This is the last post where I expand on my trends for 2016. This section has to do with the role that IT leadership will play in driving these trends. As I stated in my opening posts, IT is undergoing a major change in focus from infrastructure to application enablement and analytics. IT leadership is driving this transformation.
8. Businesses Prepare For Next Gen Cloud
According to a study by The Economist, some of the best practices that will help business leaders make the most of their cloud opportunities include improving supplier selection; choosing the right cloud service for the right task; making better use of integrators to connect cloud services to existing IT infrastructure; and considering factors such as cloud’s potential to improve business operations and boost employee efficiency. The economist survey shows that there is a strong correlation between cloud usage and an innovative business. “Among firms rated by the survey respondents as above-average for innovation, 86% say that their senior management places a high priority on the cloud; this compares with 68% of firms rated as average or below for innovation. Attached is one of the survey results from the Economist study showing the impact of senior management on cloud implementation and innovation.
9. IT Infrastructure Companies Will Be Disrupted
As business begin to change their IT focus from infrastructure to application enablement and analytics, there will be a major shake up in the infrastructure vendor community. Analysts estimate that for every $ that goes into the Amazon public cloud, it displaces 3 to 4 times that revenue in infrastructure spend. AWS is projected to have revenues of $8.1 in 2015. At 3 times, that amounts to $24B of addressable market that is no longer available to the infrastructure vendors! The infrastructure that will be hardest hit will be the storage industry. You can expect to see pure-play infrastructure vendors, even the flash startup vendors, try to cope with declining revenues by looking for buyouts, splitting off all or parts of their business, acquiring new infrastructure companies, or merging with other infrastructure companies to drive economies of scale. Leaders of Infrastructure vendors will need to transform their companies from selling infrastructure to selling integrated solutions that enable IT transformation. Infrastructure is still important but only as it contributes to the overall solution. IT will be less interested in the technology of the infrastructure behind the solution than in the value that can be delivered by the total solution. At a large ecommerce customer we displaced 80% of their infrastructure spend with a Hitachi Content Platform that enabled them to consolidate onto a content cloud.
10. IT Plays Leadership Role In The 3rd Platform
IT will play a more proactive role in leading businesses through the transformation driven by social, mobile, analytics and cloud, collectively known as the 3rd Platform. Contrary to the view that IT no longer plays a dominant role in driving enterprise technology spending, we believe that the compelling value of IT lies in its ability to implement 3rd Platform technologies in accordance with corporate requirements for security, data protection, availability and collaboration. If IT does not step up to this leadership role, the result will be silos of information and duplication of processes that will inhibit business growth.
Last month I posted on how in one sales region in the US, three CIOs were displaced and the IT departments ended up reporting to the VP of Finance. I can understand if the business views IT as just a cost center, it might be better to have IT report to finance. However, there are many more stories of how CIO’s are transforming IT and creating innovation. Last year I had the pleasure of meeting Jan Bouwsma of Heineken. He presented this slide at a CIO event in Amsterdam.
For a long time the industry has talked about the need to align IT with Business. Jan believes that IT must go beyond collaboration and lead business innovation. Many consultants like PwC, Accenture, CIO.com,and the Harvard Business Review have called for the CIO to be the “Chief Innovation Officer as game changing technologies transform every business process”. 2016 will see CIO’s step up to this new role or become obsolete.