A few weeks ago my partners and I met with the members of our IT advisory board, a group of corporate IT executives from a variety of industries that work with our firm. During this daylong meeting we discussed a variety of topics such as analytics, vendor management, infrastructure management. However, we focused primarily on mobility, cloud computing, social applications, security, and IT innovation in the enterprise. We also confirmed that for the time being 2011 IT budgets are holding steady at 5-6% above the 2010 numbers, a range that is consistent with what had been reported by investment analysts at the end of 2010.
- Mobility. This is a big year for mobility with smartphones and tablets starting to have a significant impact in the enterprise. CIOs are adding iphone and iPad to the mix of devices they support because the employees forced them to. In the process they are accepting that IT is falling behind being able to properly control mobile application dissemination. Because of the proliferation of these devices, enterprise refresh cycles are changing. PC refresh cycles are now at 4 years whereas refresh cycles for smartphone and tablets are expected to be 1-2 years. The CIOs noted a lack of talent in their shops for building mobile device applications. Mobile device management and compliance around contracts for the mobile applications are becoming big deals. App stores don’t provide the right model for the corporate IT to control mobile enterprise applications. However, the app store provides the right paradigm for distributing applications. CIOs are slowly realizing that on mobility it is not only about the device but also about understanding what users are doing on the devices. Finally, it appears that Android is making strong strides in the enterprise.
- Cloud computing. CIOs understand the advantages of the public cloud but they often can’t push their businesses processes to the public cloud. However, they are working to understand which of the Tier 2 and Tier 3 applications can move to the cloud. Understanding the Total Cost of Ownership (TCO) of cloud-based software, including SaaS applications, continues to be a thorny issue preventing quicker migration of certain workloads to the cloud. According to our board, vendors of cloud-based software are not doing a good job in providing transparency to their solutions’ TCO. However, the CIOs acknowledged that business units are taking matters in their own hands and are moving business processes to the cloud. Application and data integration (integrating among cloud-based applications, as well as integration between cloud-based and on-premise applications) was mentioned again as a problem that further complicates the migration. As CIOs consider application refresh cycles, cloud-based alternatives become viable options.
- Social computing. Companies, particularly in the pharmaceutical industry, are starting to consider how social applications for CRM, Customer Experience Management and closed loop marketing allow them to establish better connections with their customers and with physicians. They are trying to understand how to use social applications to disseminate information more effectively and use techniques found in consumer-oriented social networks, e.g., likes, referrals, testimonials, to better interact with their constituencies. Security. Mobile, social and cloud computing are putting further strain on how to be secure the enterprise. CIOs started thinking about how their strategies are being impacted by these computing styles as well as by the mobile devices being adopted by the employees.
- Innovation. Companies are not doing enough about IT innovation. Today most IT organizations spend 80% of their budgets on fixed costs, including maintenance and only 20% on strategic projects. One of our CIOs in our advisory board indicated that he spends 35% of his budget on strategic projects but he appears to be the exception. Based on the ensued discussed we also learned that many business units have budgets for innovation-related projects. However, the lack of the right talent was identified as the biggest inhibitor to driving IT innovation in the enterprise. The competition for the right talent is becoming very intense and is mostly coming from internet companies.
(Cross-posted @ Trident Capital Blog)