Embracing a new IT reality?

Embracing a new IT reality? A global study of CIO pressures and priorities A research paper from Logicalis Logicalis 1

In summary: In the wake of the global financial crisis and driven by a combination of cost pressure and competitiveness, the relationship between businesses and IT is changing, and it is changing quickly. The business value derived from investments in IT is under scrutiny more than ever before. Technology is no longer an essential cost center it is increasingly viewed as a business enabler and a key contributor to competitiveness, and its value is measured accordingly. As a result, the pressure is on to align IT ever more closely with business strategies and goals. It must be optimized to deliver clear return on investment, it must support the business agility that is so vital to competitiveness, and it must support the disparate and sometimes conflicting demands of a wide range of business functions. But what does all this mean for CIOs and IT Directors the world over? This report reveals key findings from a global study that set out to answer that question and more... n How is the role of the CIO changing? n Is this new IT reality a threat or an opportunity to finally take on the strategic position that the title suggests? n What are CIOs doing to win back the time they need to focus on strategy? n And are CIOs priorities yet aligned with a reality in which business and technology must work as one where IT decisions must reflect and directly support business imperatives? Read on to find out what CIOs from Europe, North America, Latin America, and Asia Pacific have to say. Logicalis 2

Key Findings

The spectre of Shadow IT looms large It seems that line-of-business managers are taking direct control of more IT decisions continuing a trend that gave rise to the phrase Shadow IT. Just under half of CIOs and IT Directors believe that this trend will grow in the next 3 to 5 years. In fact, of the three-quarters (72%) who express a view, 60% expect this trend to continue. The belief is more concerted in Europe and North America, with over 57% and 54% of all respondents, respectively, expecting an increase perhaps an indication of business managers in more mature markets feeling more confident of taking the lead in addressing their IT needs. In ASIAPAC and LATAM, however, the trend is less pronounced 35% and 36%, respectively, predict a further increase in line-of-business manager decision making. Generally, there is more certainty, or less awareness, of the issue in these markets; however, 38% in ASIAPAC and 28% in LATAM simply don t know. 28.5% 28.5% 43% Global n Yes 43% n No 28.5% n Don t Know 28.5% That said, excluding the don t knows changes the picture significantly bringing these regions more into line with the rest of the world. Of those who expressed a view (fewer than half in ASIAPAC and around two-thirds in LATAM), 62% (ASIAPAC) and 53% (LATAM) expect line-of-business managers to gain more power over IT decision making over the next 3-5 years. Europe n Yes 57% n No 26% n Don t Know 17% North America n Yes 54% n No 23% n Don t Know 23% Q: Do you think line-of-business managers will gain more power in terms of IT decisions over the next 3 to 5 years? ASIAPAC n Yes 35% n No 26.5% n Don t Know 38.5% LATAM n Yes 36% n No 36% n Don t Know 28% Logicalis 4

CIOs still struggle to focus on strategy... CIOs are still spending too much time on day-to-day activities over 50% of respondents spend at least 70% of their time on day-to-day management as opposed to strategic planning and initiatives. Over 70% Day-to-Day 70% This is particularly the case in Europe, ASIAPAC, and LATAM. In North America, however, executives are finding more time for strategic planning and initiatives. 60% 50% 40% 53% 57% 52% 62% how is your time split between day-to-day management of technology and Q:Approximately strategic planning/initiatives? 30% 20% 10% 0% 35% Global Europe North America ASIAPAC LATAM but they want to. However, perhaps recognizing the pressing need to adapt to a new IT reality and the threat from line-of-business managers, CIOs want to make significant changes to their day-to-day role to focus far more on strategic initiatives. Almost half of respondents worldwide would like to spend 30% or less of their time on day-to-day management and, by definition, at least 70% of their time on strategic initiatives. North American executives, despite already dedicating the most time to strategy, show the greatest desire to further change the balance. Less than 30% Day-to-Day 70% 60% 60% 50% 40% 45% 37% 30% 45% 44% Q:In an ideal world, what would be the split between day-to-day tasks and strategic planning? 20% 10% 0% Global Europe North America ASIAPAC LATAM Logicalis 5

