Logicalis Global Survey: Nearly Half of All CIOs Transitioning to Internal Service Providers

Solution Provider Says Shadow IT Still a Challenge for Enterprise IT; CIOs Regaining Control

NEW YORK, November 9, 2015 – Shadow IT continues to create headaches for corporate CIOs, according to a new study by Logicalis US, an international IT solutions and managed services provider (www.us.logicalis.com).  The company’s third annual Global CIO Survey, which polled more than 400 CIOs worldwide, found that IT leaders are facing mounting pressure from shadow IT as line-of-business (LOB) executives continue to bypass the CIO and IT department when making technology investments. In fact, the 2015 study indicates nearly one-third (31 percent) of CIOs globally are routinely bypassed by the LOB in IT purchasing decisions while the vast majority of IT leaders – 90 percent – find themselves bypassed at least some of the time.  CIOs, however, are not sitting still; the survey shows a growing number (42 percent) are now actively embracing a new internal service provider model that will allow them to provide increased business value and relevancy to their LOB colleagues and internal IT users.

To read this year’s Global CIO Survey, click here.

“This is a trend that Logicalis has been at the forefront in identifying,” says Vince DeLuca, CEO, Logicalis US. “When you analyze the reasons shadow IT exists, it’s clear that LOB executives are simply looking for better, faster access to IT services; they want an at-work experience that emulates the on-demand services they have access to in their consumer lives.  The consumerization of IT and the widespread availability of as-a-service cloud options has, therefore, made it both easy and, in many cases, practical to bypass the IT department. These actions, however, have yielded significant consequences for the IT professionals tasked with corporate IT governance and security measures – a fact which has forced many CIOs to redefine their role from that of technologist to what is fast becoming known as the ‘internal service provider.’”

Interestingly, while CIOs have been fighting the battle to retain the balance of power in IT decision-making – with most still bypassed at least some of the time – the survey also found that two-thirds (66 percent) of CIOs today actually do hold the balance of power over technology spending, making more than half of the IT purchasing decisions in their organizations.  While still significant, this number reflects a six percent decline in the number of CIOs holding this power in the last year. Clearly, top IT professionals must make impactful changes to regain control of their organizations’ IT spend: Propelled by the threat of shadow IT, CIOs are being forced to re-align their IT strategies to better serve the needs of their LOB colleagues and transform their IT departments in a way that makes them the logical first choice for IT service procurement.

  • 31%: CIOs routinely bypassed by LOB in IT purchasing decisions
  • 90%: CIOs bypassed at least some of the time in IT purchasing decisions
  • 66%: CIOs making over 50% of their organizations’ IT purchasing decisions

IT Transformation is Underway

The Logicalis survey suggests that IT leaders are more focused on transforming their IT departments into internal service providers than they are on eliminating shadow IT itself – though each yields the same end result: an ability to retake control of IT in the corporate setting.

The transformation into an internal service provider, however, will also result in a leaner IT department dedicated to managing a portfolio of services rather than simply technology per se. It will allow CIOs to deliver a faster response to the technology demands of their LOB colleagues – a transformation that the survey shows is not only being embraced, but is well underway.  CIOs have begun to free themselves and their IT teams from the day-to-day operational tasks that have traditionally consumed so much of their time, with 38 percent now spending at least half of their time on more strategic activities.

The study also indicates that CIOs worldwide are now spending almost half of their time (42 percent) on activities consistent with developing and delivering the internal service provider model – “engaging with line of business” and “scoping and providing new IT services.”

This increased focus on providing services is also reflected in CIOs’ responses around the balance of IT department activities, which suggests a 50/50 balance between technology management and the delivery of a portfolio of services.  Nearly half of the CIOs surveyed (47 percent) report that at least 30 percent of their IT services are already being provided by external service providers.

  • 38%: CIOs now spending at least half of their time on more strategic activities
  • 42%: CIOs spending almost half their time developing the internal service provider model
  • 47%: CIOs procuring at least 30% of their IT services from external service providers

“By recognizing what the LOB wants – better, faster access to technology services – and realigning their departments to meet those needs, CIOs worldwide have made significant progress toward regaining control of the IT spend in their organizations,” DeLuca says. “And by transforming themselves into internal service providers, they are ensuring their relevancy to the organization and setting the stage to take a more strategic, creative role that will lead to an overall competitive advantage for their organizations.”

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About Logicalis

Logicalis is an international IT solutions and managed services provider with a breadth of knowledge and expertise in communications and collaboration; data center and cloud services; and managed services.

Logicalis employs over 4,000 people worldwide, including highly trained service specialists who design, deploy and manage complex IT infrastructures to meet the needs of over 6,500 corporate and public sector customers. To achieve this, Logicalis maintains strong partnerships with technology leaders such as Cisco, HP, IBM, EMC, NetApp, Microsoft, VMware and ServiceNow on an international basis. It has specialized solutions for enterprise and medium-sized companies in vertical markets covering financial services, TMT (telecommunications, media and technology), education, healthcare, retail, government, manufacturing and professional services, helping customers benefit from cutting-edge technologies in a cost-effective way.

The Logicalis Group has annualized revenues of over $1.5 billion from operations in Europe, North America, Latin America and Asia Pacific and is one of the leading IT and communications solution integrators specializing in the areas of advanced technologies and services.

The Logicalis Group is a division of Datatec Limited, listed on the Johannesburg and London AIM Stock Exchanges, with revenues of over $6 billion.

For more information, visit www.us.logicalis.com.

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