Freedom to Choose

FREEDOM TO CHOOSE

WHAT TECHNOLOGY AUTONOMY MEANS FOR THE BUSINESS

Written by

Survey conducted by

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WHAT TECHNOLOGY AUTONOMY MEANS FOR THE BUSINESSThis report was written by the Economist Intelligence Unit (EIU). The author of the report was Kate Bevan, and the editor was Denis McCauley.

The findings are based on a survey of over 1,900 IT and business executives based in Europe, the Americas and Asia-Pacific. The survey was designed by the EIU and executed by Vanson Bourne in March-April 2013. To complement the survey, the EIU also conducted a series of interviews with CIOs and independent experts. Sincere thanks go to the survey participants and interviewees for sharing their insights on this topic.

Executive Summary

In business as in most walks of life, technology is rightly regarded as the great disruptor. As the speed and functionality of different technologies rapidly improve and their costs similarly decline, markets are often upended and organizations’ ways of working substantially changed. This phenomenon is manifesting itself again within enterprises in the form of “technology autonomy”. An outgrowth of IT consumerization, bring-your-own-device policies, the proliferation (and diversity) of mobile “apps”, and the advent of cloud computing, technology autonomy denotes the independence that employees and individual business departments are claiming to make their own choices about the technologies they use to perform their work. In this case, it may be the role of IT that is the chief object of disruption.

In years past, many a CIO, CTO or IT director sought to resist or at least contain the loss of authority implied by business units’ penchant for choosing their own technologies. If the results of the survey conducted for this report are any indication, however, such IT recalcitrance is fading fast. CIOs and other senior IT leaders in most organizations are now convinced that according greater freedom to business units to select and acquire the devices and applications of their choice will enhance business performance. In many cases they profess greater confidence on this score than their business peers. Although differences of opinion remain in many areas of technology use, when it comes to expanding technology autonomy, IT and the business in many organizations appear to have achieved the nirvana of alignment.

Confidence in the benefits of greater technology autonomy is indeed widespread. More than eight in 10 executives surveyed for this study believe it is critical if their business is to grow and to become more efficient. Majorities also believe that both their revenue and their profits would increase (by an average of around 25%) were employees accorded all the freedom they desire to choose their devices and applications. Such freedom, it is believed, would result in better innovation, greater efficiency, more flexibility and possibly even lower costs. Provided that security, compliance and cost requirements are satisfied, there is a belief across industries and countries – and across functions within the organization – that the benefits of autonomy well outweigh the risks.

Other findings of the research include the following:

• A link is evident between greater autonomy and business performance. Companies enjoying relatively high profit and revenue growth (greater than 10% annually) currently enjoy greater degrees of technology autonomy than lower growth firms, and also manifest greater confidence than others that such autonomy will deliver concrete results to the business.

• Business units seek cooperation, not usurpation... The survey displays no groundswell of business units seeking to usurp IT’s authority to make technology decisions. IT and business leaders broadly concur (although the former appear more insistent by degree) that IT should retain a major voice in decisions relating to mobile device provision, application selection, managing access to data and accessing cloud-based services. Business units seek more collaboration in such decisions, rather than sole authority.

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• ...Yet many decisions are being made without recourse to IT. Nearly half of survey respondents (46%) report that they have made technology decisions in the past year without consulting IT. The types of applications most frequently involved are cloud storage, social media, office productivity software, marketing automation and security. Some of these – particularly cloud storage – present definite risks given that company (or even customer) data will reside on third-party servers.

• CIOs are nonetheless calm about being able to minimise the risks. “We consciously avoid the heavy policing of technology decisions and want employees and business to take advantage of new ways of working,” say Myron Hrycyk, CIO of UK water utility Severn Trent. “It’s down to the IT departments to set themselves up in the right way to ensure the enterprise adopts these solutions in a controlled fashion.”

• No more “department of no”. The perception of greater IT and business alignment is strengthened by the fact that only 4% of business unit managers in the survey believe IT merits a reputation as the “department of no”. On the contrary, the most oft-cited characterization of IT by business heads and board members is that of “a genuine partner in the business.”

• But dissatisfaction with IT policies remains. The trusted partner perception notwithstanding, most respondents still feel that IT policies slow the business down. Over half of those surveyed say that restrictive IT policies hamper their organization’s ability to innovate, improve customer service, and more generally to boost revenue and profitability. Senior IT managers are even more emphatic on this count than their business peers, and board members are especially critical of IT policies in this regard.

