Sunday, November 22, 2009

Information Technology(IT):- A Business Partner not just Cost Center (Based on IDC Survey)

Hello Everybody!
This is first time I am writing a blog on IT Infrastructure, though I am working in IT Infrastructure domain for quite some time now. My expertise is in technical, sales and consulting arena. So I feel this knoweledge sharing would be more interactive and it would be more helpful for all of us who work in IT Infrastructure domain or more broadly in overall IT.
Today we can look at how IT has evolved over a period of time from being just a Cost Center earlier to a Business Partner today. The base of this information is a survey conducted by IDC in multiple MNCs across various vertical sectors like Insurance, Manufacturing, Professional Services and Telecoms in Japan, Australia, India and the People's Republic of China(PRC).
The key findings of this IDC Survey inclue:-
1. IT has evolved from a cost center to a business enabler, and in many organizations today, IT assumes a strategic role of a business partner. With IT ranking high on the corporate agenda, a CIO’s role has also become more strategic and critical for organizations that use technology as a key business differentiator.
2. In countries like Australia, the PRC and India, select industry sectors are witnessing double-digit growth. In order to sustain their growth, bottom line and cost competitiveness in the market, organizations are expecting to use IT more aggressively to cut down operational costs while improving employee efficiency and productivity. CxOs are expected to join shoulders with business leaders in attaining both top-line and bottom-line revenue targets.
3. In order to stay competitive, organizations are leveraging on IT to enhance their operational
efficiency, reduce the go-to-market period and improve customer service, while keeping costs under control. CxOs are also challenged to simplify IT while keeping the IT ecosystem agile and within budget. The increase in power and cooling costs, and the growing environmental concerns of rising carbon footprint are also pushing organizations to embark on "Green" initiatives. Therefore, CIOs are increasingly looking to leverage their IT vendors' global expertise in
simplifying IT to meet their business and IT goals.

Business Priorities Driving IT Initiative:-

IDC's survey shows that CEOs are focused on growing the business by driving product innovation and improving customer care, while ensuring regulatory compliance. Improving organizational productivity also features strongly in the CEOs' agenda. The IT organization is expected to be more nimble and innovative in supporting the business goals. For organizations in India, Australia and Japan, enhancement in customer care service is one of the leading initiatives on the CEOs' agenda. It is worth noting that regulatory compliance is the most important
initiative for CEOs in India.

About 80% of the respondents said that they would use and rely on technology “more aggressively” to achieve their company’s priorities. The country most likely to
use technology more aggressively is Japan, as almost 90% of the companies responded that
they would do so.

Top Priorities for Key IT Projects:-

Across the surveyed countries, respondents said the top priorities of their key IT projects are to support the business, to ensure IT security, and to reduce the total cost of ownership. In addition, projects on virtualization and related tasks of upgrading and consolidating IT systems are also top priorities. The survey also revealed that the business priorities of respondents from India and Japan are more varied, and did not concentrate on a select few.
Growing Complexities in the IT Ecosystem:-

CxOs from the PRC, Australia and Japan, unanimously rated “achieving business agility” as the key challenge, whereas the India CxOs gave similar priorities to “finding and retaining talent” and “assessing and quickly absorbing mergers and acquisitions." CIOs across all four countries agreed that having too many disparate systems and the lack of an integrated IT environment posed the topmost challenge with respect to the impact of technology use on the organization's ability to compete more effectively in the marketplace.

Overcoming Challenges by Simplifying IT:-

The CxOs face significant difficulties in achieving business agility amidst expanding business
requirements. CIOs are adopting service-oriented architecture (SOA) to standardize and automate their business and IT processes in order to simplify their IT. The consolidation of hardware down to a select few vendors and reducing the number of applications are also key initiatives.

Emerging Themes: Green IT, Virtualization and Web 2.0:-

When asked about the technology areas that can affect their organizations’ competitiveness, CxOs believe that Green IT, datacenter transformation and usage of new media to reach customers are the top 3 technology areas that will define their competitiveness. It noteworthy that for the emerging economies like India and the PRC, Green IT has the topmost priority in technology areas that can affect the organizations' competitiveness. Green IT may help the organizations in these countries reduce the cost of power and cooling, as phenomenal growth in both the countries lead to an increase in power supply usage.

Across the region, virtualization is currently applied mainly to servers, storage and
networks, as shown in figure below. The degree of adoption is mixed, indicating that these organizations still have some ways to go towards leveraging virtualization as a tool to improve IT utilization and drive consolidation.

The performance of the IT department and the CIO are measured on how effectively they support the lines of business, with projects being completed on time. Ultimately, all efforts must continue to support and advance the company's strategy in a continuing cycle where IT creates value and projects stay within budget.

Top business priorities for the companies surveyed are to drive business growth through faster product innovation and better customer care, while ensuring regulatory compliance. The companies expect IT to play a more strategic and responsive role in supporting business initiatives.
 Thus the top priorities for CIOs are to support the line of business, ensure security, and reduce the total cost of IT ownership. They expect to use technology aggressively to help them achieve competitiveness, but also recognize the ongoing struggles of simplifying IT systems to achieve business agility. This all have to be achieved without appreciable budget increases.
 CIOs in the survey openly admit that they have a disparate and complex ITenvironment, and they are turning to vendors who understand their business to co-create solutions that are open and flexible. CIOs are measured on how well they support the organization's business priorities and how well they deliver these projects on time and within budget. They also said they would like their vendors to help them achieve these goals.
 Green IT is an increasingly important factor on the CxO's agenda due to the potential cost savings or regulatory compliance requirements, and will increase in importance in the near future. CxOs are concerned about reducing energy consumption, reducing environmental impact through recycling and reducing carbon footprint, all driven by cost savings and regulatory pressures.
 Virtualization is widely adopted by organizations in Japan and China, but not so in India and Australia. There are opportunities for companies in India and Australia to achieve better efficiencies by virtualizing more of their servers, storage, clients and applications.
 Vendors are expected to support the CxO’s Green initiatives by providing more eco-friendly IT solutions as well as making the functionalities of existing IT systems environmentally friendly. CxOs expect these to be achieved with no increase in IT budgets.
 The business landscape is changing at such break-neck speed that in order to stay competitive, organizations are leveraging on IT to enhance their operational efficiency, reduce the go-to-market period and improve customer service, while keeping costs under control. As a result, IT infrastructures are becoming more complex, and CxOs are challenged to simplify IT while keeping the IT ecosystem agile and within budget. Due to the increase in power and cooling costs, and the growing push to reduce carbon emissions, organizations are embarking on Green initiatives. To overcome these challenges, CIOs are increasingly looking to leverage their IT vendors' global expertise in simplifying IT to meet their business and IT goals.


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