May 13, 2015

To Support Innovation and Enterprise Agility In the Digital Era, IT Must Focus on Four Imperatives

  • The Hackett Group's Research Also Identifies an Array of IT Capability Gaps

MIAMI & LONDON, May 13, 2015 - To achieve world-class performance in the digital era, IT organizations must focus on four imperatives, according to new IT Key Issues Research from The Hackett Group (NASDAQ: HCKT): translate technology innovation into business innovation opportunities; manage and mitigate the impact of complexity; redesign the IT service delivery model to support business technology convergence; and support the company's information transformation journey.

"The best IT leaders are realizing that the way they've operated in the past no longer cuts it," said IT Executive Advisory Practice Leader Scott Holland. "The traditional mindset of building systems that are robust, predictable, and to spec isn't enough anymore. Yes, you need to keep the legacy systems running. But greater agility and flexibility is required, and IT needs to be able to turn on a dime to support the changing needs of the business and create real strategic advantage."

The Hackett Group's research found that for the enterprise, high levels of volatility and uncertainty persist, driving a combined focus on agility and innovation. An IT focus on agility and speed is key, as IT often has a critical impact on time-to-market, with technology development efforts integral to product or services launches. Companies are also concerned with an array of risks, led by intensified competition, access to critical talent, and regulatory risk. Many of these risks have impact on IT.

At the same time, IT budgets and staffing are both expected to see only modest increases in 2015, according to The Hackett Group's research, with staff increasing by 3.3 percent and budgets by 3.1 percent. These increases are significantly higher than those seen in last year's study. But cost pressures continue, and IT investments are being made strategically, in key areas, including data and analytics, mobile, and cloud-based initiatives.

The need to support a technology-led enterprise innovation agenda and enable enterprise agility is related to the transition from the industrial to the digital era, The Hackett Group's research finds. This translates into four world-class IT imperatives.

Translate Technology Innovation into Business Innovation - Innovation is a core component of virtually all business growth strategies, and digital business transformation is on the agenda of the majority of companies. At the same time, technology innovation is progressing at a relentless pace, manifested in technologies such as cloud computing, big data analytics, the Internet of Things, mobile apps, and social media. IT's ability to translate this technology innovation into business innovation opportunities is rapidly becoming a core attribute of world-class IT performance, the research finds. This is a complex, multifaceted issue involving business partnering capability maturity, technology innovation competency, innovation process integration, and the maturity and business savvy of technology talent, along with enterprise innovation culture.

Learn to Live with Technology Complexity - Widespread frustration about IT's inability to keep up with business demands is in part a result of complexity in technology infrastructures that has been created in recent decades. As a result, most resources in many IT organizations are now consumed by just running these systems. Ability to focus on value-added activities, including innovation, is predicated on how well complexity in the traditional technology environment is managed, the research finds. Aspiring to actually reduce technology complexity in the digital age is not realistic. Instead, it must be minimized and managed. In addition, the need to manage the deluge of data generated in the digital era will introduce additional complexity into the technology environment.

Reinvent the IT Service Delivery Model - IT organizations also need to fundamentally change their service delivery model to stay relevant as the lines between what was traditionally defined as either "the business" or "IT" continue to blur, The Hackett Group recommends. Technology is rapidly becoming pervasive and integral to all aspects of the core business, changing the way the IT organization engages with it. As the distinction between IT and the business gradually becomes less relevant, the issue of how IT engages with the business evolves into governance issues about how technology decisions are made. With the explosion of on-demand, cloud-based technologies, sourcing models are also undergoing a complete overhaul. Most importantly, IT needs to develop or bring in new talent to stay relevant in the digital age.

Plan and Execute the Information Transformation Journey - Of all the emerging technologies, analytics has perhaps the greatest potential for business value creation, the research finds. But to truly optimize the use of big data requires comprehensive transformation that goes beyond incremental change. Mobility and cloud-based analytics are further accelerating the value of analytics, but at the same time creating additional technology selection, security, and application development challenges for IT organizations. For many companies, a commitment to analytics and big data coincides with changes in the decision-making culture and in the nature of value creation from product-centric to information- and service-centric. IT organizations are being challenged to redefine their role in this transition.

The Hackett Group's new study, "IT Key Issues in 2015: Innovation and Agility are Driving the IT Agenda," is based on results gathered from executives from over 170 large companies in the US and abroad, most with annual revenue of $1 billion or greater. A complimentary version of the research is available with registration at this link:

About The Hackett Group, Inc.

The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies. Services include business transformation, enterprise performance management, working capital management, and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its award-winning Oracle EPM and SAP practices.

The Hackett Group has completed more than 11,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of the DAX 30 and 52% of the FTSE 100. These studies drive its Best Practice Intelligence Center™ which includes the firm's benchmarking metrics, best practices repository, and best practice configuration guides and process flows, which enable The Hackett Group's clients and partners to achieve world-class performance.