Most IT leaders today are being asked by to perform a magic trick. On the one hand, they are being tasked with driving IT that will help materially reinvent the business, also known as digital business transformation. At the same time, many of them are also being required to reduce or, at the very least, keep IT spending in check.
A new survey of 1,000 IT leaders conducted by TEKsystems finds that 44 percent expect their IT budgets to stay the same in 2018. Another 16 percent expect a decline, for a total of 60 percent. That compares to 40 percent that expect to see IT budgets increase.
More telling, however, is that while 85 percent agree IT organizations are expected to enable business innovation, only one-third claim their IT team is transforming part of the business today. Even two years out, only 41 percent anticipate their IT truly fulfilling the role of driving innovation. That’s a major disconnect from what most business leaders are expecting from internal IT organizations. The good news is that the number of IT leaders that say they expect to outsource some IT functions increased 6 percent over a year ago.
Digital business transformation opportunities
To navigate that dichotomy, managed services providers will need to implement their own multi-pronged business strategies. In many cases, IT leaders will be looking to MSPs to reduce their operational costs. That’s harder than it seems. Most internal IT services teams don’t need to turn a profit on the services they deliver. MSPs need to be able to deliver IT at a level of scale that enables them to charge less than what it costs an organization while turning a profit on delivering the same IT service. Largely because of budget constraints, though, the number of IT leaders that expect to be able to meet demand for core IT services dropped 10 points from 86 percent to 76 percent of respondents. IT budgets allocated to managed services tied to the core IT services will be under more pressure than ever.
New @TEKsystems study: 85% of IT leaders say IT is expected to enable #BizInnovation; only 1/3 claim be doing so
As a result, many MSPs may find that focusing on emerging technologies that drive business innovation to be the better option. Unfortunately, the TEKsystems survey finds only about half of the IT leaders claim they have advanced security and agile development projects in a pilot or production stage. In fact, many IT leaders report that they are not planning on implementing artificial intelligence (54 percent), augmented/virtual reality (69 percent) or blockchain (71 percent) projects in 2018. Worse yet, relatively few IT leaders have these projects on their two-year planning cycle.
Instead, top priorities remain security (77 percent) cloud computing (62 percent), mobile applications (62 percent), and Big Data analytics (59 percent). That suggests substantive IT change continues to come slowly to most organizations. There is an opportunity for MSPs define innovative use cases for emerging technologies that internal IT organizations don’t have the confidence to execute. But, they will need to identify a business leader to sponsor those projects.
Navigating difficult relationships
Regardless of how MSPs find themselves being engaged, they need to keep a close eye on the relationship between internal IT and the rest of the business in the coming year. Tensions between business leaders and IT have always existed. But business leaders are expecting miracles from IT in the next year. When those expectations are not met, there will be regime changes within that business. Sometimes that will come in the form of removal of IT leaders, changes to the senior business leadership, or both. Once a new competitor starts employing advanced technologies to gain market share at the expense of incumbents in a specific vertical industry, it’s usually not long before changes in management ensue.
Savvy MSPs should regularly remind everyone they meet inside the organizations they serve that they are part of the solution versus becoming the latest scapegoat for the problem. Chances are good it’s going to get harder to keep track of who’s in charge of what IT budget with all the probable comings and goings in both business and IT leadership, so don’t be surprised when that midlevel executive nobody really knows or some unknown outsider is suddenly making a decision on what MSP to rely on next.