About the Survey

An online and telephone survey was conducted in Europe, the Americas and Asia-Pacific in March-April 2013. The survey reached a total of 1,910 executives drawn from the United States (21% of the sample), Germany (13%), India (13%), China (13%) and the United Kingdom (10%), with France, Brazil, Australia, Singapore, Japan and Sweden constituting the remainder. Half of the survey sample have an IT function and the other half a business function. C-level executives account for 42% of the respondents, with CIOs and technology directors (at 23%) the most prominent position in the survey. Heads of business units and departments combined represent 26% of the sample.

Large companies predominate: all but 9% of respondents work in organizations having annual revenue in excess of US$500 million, and two-thirds earn revenue of over US$1 billion. Nearly 60% of surveyed organizations employ 5,000 or more people. The sample spans 18 different industries, with technology, manufacturing, financial services and the public sector the most prominent.

The EIU developed the questionnaire, and Vanson Bourne conducted the survey.

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The Meaning of Autonomy

The popular perception of the IT function has traditionally been that of a benevolent dictatorship, making virtually all decisions about what types of hardware and applications to purchase and deploy, and deciding the different levels of access to technology that different categories of employee should enjoy. Business units or individual employees could make suggestions or requests, but the decision-making authority has traditionally rested with the CIO, CTO, IT director or IT manager.

Something has changed, however. Employees are vastly more knowledgeable about devices and applications today than they were a decade ago, giving rise to such trends as IT consumerization and bring-your-own-device (BYOD). These have involved employees being enabled to use the kit and applications of their choice for work – and in some cases being given a set sum of cash and told to go and obtain them. That has relieved the IT department in many firms of the need to provision laptops and mobile phones, for example. At the same time it has posed new challenges to CIOs and the IT function for managing access to corporate systems and e-mail – as well as a whole new set of worries about allowing staff to mix up corporate content with personal e-mails and photos.

Meanwhile, the emergence of cloud computing has made it relatively easy for employees to obtain technologies such as ERP (enterprise resource planning), CRM (customer relationship management), document storage, e-mail and office applications from external providers.

As a result of the above, individual business units, and even individual employees, in many organizations are making some technology decisions – including purchases – on their own. They are, in essence, a claiming a degree of “technology autonomy”.

This development cannot yet be described as a groundswell. At well under one-fifth of organizations in the survey conducted for this study do respondents say that individual business units mainly or solely make decisions about technology purchasing, selecting and deploying applications, acquiring mobile devices, and managing access to corporate data. IT retains the dominant role in all these areas. As we will see later, however, the business units are clamoring for more influence. And many are starting to take things into their own hands.

The IT department is dead. Long live the IT department.

How should CIO’s and the IT department – as well as senior corporate management – view this phenomenon? The upsides of technology autonomy are plentiful: flexibility, cost reductions and the ability to scale are just some of the potential benefits. But CIOs now face a landscape where they have to manage demands from business units for services to be provisioned from outside the organization; they have to stitch together a patchwork of disparate services, locations, taxonomies and implementations into a fabric that drapes elegantly across the whole organization. Greater technology complexity may be an unwanted by-product of greater local autonomy; reduced costs may not always be assured; and of course security and compliance needs may be compromised.

The results of the research paint a generally positive picture of IT and business attitudes toward greater technology autonomy. Many more of the over 1,900 executives polled see its potential benefits than worry about its pitfalls, although most acknowledge the importance of meeting security and compliance needs. The other picture to emerge is that of the IT function acting – and being perceived as – as a genuine partner in the process of identifying, sourcing and implementing technologies for the business units.

In the words of Rick Simmonds, managing partner at Alsbridge, an outsourcing consultancy: “The IT department has become a change agent – a partner to help the business use new technology properly.” If this is so, technology autonomy and its different manifestations may come to be seen as the catalyst for the IT role change that so many CIOs and other business leaders have long championed and awaited.

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The Decision Makers

Broadly speaking, IT and business managers have similar views as to how, and by whom, technology decisions should be made in their organizations. Survey respondents were asked who they felt ought to make the decisions in such areas as mobile device provision, selecting and deploying applications, and accessing cloud services, and who

actually makes such decisions today. In the overall sample, there were very small differences between the results to the two sets of questions, indicating broad acceptance that those who are making the decisions today ought to continue making them in the future.

Do you think the IT department or individual business units/departments are better placed to make the following types of technology decisions?