Optimize and streamline is the mantra When asked what they can do to free up more time for strategic activities, CIOs and IT Directors exhibit a striking consensus of opinion internationally. The first priority is to streamline and optimize existing technology infrastructures. This is a particularly high priority in North America, where 75% of those interviewed pointed to streamlining and optimization perhaps reflecting the fact that North America, along with Europe, has the greatest volume of legacy technology. Also featuring heavily in the mix, and clearly not unrelated to the streamlining and optimization goal, is the increased use (and more efficient use) of managed-services providers. Indeed, taken together, the proportion identifying managed-services-related activities corresponds closely to the proportion pointing to optimization and streamlining. 44% 13% 21% 22% Global n Hand more day-to-day management activities over to specialist managed-services vendors n Consolidate our use of managed services, selecting single vendors to manage specific technologies and services across multiple territories n Adopt cloud consumption model n Streamline and optimize our technology infrastucture In all territories, perhaps to a lesser extent in LATAM, the results suggest managed-services providers have a major part to play in helping CIOs carve out a more strategic role. The relative lack of desire to adopt cloud consumption models may suggest that a significant number of businesses are already using public and private clouds or are well on their way to doing so. Europe n 21% n 24% n 10% n 45% North America n 27% n 16% n 16% n 41% ASIAPAC LATAM Q: What could help you earn back several hours a week to focus on business strategy goals? n 18% n 28% n 11% n 43% n 22% n 18% n 15% n 45% Logicalis 6

First and foremost, CIOs want time to focus on mobility and insight When asked what they would focus on first, if successful in achieving their ideal split between day-to-day and strategic activites, CIOs and IT Directors displayed a clear consensus and, in so doing, displayed a striking appreciation of the shifting role of IT in business. That is, the stand-out priorities both relate directly to supporting business strategies by enabling collaboration, enhancing productivity, and supporting mobile workforces. Specifically, Business Analytics stands out as a first point of focus for 43% of CIOs, followed by mobile enterprise strategy at 34%. These priorities are broadly consistent across all territories. Business Analytics and mobility are identified as the top two priorities across the board the only variation being in Europe, where mobility takes the top spot. Europe 7% 18% 33% 42% n 40% n 32.5% n 17.5% n 10% Global n Mobile enterprise strategy 33% n Business Analytics 42% n Cloud services 18% n Other 7% North America n 20% n 52% n 16% n 12% Q: If you were to be successful in achieving an ideal split between operations and business strategy, what would you focus on first? ASIAPAC n 35% n 45% n 18% n 2% LATAM n 30% n 41% n 20% n 9% Logicalis 7

What s core, and what s context? Looking in more detail at the steps CIOs and IT Directors can take to streamline and optimize, in many cases working with managed-services providers, the survey also sought to assess overall willingness to hand over specific technologies to external suppliers. Although the global picture appears to show a striking willingness to see ever more technologies as context, this masks a more complex picture. Indeed, this is the area where we saw perhaps the most striking regional variations with trends in Europe and ASIAPAC standing very much at odds with those in the Americas. Global CIOs in North America are the least predisposed to handing over management of technology, with less than 50% agreement across all technology areas. Similarly, their colleagues in LATAM, though less cautious overall, appear significantly less willing to hand technologies over to managed-services providers. 54% 41% 41% 56% 48% 32% Their counterparts in ASIAPAC, by contrast, are more than happy on all counts to allow their technologies to be managed by a trusted partner, with no response to the contrary exceeding 49% (Network Services). Similarly, European CIOs veer toward general acceptance of partnering, notwithstanding a lingering caution about security technologies. n In n Out 46% 59% 59% 44% 52% 68% Q: Which of the following technologies do you think must be managed and supported in-house? Which would you be prepared to put into the hands of a trusted partner? Network Infrastructure Servers Storage Security Network Services Mobile Environment Logicalis 8

Q: Which of the following technologies do you think must be managed and supported in-house? Which would you be prepared to put into the hands of a trusted partner? n In n Out Europe North America 30% 44% 40% 45% 70% 48% 56% 60% 55% 52% 64% 71% 36% 29% 54% 46% 44% 56% 84% 56% 44% 52% 48% 16% Network Infrastructure Servers Storage Security Network Services Mobile Environment Network Infrastructure Servers Storage Security Network Services Mobile Environment ASIAPAC LATAM 45% 55% 20% 80% 22% 78% 28% 72% 49% 51% 19% 81% 63% 37% 57% 43% 52% 48% 69% 31% 48% 52% 39% 61% Network Infrastructure Servers Storage Security Network Services Mobile Environment Network Infrastructure Servers Storage Security Network Services Mobile Environment Logicalis 9

