The Hackett Group Research Alert: IT to See Small Budget Hike in 2013 Despite Operational Cutbacks, As New "Borderless Business

  The Hackett Group Research Alert: IT to See Small Budget Hike in 2013
  Despite Operational Cutbacks, As New "Borderless Business Environment"
  Drives Increased Demand and Expectations

  Imperatives For 2013 Agenda Include Demonstrating Business Impact, Driving
          Innovation, and Future-Proofing the Service Delivery Model

Business Wire

MIAMI & LONDON -- March 5, 2013

IT organizations can expect to see small increases in operating budgets for
2013, even as cutbacks continue across other parts of business services,
including finance, HR, and procurement, according to new IT Key Issues
research from The Hackett Group, Inc. (NASDAQ: HCKT).

The study found that the IT budget increases are in part being driven by
increased demand and expectations, as IT organizations are being asked to
respond to the new "borderless" business environment by building out a
flexible, virtual, data-enabled model for service delivery. IT will play a key
role as companies seek to fundamentally improve how they collaborate, make
decisions, and execute operations.

The Hackett Group's research identified three imperatives that shape IT
strategy and the IT agenda for 2013, as companies seek to reduce complexity,
improve analytics, and solidify their strategic contribution to the
organization. IT leaders are seeking to demonstrate their impact on the
business, both as a backbone of global operations and as an enabler of new
revenue-generating capabilities. They are driving business-enabling
innovation, in support of the new borderless business environment. Finally, IT
leaders are seeking to future-proof their service delivery model, rethinking
their role as companies become more global and focusing less on building
technology and more on enabling capabilities.

"IT priorities for 2013 are being driven by the dramatic shift we're seeing
globally," explained The Hackett Group's Global IT Advisory Program Leader
John Reeves. "Externally, companies are realizing that growth will come by
expanding beyond traditional borders, whether that be new geographies or new
forms of business relationships with their customers. Internally, functional
borders between business services operations are also coming down in the wake
of cross-enterprise, end-to-end process ownership. Finally, there are
dramatically fewer barriers to service delivery placement, with Global
Business Services operations able to provide seamless support to internal
customers.

"These changes are driving pressure on IT organizations to play a larger role,
to be operationally flexible, reduce overhead, and increase customer
satisfaction to counter market volatility," said Mr. Reeves. "IT needs to move
beyond its traditional role as a cost center and focus on business enablement.
To truly optimize for the new 'borderless business environment,' it's key that
IT help companies drive towards one view of their products/services, their
customers, and their financials. This is something that most companies still
find tremendously challenging."

The Hackett Group's research found that organizations are expected to
experience a small increase in IT investments, with operating budgets rising
just over 2 percent in 2013. While the planned increase in IT investment is
modest, it is significant compared to other business services, which
anticipate the need for both cost reductions and staff cuts. Reductions in IT
staff of less than 1 percent are expected, but these are minimal compared to
some other business services functions, such as finance, where a 9x larger
reduction in force is expected.

Demonstrating IT's impact on the business is one critical issue IT leaders
expect to address in 2013. Companies are clearly emphasizing technology’s
central role in enabling overall strategy, and IT has the opportunity to be a
trusted partner and leader in this transformation. To do so, it needs to
strengthen its relationship with sponsors and show its value in business terms
to justify the investment. Three of the top priorities identified by IT
leaders in The Hackett Group's study address this: building business
relationship management capability; remaking perceptions about IT as a
business-focused service; and measuring IT’s performance in business-facing
terms.

Several priorities identified in The Hackett Group's study demonstrate a focus
on the issue of driving business-enabled IT innovation for 2013. At its best,
IT can gain a reputation for innovation by leading the business in
transforming its capabilities, experimenting with new ways of doing things
under tight constraints, and identifying new analyses to perform on data to
obtain competitive advantage. For 2013, IT leaders are focusing on enabling
analytics and identifying new opportunities to reduce complexity and costs. To
foster a culture of innovation, IT needs to provide opportunities for teams to
experiment, even if these experiments sometimes fail.

Finally, The Hackett Group's study shows a strong focus on future-proofing the
IT service delivery model for 2013. As companies become more global and
vendors offer more services that can be consumed directly by the business, IT
is rethinking its role, focusing less on building the technology and more on
enabling the capability. As a result, IT’s operating model needs to be
radically different than it was 10 or even 5 years ago. Foundationally, IT
executives have cited the need to adapt the function’s Service Delivery Model
to support global operations, including a substantial increase in integration
activity. In addition to scale changes, though, IT needs to focus less on
building technology and more on enabling capabilities. In part, this
transformation involves taking a leadership role in analytics, understanding
and presenting IT solutions and performance in business terms, clarifying the
cost of IT services, and incorporating SaaS options in the technology
evaluation process. A key element of accomplishing all this will be talent
management, with IT leaders needing to ensure that they have staff with the
skills that are required, and have organized staff into high-performance teams
to ensure their success.

The Hackett Group's 2013 IT Key Issues Study, "Enabling Borderless Business
Services: IT’s Key Issues of 2013," is available, following complimentary
registration, at http://www.thehackettgroup.com/research/2013/key2013itex/

About The Hackett Group

The Hackett Group (NASDAQ: HCKT), a global strategic business advisory and
operations improvement consulting firm, is a leader in best practice advisory,
business benchmarking, and transformation consulting services including
strategy and operations, working capital management, and globalization advice.

Utilizing best practices and implementation insights from more than 7,500
benchmarking studies, executives use The Hackett Group's empirically-based
approach to quickly define and implement initiatives that enable world-class
performance. Through its REL group, The Hackett Group offers working capital
solutions focused on delivering significant cash flow improvements. Through
its Archstone Consulting group, The Hackett Group offers Strategy & Operations
consulting services in the Consumer and Industrial Products, Pharmaceutical,
Manufacturing, and Financial Services industry sectors. Through its Hackett
Technology Solutions group, The Hackett Group offers business application
consulting services that help maximize returns on IT investments. The Hackett
Group has completed benchmark studies with over 2,800 major corporations and
government agencies, including 97% of the Dow Jones Industrials, 86% of the
Fortune 100, 90% of the DAX 30 and 48% of the FTSE 100.

More information on The Hackett Group is available: by phone at (770)
225-7300; by e-mail at info@thehackettgroup.com.

Contact:

The Hackett Group
Gary Baker, 917-796-2391
Global Communications Director
gbaker@thehackettgroup.com
 
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