� Solely IT Department � Mainly IT Department � Equal Cooperation � Mainly Business Unit � Solely Business Unit

IT Department Managers

Business Department Managers









Purchasing Decisions

Application Selection

Managing Accessto Corporate Data

Mobile DeviceProvisioning

Subscribing toThird Party Services

28% 38% 24% 6% 3%

18% 30% 30% 14% 8%

28% 40% 25% 6% 1%

20% 30% 32% 13% 5%

35% 33% 22% 8% 3%

19% 29% 31% 15% 7%

32% 35% 22% 8% 4%

21% 28% 30% 13% 8%

38% 34% 20% 6% 2%

26% 29% 30% 10% 5%

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By whom do the following types of technology decisions tend to be made in your organization?











Purchasing Decisions

Application Selection

Managing Accessto Corporate Data

Mobile DeviceProvisioning

Subscribing toThird Party Services

30% 35% 24% 7% 3%

22% 30% 25% 14% 9%

32% 37% 24% 6% 1%

24% 31% 30% 11% 5%

36% 34% 21% 8% 2%

23% 29% 27% 16% 5%

33% 36% 20% 7% 4%

24% 29% 26% 14% 7%

38% 35% 20% 5% 2%

29% 28% 27% 11% 5%

� Solely IT Department � Mainly IT Department � Equal Cooperation � Mainly Business Unit � Solely Business Unit

This does not mean that IT and the business units see completely eye-to-eye, however. For example, 66% of senior IT managers believe that the IT department should be solely or largely responsible for making purchasing decisions. Nearly half – 48% – of business unit heads agree with this, but the gap is noteworthy. The differences between the two groups are of similar magnitude when it comes to application selection, managing access to data and other areas. So while there is broad agreement between IT and the business on this question, it would be a stretch to describe it as unanimity.

Moreover, when digging deeper into the survey it becomes clear that business units are making quite a few decisions without the IT department’s knowledge – and not just decisions on devices. Only 12% of overall respondents say that IT is consulted in all technology decisions made by business units. An extremely large number – 46% – report that IT is made aware of local technology choices no more than half the time, and often much less than this. These decisions typically involve accessing cloud-based storage applications, social media, office productivity tools and marketing automation software.

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This situation certainly presents challenges for the CIO and other IT leaders in areas ranging from security to cost to complexity to compliance. CIOs interviewed for this study acknowledge the challenges but are nonetheless accepting of the trend, and of the need to adapt rather than throw up obstacles. This is being pragmatic, believes Mindy Simon, VP of Information Technology at ConAgra, the US packaged foods group. When it came to consumerization, she says: “We either had to open the doors and let them in, or be hated. We’re pushing for more usability, because if [the technologies] are not usable to the same level [employees] enjoy at home, they’re going to find some way to use them in a fashion more to their taste and preference.”

Technology decisions at Conagra, adds Ms Simon, “are made in partnership with the business and IT. We hold the budget for most of this...but I’d say that the decision-making is joint.”

Rick Simmonds is very aware of the potential for staff to bypass the IT department, saying: “There’s a very old-fashioned world of ‘you get what you’re given’. People will always find a way around things. You have to find a balance between controlling and enabling.”

Myron Hrycyk, CIO of UK water utility Severn Trent, agrees: “It’s down to the IT departments to set themselves up in the right way to ensure the enterprise adopts these solutions in a controlled fashion.” At Severn Trent, he adds: “We consciously avoid the heavy policing of technology decisions and want employees and business units to take advantage of new ways of working.”

A balance of risks

A look at Chart 2 helps explains why resisting some degree of devolved decision-making is risky for IT organizations – possibly more risky than allowing it. When the business units do end-runs around IT, cloud storage is the most likely category of application to be involved. This, of course, involves storing data, possibly even customer data, on third-party servers. Social media and office applications may present fewer concerns, but security applications (fifth on the list) are potentially more worrisome.

Of which applications accessed by you over the past twelve months was the IT department not aware?

When employees access technologies themselves

The list below represent the types of software applications that employees in business units (and outside of IT) most often purchase or access themselves, with or without IT’s knowledge.

1. Office applications (e.g. Google Docs)

2. Communications software (e.g. phone, messaging, conferencing, etc)

3. Security applications

4. Cloud storage applications

5. Social media applications

6. Collaboration applications

7. CRM (customer relationship management) software

8. Project management software

9. Marketing automation software

10. Finance software

11. ERP (enterprise resource planning) software

12. Data analysis applications

13. SCM (supply-chain management) software

Cloud Storage14%

Social Media13%

Office Apps11%

Marketing Automation

11%

Security Apps10%

CommunicationsSoftware

9%

Collaboration Apps9%

ERP7%

CRM7%

ProjectMgmt SW

7%

Finance Software

5%

SCM SW5%Data

Analysis Apps5%

All Others52%

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Phil Cracknell, head of IT security at logistics firm TNT, agrees that cloud storage is a difficult issue but believes that the key is how it is managed, and that the workforce is educated about the risks. “We’re highlighting why we don’t allow Dropbox [a provider of consumer cloud storage],” for example.

