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Logicalis Global Survey: Digital Brings Fresh Challenges for Three-Fourths of CIOs

Distributed IT, shadow IT departments and data security risks are the big issues as businesses worldwide respond to the threat from digital disrupters.

SYDNEY, October 24, 2016 – Businesses worldwide are responding to the threat posed by digital disrupters like Über and Airbnb, a trend that poses significant challenges for CIOs, a study carried out by international IT solutions and managed services provider Logicalis has revealed.

The Logicalis Global CIO Survey 2016 polled 708 CIOs worldwide and found that the digital transformation of business is gathering pace, with 73% of firms worldwide now digitally enabled to some extent.  Overall, the study found, digital adoption confirms to an innovation bell curve:

  • The digitally enabled innovators, or digital disrupters, account for 7% of businesses.
  • Early adopters make up 22% of businesses worldwide
  • The early majority accounts for 45% of firms, while 22% fall into the late majority
  • Laggards, or those not digitally enabled at all, account for just 5% of businesses.

Mark Rogers, Chief Executive Officer, Logicalis Group commented: “This speaks both to the huge benefits that digital transformation brings, but also the scale of the challenge posed by digital disrupters and early transformers – while such a rapid transformation almost certainly means big changes for CIOs and IT departments.”

Big challenges for CIOs

This rapidly changing environment does indeed pose big challenges for CIOs, the survey found.  CIOs have, for instance, less control over IT spending than ever before – 40% now say they make 50% of spending decisions or less. 

This trend is also reflected in the frequency with which CIOs are by-passed altogether – with line of business buying technology without involving IT at all.  The proportion reporting that this happens often, very often or most of the time has risen from 29% in 2015 to 39% in 2016.

Distributed IT and the Shadow IT Department

One result of this loss of control is a move away from centralised IT, with more and more CIOs now operating in ‘distributed’ IT environments.  This decentralisation of IT, a natural extension of ‘shadow IT,’ is no longer seen as subversive, however, and is instead viewed as a positive and essential element of digital transformation. 

For example, though the vast majority of CIOs (83%) report that line of business departments now employ IT people whose role is to support business function-specific software, applications and cloud services – shadow IT departments - CIOs seem content to work with them.  More than a fifth (22%) work with ‘shadow IT departments’ on a daily basis and 41% do so at least weekly.

Commenting on the trend Vince DeLuca, Chief Executive Officer, Logicalis US, said: “The challenge for IT departments and CIOs is to find ways to support these specialists effectively – securing the network and vital data without stifling the ‘shadow innovation’ their skills support.”

Security challenges

Together, the combination of IoT, distributed IT and the increased pervasion of apps into the very core of the business – along with an ever-evolving threat landscape - represent a perfect security storm.

As a result, the CIOs surveyed cited security as far and away the biggest challenge related to the increased use of cloud services.  More than three quarters (78%) pointed to security as a challenge, with related issues like data sovereignty (47%) and local data regulations (37%) coming in second and third. 

Looking at security threats in more detail, CIOs expect the prevalence of increasingly sophisticated threats (61%) to be the number one issue for the next 12 months, while issues like ransomware and corporate extortion were highlighted by more than half (56%).

Looking outside for help

The sheer range of issues facing CIOs as a result of digital transformation means the pressure to hand off day-to-day technology management, to focus on strategy and reframe IT departments as internal service providers, is greater than ever.

In response, CIOs are increasingly seeking partner led and delivered services.  This year a quarter (24%) of CIOs outsource most of their IT (more than 50% outsourced), and the number outsourcing none or just 10% of their IT has fallen dramatically – respectively, to 9% (13% in 2015) and 19% (26% in 2015).

In conclusion, Rogers said: “As digital innovation accelerates, the winners will create new customer experiences, make faster and better decisions through smarter collaboration, and create new digital business models and revenue streams, securely.

“CIOs and IT leaders can play a leading role in enabling that innovation, drawing on skills from insightful partners to help shape their businesses and lead their sectors through the application of digital technologies.  I am delighted that Logicalis is already helping clients to plan their digital journeys - releasing the creativity that runs through their workforces and using digital technology to deliver outstanding results.”