The past two decades have seen their share of technological disruption – retail, books, music, newspapers, and traditional data centers by – virtualization and cloud computing. With the impact of cloud computing and mobile BYOD trends on traditional IT departments, there has been an ongoing discussion in recent years about whether or not CIOs and IT leaders are still, or will remain, strategically relevant to the enterprise.
All considered, it’s not an unreasonable question. In many ways, it’s as if traditional IT systems and data centers have been thrown into maintenance mode, while investments pour into cloud, mobile, social media, and data analytics. It’s not just that the importance of the physical data center itself is changing, or that applications are increasingly subscription services rather than bits running on-premises, it’s that increasingly CIOs and IT leaders are left out of the IT buying decisions.
Some of this is showing up in spending trends. According to the Gartner Worldwide IT Spending Forecast, global IT spending will hit $3.5 trillion this year. That’s a top line 5.5% decline from last year. Most of that downward move, however, is attributed to US dollar currency fluctuations, rather than real demand disintegration. In constant currency, global IT spending in 2015 is projected by Gartner to grow at 2.5%. Gartner also expects communications services to be the largest IT spending segment this year, and global mobile phone shipments remain strong.
In the first quarter of 2015, according to IDC, cloud infrastructure sales increased more than 25%, annually, to almost $6.3 billion. During that time, public cloud spending rose to $3.9 billion, up 25.5%, while private cloud sales rose 24.4% to $4.2 billion.
That growth far outdoes that of the broad enterprise software market. Gartner expects enterprise budgets for data center systems in local spending to remain stable for the year, with users expected to extend life cycles and defer replacements to counter price increases related to the strong US dollar. Enterprise software also will decline 1.2 percent this year, but much of that also can be attributed to the strong dollar as well as SaaS revenue being subscription-based.
While a lot of this stagnant to reduced IT spending this year can be attributed to less expensive cloud services, lower CAPEX associated with SaaS pricing, much of it can be attributed to technology spending shifting from centralized IT departments to other segments of the business, such as marketing and human resources. Even more individual users and business managers can choose cloud services for personal productivity software and small workgroups, all of which generally flies under IT radar.
Despite all of these trends having been underway for a number of years now, many organizations still haven’t been able to adapt. It seems not too long ago that IT reigned supreme over every device, server, and data connection in the enterprise. They approved who used what where, and what was production. They dictated where data were stored and how they were secured. And anyone who wanted to use anything information technology-related had to go through the IT department. Those days are gone.
What all of this is certainly doing is changing the dynamic between the “business” and IT. Many of these cloud services bought outside the control of IT run unmanaged, and the result is that IT doesn’t see what users are doing and what they need, so they can’t add value this way to their enterprise users.
This lack of transparency into what technology users are actually using to get work done actually increases the complexity of systems and obfuscates IT from being able to do everything it needs to do to keep relevance. There’s no long-term technology strategy; there’s no panoramic view into all of changes in how people are using new technologies to understand IT opportunities that perhaps are being missed; and lastly there’s no way to enforce security and compliance policies.
What all of this means for IT leaders is that it’s up to them to remain relevant in the years ahead. They’re going to have to find ways to provide value to their internal customers, whether that’s by helping them to build solutions on their own or enhancing apps and services that internal business managers chose themselves. They must help them to find the best external services for their need and create the most friction-free, cost-effective, efficient solutions that optimize end user experiences as well as corporate data. Today, it’s more about end user experience than it is large databases, applications, and ERP rollouts. It’s more about cultivating data than centralizing everything into monolithic databases. And it’s more about helping orchestrate users with mobile, social, and cloud than it is storage and data centers.
It’s about maintaining relevancy in the technological storms that are pounding IT departments today. In the upcoming months, we are going to run periodic stories and Q&As that aim to show business leaders exactly what they need to know to ride through the disruption.