The concern with storage is related not only to security but also to compliance. Once firms move data out of their own infrastructure and into the cloud, they face a host of new issues: where is the data hosted? How is it protected? Which jurisdiction is it in?

Organizations in the European Union (EU) face a strict data protection regime, which raises issues about moving to the cloud. According to Francesc Muñoz Molina, IT director at Cuatrecasas Goncalves Pereira, a Barcelona-based law firm: “The EU, and Spain in particular, have the toughest regimes in the world on personal data – maybe too tough. There are huge penalties for [contravening the rules].” At his firm, e-mail “is one of the last things we’ll put into the public cloud”. He makes the point by saying that if the firm moved its e-mail provision to Google, “we won’t know who is managing e-mail and where. We have too many concerns nowadays.”

Matt Peers, UK CIO of the business advisory firm Deloitte, also points to compliance issues: “The UK firm also includes Switzerland, which of course has banking regulations that we have to comply with. We have to be careful about where the data is living. Our UK clients feel very nervous about data in the US.” And as a firm that provides both consultancy and accounting services, he adds: “We’re not in the business of taking risks.”

In the survey, compliance is rated as serious a barrier to greater technology autonomy as security – a view shared by IT and business leaders alike. This seeming agreement of both groups that compliance and security concerns are paramount in technology decisions indicates that IT and business are thinking and acting more as partners today than perhaps had been the case.

Moving to the cloud means having to think about data security differently. Phil Cracknell articulates that most clearly when he says: “As soon as you knock down those firewalls, you need to think about how you’re protecting the data and having more granular control over that data. Once you have those boxes ticked, you don’t need to be so worried about having it inside your perimeter.”

Yet even the most security-conscious of IT directors nonetheless is very aware of the potential benefits. Peers points out that “we were the first Deloitte member firm to put the helpdesk in the cloud”.

Another concern is that technology autonomy can quickly degenerate into technology anarchy, with users bypassing the IT department, installing software that the IT doesn’t know anything about and buying inappropriate services. The survey suggests that some business units are indeed rushing off and implementing services on their own. However, notes Hrycyk of Severn Trent: “I know the dangers that having fragmented systems pose and actively work to prevent this. Technology autonomy should not mean technology chaos.”

He adds: “It will take management and control, and progressive policies to ensure a compliant approach, and that strategic vision is maintained across the business as a whole. This is where IT needs to step up and get involved.”

Share of respondents agreeing that security, cost and compliance are significant barriers to greater technology autonomy.

Compliance

ITBusiness

73%69%

Cost 77%76%

Security 76%68%

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The Trusted Partner

Arguably the best news for technology leaders from this study is that very few business managers view IT as a hindrance to the organization. In the words of Phil Cracknell of TNT: “In the past, we were the defenders of the realm, the people who said no.” Now no more than 4% of business unit managers who responded to the survey believe IT deserves the reputation of the “department of no”. On the contrary, the most oft-cited characterization of IT by business heads and board members is that of “a genuine partner in the business.” It is also worth noting that executives of “high performing” firms in the survey – those exhibiting annual revenue and profit growth of 10% or more in the past three years (see Sidebar) – are considerably more likely to consider IT as a genuine partner than executives of lower-growth firms.

Myron Hrycyk is not surprised by this: “The IT department is one of the most evolutionary departments in any enterprise. There was a growing realization that a more integrated approach to IT was needed – one that takes into account people, business processes and external trends... Over the years I’ve seen the CIO move closer to the core business, with technology as an enabler. There’s been the growing realization that technology is crucial to delivering business change.”

The approaches toward consumerization and BYOD on the part of some of the organizations whose technology leaders we interviewed for the study may help explain why the perceptions of IT seem so positive.

Richard Thomas, CIO of Quintiles, which provides clinical development and outsourcing services for biotech and pharmaceutical clients, sees his department now as an enabler. He points to how Quintiles supports all kinds of devices – “tablets, slates, Surface, smartphones and on and on” – to work with the existing corporate technology. “We set ourselves up very well to be able to support not just the devices, but a virtual work environment,” he says. “The technology underneath it allows us to have it run on just about any device and any operating system man has ever made.”

