http://www.informationweek.comInformationWeeken-usCopyright 2012, UBM LLC.2012-10-19T09:07:00ZIT budgets will grow more slowly in 2013, but these elements of IT transformation will continue, CEB's survey and analysis shows.http://www.informationweek.com/news/240009322?cid=RSSfeed_IWK_AuthorsAt first glance, consulting firm Corporate Executive Board's 2013 IT budget benchmark findings make dispiriting reading. But underneath the headline numbers are clear signs that CIOs are pressing ahead with new ways to create business value. <P> CEB collected and benchmarked 2013 budget plans from about 200 companies globally, representing $52 billion in IT spending. Based on our analysis, the average corporate IT budget will increase 1.8% next year. After several years of annual budget growth of between 5% and 10%, the 2013 forecast seems small. However, it's important to remember that previously more substantive increases arose from IT organizations working through a backlog of projects that built up during the recession. <P> The 2013 projected budget increase reflects higher operational expenditures only--capital expenditures are projected to be flat, limiting the opportunity CIOs have for continued innovation. Room for maneuvering will be further limited by that old bugbear, maintenance spending. Spending on IT maintenance and mandatory changes for legal and compliance reasons will remain stubbornly high, at 67% of total IT spending. <P> Despite these constraints, CIOs are planning to drive significant change next year by moving money around while keeping total spending mostly flat. What's emerging is an IT organization that sees more opportunity to drive growth through employee collaboration, insight, and mobility, and less through traditional process automation. To do this, CIOs are increasingly making IT service-based and building new IT skills and roles. Evidence of this transformation shows up in six main areas in the survey. <P> <strong>1. Continued Focus On Information Over Process</strong> <P> In 2013, project portfolios will include less investment in process automation and more in information management and collaboration. For the third year running, information management and collaboration projects represent the largest category in the project budget. On average, this category accounts for 32% of IT project budgets, compared with 30% for process automation. How far might this trend go? Among the top 20% in terms of spending on information management and collaboration, they plan to devote 66% of 2013 project budgets to this category. <P> <strong>2. Applications Go Mobile</strong> <P> Spending on mobile application development will grow by 50% in 2013, to nearly 2% of total IT expenditure. This is solely spending within IT on developing new mobile applications and making existing applications ready for mobile. The figure doesn't include spending on mobile devices and the money that marketing teams spend on mobile and social media projects without IT's involvement. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <strong>3. Up In The Cloud</strong> <P> Fifty-four percent of IT organizations plan to increase spending in the public cloud next year. On average, 7% of total IT spending will be allocated to public cloud resources. The largest share of cloud spending will go to software-as-a-service, but spending on infrastructure-as-a-service is rising fast. <P> <strong>4. End-To-End IT Services Go Mainstream</strong> <P> In the last two years, we have seen an upsurge of interest in end-to-end IT services. This services model takes all of the technology (applications infrastructure, data, etc.) needed to deliver a specific business outcome and packages it together as a service. While many IT organizations have only experimented with the model, this tentative approach is changing. By the end of 2013, most organizations expect to offer at least some end-to-end IT services. And at roughly two-thirds of those organizations, services will account for more than 30% of the IT operating budget. <P> <strong>5. New Roles Emerge</strong> <P> The focus on service management and enabling employee productivity is driving changes in IT roles and skills. Seventy-eight percent of IT organizations already have or plan to create service manager roles; 59% are going a step further by creating or planning to create service architects. Eighty-four percent of IT organizations have or plan to have information architects, and 52% will have user experience designers. <P> <strong>6. More Will Be Done Outside IT</strong> <P> While IT bolsters key new roles in 2013, companies expect a decrease in IT employees as a percentage of total employees. The survey doesn't show an increase in outsourcing, which suggests a different trend in which more IT work is being done, formally or informally, within the company but outside IT. <P> This impressive to-do list shows that CIOs are increasingly impatient with the current performance of IT, and they're willing to push through change that is significant, and in some cases, somewhat risky. But an even riskier strategy is to not make budget choices that drive change. <P> <center>Read More:<br> <b><a href="http://www.informationweek.com/global-cio/interviews/it-has-changed-but-it-budgets-havent/240009244">IT Has Changed, But IT Budgets Haven't</a></b></center></p> <P> <P> <!-- KINDLE EXCLUDE --> <center> <div id="printfeaturePDFpromo"><div class="printfeaturePDFCover"><a href="http://reports.informationweek.com/abstract/83/9155/IT-Business-Strategy/informationweek-october-29-2012.html?k=axxe&cid=article_axxe_os"><img src="http://twimgs.com/infoweek/1348/smallcov2.jpg" alt="InformationWeek: Oct. 11, 2010 Issue" title="InformationWeek: Oct. 11, 2010 Issue" /></a></div> <div class="printfeaturePDFCopy"><strong><a href="http://reports.informationweek.com/abstract/83/9155/IT-Business-Strategy/informationweek-october-29-2012.html?k=axxe&cid=article_axxe_os">Download a free PDF of <nobr><em>InformationWeek</em> magazine</nobr></a><br /> (registration required)</strong></div> <div class="clearBoth"></div> </div> </center> <!