IT contractors seeking to target IT contracting’s next major growth area need to gain the digital skills and experience that can help clients drive revenue growth.
This shift in emphasis away from projects that generate cost savings and operational efficiencies is one of the findings of the 16th Harvey Nash CIO (chief information officer) Survey. The survey also heralds the emergence of a new kind of client, the chief digital officer, and warns of worsening skills shortages holding back digital strategies.
“After six years of sluggish activity, this report clearly shows that 2014 is a watershed year,” highlights Harvey Nash global CIO Practice chairman Dr Jonathan Mitchell. “CIOs and technology leaders are seeing growing budgets and growing prominence in their organisation as CEOs are turning to technology to drive growth.”
ContractorCalculator CEO Dave Chaplin believes that the refocusing could be as a result of the age of easy automation wins to generate efficiency being over: “It may be that after many years of automation using technology, the Pareto principle has kicked in so 80% of the most costly processes have been automated, and it now costs more to automate something than it would save.”
Cash generating digital projects are taking precedence
“Large numbers of IT leaders are telling us that growth is now at the very top of their agendas,” continues Mitchell. “Those telling us that building revenue and profit is most important have increased since last year.”
CIOs and technology leaders are seeing growing budgets and growing prominence in their organisation as CEOs are turning to technology to drive growth
Dr Jonathan Mitchell, Harvey Nash
The result is that revenue generating projects are increasingly taking precedence, and that the role of the CIO is evolving beyond providing IT infrastructure for the business. Just over half (51%) of UK-based CIOs now prioritise driving revenue growth, although two thirds (66%) still consider operational efficiencies a priority.
“This sends a clear message to IT contractors who want to stay at the top of their game that a combination of both digital skills and business skills will help them to secure the most lucrative and professionally interesting projects,” says Chaplin. “Fortunately, this plays to the strengths of the best IT contractors, who have always understood the need for clients to see a solid return on investment for employing contractors.”
The ownership of digital projects is changing
Contractors also need to be aware that their sales targets, in the form of the decision maker on projects and contracts, may be shifting away from the traditional IT director for digital projects.
Mitchell explains: “For the first time, we are seeing the clear emergence of a digital leader. Seven per cent of CIOs report that their organisations have recently established the role of chief digital officer or CDO.
“It comes as no surprise that something of an arm-wrestling contest is going on between the IT and marketing functions for control of this exciting new opportunity,” he adds.
According to the survey, marketing ‘owns’ digital in four in ten of contracting clients, with “only 10% of CIOs claiming to control this area”. Forty per cent of survey respondents said that digital is shared between IT and marketing, suggesting that each group is planning to its strengths.
New priorities are driving skills shortages
The UK is no stranger to skills shortages in the IT and technology space, and it seems that the focus on cash-generating digital projects is worsening the situation: 59% of UK CIOs believe that skills shortages will have a negative impact on their IT plans. Globally, the technology skills shortage is at its most severe since 2008.
“This year has seen a worrying increase in the number of leaders citing concerns about skills shortages,” says Mitchell. “To be successful, organisations will not only need a clear technology strategy, but they will also need the right people to deliver it.”
Project management is the most sought after and scarce skill, alongside change management. Mobile solutions and big data feature high on the list of most in demand skills, alongside more traditional IT skills, such as enterprise architecture, business analysis and development.
The report also highlights that 90% of CIOs are concerned about retaining the IT talent they have. “Whether this will translate into attractive contract renewal packages remains to be seen, but it could be a useful bargaining chip for contractors when negotiating their next renewal,” says Chaplin.
Despite all the hype, IT life goes on
For contractors lacking the skills, or the desire to acquire the skills, to go digital, the report provides some consolation. Just under half of CIOs (46%) have experienced budget growth during the last 12 months. This is at its highest point since 2006.
Operational efficiencies remain a priority, according to 64% of CIOs globally. For the last five years, cost savings have been the top priority. And the top CIO-led projects include infrastructure roll-outs and moving systems to the cloud.