CIOs want multi-faceted support from dedicated specialists... Overwhelmingly (80%), CIOs would prefer to deal with a dedicated services company as opposed to the services arm of a major equipment vendor (20%), as they seek the specialist support required to optimize and streamline an increasing range of technologies. your organization prefer to deal with a dedicated services company such as Logicalis as the prime contractor, Q:Would or with the services arm of a major equipment vendor? Global n Dedicated 80% n Vendor 20%...but fewer of them. However, CIOs and IT Directors are clearly aware of the issues surrounding service provider sprawl particularly the inefficiencies and costs associated with working with an un-optimized roster of vendors. Rather, the majority are moving toward a more unified model, with the general view (60%) being that using a single vendor across territories is preferable to selecting on a country-by-country basis. Q: In your opinion, what is the best approach to using a managed services or services optimization partner? Global n Country-by-country 40% n Single vendor 60% Logicalis 10

Optimization means business and technology working as one It is clear that CIOs and IT Directors have a good understanding of the new business IT reality in which they now operate in particular, the absolute focus on aligning IT investment decisions and ongoing management with wider business strategies. Ability to dedicate more specialist resources to innovation Delivering a consistent technology experience internationally Enabling the business strategic goals Supporting productivity Proportion selecting each option n Global Average n Europe n North America n ASIAPAC n LATAM The survey results point this out. Asked how they measure optimization, CIOs and IT Directors overwhelmingly pointed to: Streamlined management n Enabling the business strategic goals n Best use of technology budgets n Supporting productivity n Cost cutting Best use of technology budgets Maximize life-cycle value of technology investments Efficient access to expertise Q:How would you measure optimization? Adopt new technology consumption models Cost cutting Logicalis 11

Conclusions These survey results confirm the reality we see on the ground. IT leadership is now actively looking to drive a services-led transformation strategy to close the gap between business expectation and IT delivery capacity and capability and to transform the CIO s role in the process. The common theme worldwide is one of CIOs striving to improve all internal operational processes to deliver greater efficiency across every aspect of IT infrastructure and service operations, from building highly virtualized data center platforms to investing in best-practice internal ITSM processes and systems. It seems clear that CIOs will now focus their organizations on delivering an experience comparable with external services providers, and they also will engage with services partners to assist them in achieving the service maturity and agility necessary to compete for internal business in the coming years. Ian Cook Chief Executive Officer Logicalis Group Logicalis 12

Overall, it is clear from the survey that tackling international transformation to deliver IT maturity and efficiency is where our customers are looking for most assistance today. CIOs increasingly see providers like Logicalis as offering an efficient solution, bringing instant maturity of IT service processes by operating existing technology or by providing new business solutions in the form of a service. But the survey also suggests that CIOs recognize they may have too many service partners today. Service provider sprawl is an issue many CIOs clearly want to avoid or remedy by consolidating a select number of service partners who can work across the services life cycle, and that is very much part of the rationale behind the Optimal Services portfolio. Chris Gabriel Chief Technology Officer Logicalis Group Logicalis 13

The most important ICT developments will cluster around what IDC calls the 3rd Platform for IT growth and innovation, built on mobile devices, cloud services, social technologies, and Big Data. The 3rd Platform is a hyperdisruption, a once every 20- to 25-year shift to a new technology platform for growth and innovation. By 2016, organizations worldwide will spend $100 billion on vertical solutions based on the 3rd Platform, with the aim of improving business agility. We predict that this business innovation on the 3rd Platform creating a wider variety of new solutions targeted at new business opportunities and challenges will drive a profound shift in the role of the IT organization and IT purchasing decisions. Enterprise IT groups cannot afford any longer to be just watching, studying, exploring, or experimenting with cloud services, mobile devices, social technologies, or the other core elements of the 3rd Platform. They must develop deep competence in all these technologies, often with the help of third parties with expertise in as a service strategies. Chris Barnard Associate Vice President IDC Logicalis 14

About the research All figures are drawn from a survey of 186 CIOs and IT Directors across 180 mid-market organizations in 24 countries spanning Europe, North America, Latin America, and Asia Pacific. Logicalis 15

About Logicalis Logicalis is an international IT solutions and managed-services provider with a breadth of knowledge and expertise in communications and collaboration, data center and cloud services, and managed services. Logicalis employs nearly 3,500 people worldwide, including highly trained service specialists who design, specify, deploy, and manage complex ICT infrastructures to meet the needs of almost 6,000 corporate and public sector customers. To achieve this, Logicalis maintains strong partnerships with technology leaders such as Cisco, HP, IBM, CA Technologies, NetApp, Microsoft, VMware, and ServiceNow. The Logicalis Group has annualized revenues of over $1.4 billion, from operations in Europe, North America, South America, and Asia Pacific and is quickly establishing itself as one of the leading IT and Communications solution integrators, specializing in the areas of advanced technologies and services. The Logicalis Group is a division of Datatec Limited, listed on the Johannesburg and London AIM Stock Exchanges, with revenues of over $5 billion. For more information, visit www.logicalis.com Logicalis 16