-- /KINDLE EXCLUDE --> <P>2011-05-28T00:00:00ZMost corporate IT organizations aren't ready for a wave of capital spending after years of cost cutting, standardization, and simplification that came at the expense of innovation.http://www.informationweek.com/news/229502448?cid=RSSfeed_IWK_AuthorsCorporate IT is about to face a surge in demand for innovation, but is it ready? In the first quarter of 2011, 20% of S&amp;P 500 companies reported that their revenue exceeded prerecession peaks. Many more will reach this milestone before the end of 2011. When this happens, the brakes come off capital spending. In fact, that elite 20% grew capital spending up to 65% faster than the rest. </p> <P> With greater capital spending comes more appetite for innovation, and at most companies IT is expected to play a full part. But despite all the hype about IT innovation and the CIO as "Chief Innovation Officer," the reality is that corporate IT's ability to innovate has atrophied. In many organizations, years of cost cutting, standardization, and simplification came at the expense of innovation. Deploying ERP, consolidating data centers, or completing an outsourcing deal are difficult and worthwhile but rarely innovative. </p> <P> Besides not being innovative, they may actually be harmful to innovation. The behaviors and processes required--efficiency, repetition, process discipline, and risk aversion--are contrary to the flexibility and creativity that lead to innovation. One leading CIO told us recently that many innovators and critical thinkers left her organization as they battled their way through a multiyear ERP implementation.</p> <P> To be truly effective at innovation, CIOs must rethink the way IT works with the rest of the business, incentivizes staff, and evaluates investments. CIOs must do this without sacrificing the efficiency and operational excellence they have so painstakingly acquired. In recent research, Corporate Executive Board's Information Technology practice examined how exemplar IT organizations are successfully navigating this dilemma. </p> <P> <strong>1. Foster Openness To Innovation</strong></p> <P> <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/1301/301CS_Andrew-Horne.jpg" width="175" height="175" alt="Andrew Horne, Corporate Executive Board" title="Andrew Horne, Corporate Executive Board" class="img175" /> <div class="storyImageCaption">Andrew Horne, Corporate Executive Board</div> </div> <!-- / Image Aligning Right --> Innovation entails creative tension and a willingness to take risks. For example, business-facing IT staff must be able to "challenge" their business partners, not just build relationships and seek consensus. More broadly, IT leaders should take another look at IT staff performance criteria to ensure that creative thinking and appropriate risk-taking are encouraged, not penalized. </p> <P> <strong>2. Expand The Pipeline Of New Ideas</strong></p> <P> Innovation requires openness and collaboration within and beyond IT. We have seen a number of techniques, including regular newsletters highlighting innovations in IT and idea-sharing partnerships with external parties, as well as less conventional approaches, such as spotlighting when employees are working around IT systems, in order to uncover unstated end user needs. </p> <P><strong>3. Triage The Most Promising Ideas</strong></p> <P> Often, the hardest part of innovation isn't generating ideas; it's deciding which to place bets on and pursue. A traditional project proposal without measurable ROI may just be a bad proposal, but an innovative idea may have no measurable ROI because it hasn't been tested. To distinguish between the two, IT organizations need a quick, lightweight filtering mechanisms based primarily on nonfinancial criteria and drivers of competitive advantage. The idea is to determine whether an innovation warrants further exploration, not to generate a business case or estimate ROI, as too little is known about the innovation to assess the business case effectively. </p> <P> <strong>4. Adopt A 'Test And Learn' Approach</strong></p> <P> "Fail" is an unwelcome word in IT, but sometimes, indeed often, innovations fail. The secret is to get to the failure as quickly and cheaply as possible, accept the failure without faulting anyone, and move on. </p> <P> One way to do this is to identify potential uncertainties. Typically, the uncertainties relate to the business model, not the technology. Asking "Will this idea really improve how we do business?" is usually a better approach to finding the uncertainties than asking "Will this technology work?" Having identified the uncertainties, the next step is to test them, starting with the most serious. </p> <P> For example, an insurance company we work with wanted to test whether a new type of online quote generator would win more business from agents. The biggest uncertainty was whether the delivery of faster quotes would make a difference in the market. Having identified the value of fast quotes as the first uncertainty to test, the company looked for a simple low-cost experiment. Instead of building a prototype, it asked its call center to start providing quotes by email. The faster quotes did win business, so they moved on to test the next uncertainty. </p> <P> So what does the innovative IT organization look like? It's an organization that challenges its business partners, encourages its staff to be creative and take risks, doesn't always look at project ROI (at least not at first), and isn't afraid to fail. This is a tall order, but if IT can master it, then it will provide a capability few can match. </p> <P> <em>Andrew Horne is managing director at the Corporate Executive Board. Write to us at <a href="mailto:iwletters@techweb.com">iwletters@techweb.com</a>. </em> </P> <P> <center>Go to the main story:<br> <b><a href="http://www.informationweek.com/news/global-cio/interviews/229502447">Innovation Atrophy: How Companies Can Fight It</a></b></center></p> <P> <center>Continue to the sidebar:<br> <b><a href="http://www.informationweek.com/news/global-cio/interviews/229502449">Big Impact: 5 Lines Of Code To The Cloud</a></b></center></p> <!-- KINDLE EXCLUDE --> <center> <div id="printfeaturePDFpromo"><div class="printfeaturePDFCover"><a href="http://analytics.informationweek.com/abstract/83/7294/IT-Business-Strategy/informationweek-full-issue-may-30-2011.html"><img src="http://twimgs.com/infoweek/1301/smallcov.jpg" alt="InformationWeek: May 30, 2011 Issue" title="InformationWeek: May 30, 2011 Issue" /></a></div> <div class="printfeaturePDFCopy"><strong><a href="http://analytics.informationweek.com/abstract/83/7294/IT-Business-Strategy/informationweek-full-issue-may-30-2011.html">Download a free PDF of <nobr><em>InformationWeek</em> magazine</nobr></a><br /> (registration required)</strong></div> <div class="clearBoth"></div> </div> </center> <!-- /KINDLE EXCLUDE -->