IT Strives to Reinvent Itself Despite Budget Restrictions While Delivering Improved Information and Analytics

  IT Strives to Reinvent Itself Despite Budget Restrictions While Delivering
  Improved Information and Analytics

  IT to Focus on Three Areas in 2014 -- Redefining the IT Value Proposition,
   Enhancing the Enterprise Information Architecture, and Realigning Talent

Business Wire

MIAMI & LONDON -- April 1, 2014

IT leaders are striving to reinvent themselves in 2014, as they struggle to
support innovation-based corporate growth efforts with improved information
and analytics, according to 2014 IT Key Issues research from The Hackett
Group, Inc. (NASDAQ: HCKT). At the same time, IT organizations are facing
another year of staff cuts and only small budget increases, in the face of
moderate revenue growth expectations.

According to The Hackett Group's research, companies are focusing on three IT
strategy areas for 2014: redefining IT's value proposition, including
developing business relationships necessary to support innovation and adopting
metrics to better measure IT value contribution; development of enterprise
information architecture and analytics capabilities to help their company
support top-line revenue growth; and talent realignment.

The Hackett Group's research showed that IT organizations are being expected
to improve efficiency in 2014, as they consistently have since 2008. Budgets
are expected to increase by 1.7 percent and staffing is expected to be cut by
2.0 percent. But once the expected enterprise growth rate of 6.7 percent is
factored in, the result is a productivity gap of 8.7 percent and an efficiency
gap of about 5 percent for 2014. These gaps will require them to focus on
reducing IT costs in traditional IT delivery service areas, and redeploy
resources so they can largely self-fund any reinvention and transformation
efforts.

"IT organizations have a long history of challenges keeping up with the
changing needs of the business. That's truer today than ever before. As
companies focus on improving innovation to drive growth, IT must shift towards
a true service mentality which enables enterprise strategy and deepens the
IT/business partnership. It's no longer enough to be simply a utility to the
enterprise, with a strict focus on low cost," said The Hackett Group Global IT
Advisory Practice Leader Scott Holland.

"Changes in technology have also undermined the total control that IT used to
have over critical assets and services," Mr. Holland explained. "Technology
has become pervasive, and there are so many new options available to the
business, from the cloud to SaaS to tablets and smart phones. IT needs to up
its game and change its mindset. A deeper understanding of the business is
required, as is the ability to translate that knowledge into technology
solutions that are virtually transparent to the user. Then IT needs to make
sure it all hangs together. "

Shifting and Better Quantifying the IT Value Proposition

IT has historically had significant difficulty modeling, projecting, and
measuring its value contribution to the enterprise. With companies looking to
technology as a source of innovation and competitive differentiation, this
weakness must be addressed, The Hackett Group's research found.

The study identified a range of initiatives currently underway to change IT's
value proposition. First and foremost, it's critical for IT to collaborate
more effectively with other business functions and departments, identify new
opportunities, and keep projects on track. Similarly, IT planning processes
must be aligned with enterprise strategy and operational plans in order to
establish a direct connection between IT goals/priorities and business
success.

According to The Hackett Group's research, the most significant change being
made in this area is in key performance indicators (KPIs) and performance
reporting. IT organizations are finding that tracking basic operational IT
metrics is no longer sufficient. IT leaders have to be able to discuss the
transformative impact of their efforts: the amount of value expected, the
effect of IT projects on business outcomes, and the importance of technology
to business strategy, including innovation. This need is driving significant
changes in performance measurement.

Develop Enterprise Information Architecture and Analytical Capability

To drive innovation, companies are more and more relying on business insights
garnered from the wealth of information they collect. This trend has profound
implications for IT organizations, and explains the high priority given to
business intelligence/analytics and information quality by business services
organizations. According to The Hackett Group's research, IT leaders rank
BI/analytics as their top investment priority. Master data and data quality is
second.

As the custodian of the enterprise information architecture, IT’s business
value contribution is a direct function of its ability to develop and maintain
a robust information architecture that meets business needs. While master data
is owned by the business, IT plays a pivotal role in establishing effective
master data management. The same is true for analytics, where IT is
instrumental in implementing and supporting tools and ensuring the integrity
of source data.

Moreover, the demands on IT are not limited to supporting the structured data
components of the enterprise information architecture. The volume of
unstructured data from a wide range of sources will continue to grow
dramatically, severely testing IT’s ability to keep up with demand.

The Hackett Group's research showed that data management standardization
levels currently trail the process and technology components of their
architecture. Recognizing the importance of data quality, companies expect to
focus on data standardization during the next two to three years, after which
The Hackett Group estimates they should be largely caught up.

Realign Talent

Without talent of the right caliber, transformation and recalibration of the
IT value proposition cannot succeed. The best that IT can hope to achieve is
incremental efficiency improvement. The Hackett Group's key issues research
identified several talent management techniques that IT organizations plan to
deploy or enhance in 2014. To address long-term talent issues, many are
emphasizing initiatives such as: rethinking job profiles and competencies,
strategic workforce planning, and functional succession planning. More
tactically-oriented techniques such as reward programs and employee
performance evaluation are also being prioritized, but at a lower level.

The central importance of talent reflects a broader issue in the IT field
today: a structural mismatch between in-demand roles and the skills and
experience of the talent available in the marketplace. The Hackett Group
believes that a comprehensive strategic workforce plan is required if IT
organizations are to avoid the anticipated talent shortage associated with the
IT service delivery model of the future..

"CIOs are struggling to meet demands for revenue-driving innovations with IT
organizations that, during the Great Recession, were stripped down to do not
much more than support back-office transactional systems," said The Hackett
Group IT Transformation Practice Leader and Principal Mark Peacock. "Every
company's IT transformation will be different. But the three themes we've
identified will be front and center on most companies' transformation
roadmaps."

The Hackett Group's 2014 IT Key Issues research is based on a study conducted
in late 2013. Study participants included executives from over 150 large
companies in the US and abroad, on their business strategies, revenue and
budget expectations, and key initiatives for 2014. A complimentary copy of The
Hackett Group's research insight, "Reinventing IT to Support Sustainable,
Innovation-Based Growth," is available with registration at this
link:http://www.thehackettgroup.com/research/2014/pr/keyissues-it/.

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 10,000
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 3,500 major corporations and
government agencies, including 97% of the Dow Jones Industrials, 84% of the
Fortune 100, 87% 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
 
Press spacebar to pause and continue. Press esc to stop.