SOURCE: A.T. Kearney

A.T. Kearney

August 26, 2013 10:00 ET

A.T. Kearney Study Sees Major Reorganization of IT Departments to Meet Growing Requirements by 2020

As IT's Importance Grows in All Industries, So Will Challenges and Budgets

CHICAGO, IL--(Marketwired - Aug 26, 2013) - Increased investment in IT will bring significant reorganization and changes in the operating models of IT departments over the next seven years according to a new study of 150 Chief Information Officers (CIOs) of global companies by management consulting firm A.T. Kearney. The report, titled "IT 2020: Preparing for the Future," found two-thirds of companies plan to invest more in IT over the next seven years, especially in sales and customer interactions.

The transformation will be driven by rapidly-growing IT requirements. Nearly 85 percent of respondents say they foresee a significant increase in requirements, with almost 75 percent expecting that time pressure for implementing IT projects will also increase. Not surprisingly, digital investments in sales and customer-driven applications will become the main focus of IT investments, according to 61 percent of CIOs.

"In other words, where IT had once focused on improving processes and automating production, by 2020 the focus will shift to fostering customer relations via personalized marketing campaigns, data analytics, and online ordering systems," said Christian Hagen, an A.T. Kearney partner and one of the study's authors.

To meet these goals, survey respondents expect all industries to fund IT at higher levels than today. Investments will differ by industry, however, with automakers and retailers investing significantly more than other industries.

One of the biggest challenges facing CIOs is complexity, and 84 percent of CIOs expect to support more applications in 2020 than they do today. Furthermore, most CIOs expect a majority of 2020 applications will support and enable multiple channels, including mobile.

However, 80 percent of CIOs expect standard software to cover more than half of the required functionality for new applications and interfaces, thus reducing the need to invest in labor-intensive custom software. Such reductions in complexity would help IT departments focus less on technical issues and more on integrating the standardized software components into business processes.

These changes reflect a potentially massive transformation of the IT function. Nearly 60 percent of CIOs are building islands of specialization and independence to meet demand for critical needs faster and more effectively. Meanwhile, more than 75 percent of respondents expect to increase outsourcing. Basic commodity services will be transferred to external partners, who may boast cost-efficient locations, cloud services, or both.

Amid this reorganization, many existing IT employees will face transition to external providers, retraining for new roles, or layoffs. New IT jobs are likely to significantly outnumber reductions, but the new jobs will require new talents and retraining may not be sufficient. In particular demand will be experts who understand IT, digital technologies, and business, as well as those experienced in sales and customer-driven applications.

To meet the skills gap, firms in the United States and other English-speaking countries may have an advantage over European-based companies: Many existing offshore centers are in English-speaking countries, thus providing a larger pool of qualified workers.

However, managing these transitions will not be an easy job for any CIO. "CIOs will be asked to contribute directly -- faster and more efficiently -- to the success of the enterprise," said Hagen. "Additionally, IT will be asked to be a leader in digital transformations and technologies. In parallel, CIOs will need to manage a highly complex application landscape with a slightly increased but still limited budget."

About A.T. Kearney

A.T. Kearney is a global team of forward-thinking partners that delivers immediate impact and growing advantage for its clients. We are passionate problem solvers who excel in collaborating across borders to co-create and realize elegantly simple, practical, and sustainable results. Since 1926, we have been trusted advisors on the most mission-critical issues to the world's leading organizations across all major industries and service sectors. A.T. Kearney has 57 offices located in major business centers across 39 countries.

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