High Performance IT 2008: There’s No Substitute for Substitution

We found that the best performing companies showed highly developed capabilities in IT execution as well as consistently investing—in good times and bad—in IT innovation.

This is a unique time for IT. New substitutes are available and surprisingly economical. If CEOs are serious about transforming their businesses, it’s time to break with legacy IT systems and think about technology from a consumer’s perspective. This report details how CIOs can help direct those big decisions.

• Enterprises must break away from legacy roots and leverage new (cheaper) IT to raise the bar on their IT performance.
  
  
• Customers and employees are demanding the functionality they are accustomed to from their personal IT experience. Yet, many large IT organizations are still reliant on aging legacy systems despite increasing demand for more agility and flexibility.
  
  
• IT departments have an unprecedented opportunity to experiment with new technologies without incurring significant cost or tying up significant resources.
  
  

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More than 800 chief information officers and chief technology officers in 22 countries have participated in this ongoing research.

Since 2005, Accenture has been studying performance drivers in managing and executing information technology. This global research program examines how the world’s largest businesses and public-sector organizations are managing their IT investment and processes across the fundamental IT functions. - Many studies measure and report on information technology investment trends. But they don’t examine the quality of the spending.

How is IT performing today? How will it perform in the future? The answers to these questions can provide the true indicator of the value of information technology and its role in helping organizations perform at higher levels.

High Performance IT 2008: There’s No Substitute for Substitution signposts the direction of enterprise IT in 2008 and its contribution to regaining ground in productivity, product innovation and customer service and improving competitiveness.

IT investment is a joint agenda for CEOs and CIOs and should be focused on the end-customer. Organizations need to deliver the same experience, speed, detail of information, and flexibility that individuals get from their personal technology yet only 28 percent of IT application investments are focused on the customer and customer-facing systems were among the portfolio’s poorest performing applications.

Innovation in technology, and the resulting business innovation enabled by technology, will be largely driven by existing technology, not new or breakthrough technology. Technology readiness is not an issue. Adoption of technology is the issue.

Employees are seeing IT innovation everywhere but the workplace and are bringing technology into the enterprise from their personal life to meet a business need. This “user-determined computing” is occurring in most enterprises and is circumventing firewalls and other corporate restrictions. CIOs cannot ignore user-determined computing.

High-performing companies were leaders in both IT execution and IT innovation and did better than other organizations against almost all performance metrics. This was especially noticeable in their ability to accelerate development cycle times—one of the most critical challenges for CIOs around the world. Mastery in both IT execution and IT innovation can balance opposing demands placed on today’s IT function.

Enterprise IT is in a phase of major change, propelled by technology already in the consumer and enterprise domains.

• Consumer Internet companies have raised expectations around user experience, participation, mobile access and real-time responsiveness.
  
  
• IT teams are still spending nearly 40 percent of their time maintaining and fixing existing systems, drip feeding life-support to legacy systems.
  
  
• More than 60 percent of all enterprises systems surveyed in our global research were already fully depreciated. The true determinant for replacement should be whether a newer, cheaper, more powerful technology is better for business.
  
  

IT investment is a joint agenda for CEOs and CIOs and should be focused on the end-customer.

• Customer-facing systems are among the portfolio’s poorest performing applications in terms of technical and business adequacy.
  
  
• Only 15 percent of system interfaces within organizations surveyed focused on the customer.
  
  
• Employees still do not have access to detailed information needed to support them in their roles.
  
  

High-performing companies are those that are leaders in both IT execution and IT innovation.

• High performers define themselves not by the problems or cost of IT but how they can leverage IT to drive business performance. Their portfolios scored best for technical and business adequacy.
  
  
• New, existing technology is not only better for your business but cheaper and more powerful.
  
  
• Virtualization will be a key strategy in 2008, it is also one way for enterprises to reduce energy consumption and minimize their carbon footprint.
  
  
• Building or consuming SOA-based applications is next on the agenda for high performers and they are already using them for legacy integration.

Key Strategies in 2008:

• Start leveraging the new enterprise IT substitutes.
  
  
• Focus on the customer; put the customer first in line outside the CIO’s door.
  
  
• Embrace virtualization. (one way for enterprises to reduce energy consumption and minimize their carbon footprint)
  
  
• Build and deploy SOA-based applications (already being used for legacy integration).
  
  
• Grow SOA and software-as-a-service part of the investment portfolio.
  
  
• Ensure that IT replacement is determined by whether a newer, cheaper, more powerful technology is better for business.