for 2012. The median CIO job tenure increased this year from 3.55 years to 4.0 years. The average total organization tenure of the top IT person is

8.26 years, with a median of 6.0 years; both of which are very similar to last year’s results.

Figure 27: Average Job Tenure of CIOs (2006-2014) (n = 451 CIOs)

27: Average Job Tenure of CIOs (2006-2014) (n = 451 CIOs) 1 1 As of July

11 As of July 2014 http://www.ejobdescription.com/IT_Salary_Survey.html reports CIO tenure at 4.33 years. In January 2014 CIO magazine reported it at 5.92 years http://fedscoop.com/survey-2014-brings-challenges-wind-shift- cios/.

cios/. A big “THANKS!” to all SIM members who completed the IT
cios/. A big “THANKS!” to all SIM members who completed the IT

Comprehensive Report: 2015 SIM IT Trends Study

Comprehensive Report: 2015 SIM IT Trends Study In terms of distribution, it is worth noting that

In terms of distribution, it is worth noting that nearly half (49.4%) of the CIOs have been in their current position for less than four years, 38.1% for less than three years, and nearly one fourth (24.6%) for less than two years. On the other hand, 36.8% have been in their current position for six years or more, nearly one sixth (16.3%) for ten years or more, and 7.3% for 15 years or more.

B. CIO Reporting Relationships

The role of the CIO is thought to be shaped by to whom the CIO reports; although it is unclear to what extent and in what way formal reporting relationships are related to CIO focus and job activities 12 . Nearly 45% (44.2%) of the responding top IT executives report directly to their CEO, more than a fourth (25.7%) report directly to their CFO, and about 15% of CIOs report to their organization’s COO (see Figure 28). Nearly a tenth (9.4%) of CIOs report to the leadership of a “business unit, function, or department executive.” But all of this year’s responses are similar to their averages over the past ten years; moreover, year-to-year variability due to sample differences are to be expected, but do seem to be leveling out over the last two years as the sample size increased.

Figure 28: To Whom the CIO Reports, 2005-2014 by percentage of respondents

 
 

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Avg.

CEO

43%

45%

31%

43%

46%

44%

49%

43%

44.7%

44.2%

43.3%

CFO

22%

25%

29%

28%

24%

31%

32%

27%

27.1%

25.7%

27.1%

COO

21%

16%

22%

14%

14%

11%

12%

19%

14.4%

15.0%

15.8%

Business Unit Executive

6%

9%

7%

3%

9%

4%

5%

10%

9.2%

9.4%

7.2%

Other

9%

5%