Some IT departments have sought to position themselves as valued intermediaries between business units and technology vendors. Matt Peers of Deloitte says his role is to make sure that people “understand why it’s better to use me as the broker” between the business unit and the vendor.

Barcelona-based Francesc Muñoz Molina says that his IT department is very engaged with the business units in their decision-making process. “Business units go with us to vendors and partners.” But he acknowledges that “sometimes we are not as fast as one guy would like”, although as a CIO for a law firm, Molina has particular issues of compliance to consider that do not apply to other businesses.

At Conagra, Mindy Simon also stresses that IT should mediate the relationship between the business unit and the vendor, but that this also requires educating vendors. “We’ve tried to explain to vendors that we prefer them not to sell direct to the business unit, and that, given we have the money, it’s not really in their best interest to do that.”

Which one of the following best characterizes your view of the IT department’s role in your organization?

IT

� Genuine Partner � Network Protector/Gatekeeper � Maintains Digital Infrastructure � Protects Corporate Reputation � Best Practices Advisor � Hindrance � Pro�t Center

Business

Board

CIO

45% 26% 14% 7% 4%

34% 32% 14% 8% 6%

44% 25% 14% 8% 5%

1% 1%

44% 28% 12% 7% 5%

1% 1%

2% 1%

3% 3%

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High performers are particularly bullish on technology autonomy

The survey results suggest a link between expanded local freedom to make technology choices and business performance. Appearance is not causation, but the 1,019 firms in the survey who in the last three years have enjoyed average revenue growth of 10% or more, as well the 961 whose annual profits have grown by 10% or more, consistently betray a conviction that greater technology autonomy is good for the business.

More of these high performers, compared to firms with growth in single digits, say that their business units bypass IT today in making technology decisions. And substantially more believe that greater local freedom in technology decisions is critical if the business is to grow and become more efficient. The disparities are perhaps most notable on the question of what the business effects would be if employees were given all the technology freedom they desired. The number of high profit-growth firms predicting that their revenue and profit would increase in this scenario is double that of firms experiencing no growth at all. And the higher the firms’ reported revenue and profit growth, the greater the share who predict a performance increase.

If you gave all employees in your company the degree of technology autonomy they desired, what would be the likely effect on your organization’s revenue and profits?

� Increase � No Change � Decrease

Revenue

Pro�t

Revenue

Pro�t

Revenue

Pro�t

Revenue

Pro�t

Revenue

Pro�t

50+%

20-50%

10-20%

Fast

er G

row

ing

Bus

ines

ses

0-10%

0%

76% 20% 3%

70% 24% 6%

68% 25% 7%

64% 27% 9%

64% 28% 8%

60% 28% 12%

45% 40% 15%

42% 39% 19%

33% 60% 6%

31% 48% 21%

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Back down to earth

The trusted partner perception aside, many outside the IT department (and even many within it) still feel that IT policies can slow the business down. Over half of survey respondents agree that restrictive IT policies hamper their organization’s ability to innovate, improve customer service, and more generally to boost revenue and profitability. Senior IT managers are if anything even more convinced of this than their business unit peers. And board members in the survey are especially critical of IT policies in this regard.

To what extent do you agree or disagree that IT policies slow down the organization’s ability to...

� Strongly Agree � Somewhat Agree � Somewhat Disagree � Strongly Disagree

IT

Business

Board

Innovate

IT

Business

Board

Improve Customer Service

IT

Business

Board

Increase Revenue

IT

Business

Board

Increase Pro�ts

21%18%

25%

21%18%

23%

20%16%

22%

19%17%

24%

33%34%

32%

32%35%

33%

30%34%

32%

30%33%

31%

30%33%

26%

29%32%

26%

31%34%

28%

30%34%

25%

16%14%18%

18%16%18%

19%16%18%

20%17%

20%

Restrictive processes can sap the ability of an organization to be nimble. Deloitte’s Peers points to the fact that ultimately all spending on technology from a business unit comes across his desk: “Any spend from their business unit gets reported through me. If there were a noticeable increase, at that point I’d say what are you doing?” An individual department might perceive a move to a cloud provider “as fast and cheap,” says Peers. “But to come up with an IT business case, you have to follow protocol. That’s something I have to contend with all the time.”

This is a challenge for the CIO, who has to balance the requirements of an IT strategy with the desire of the business to grow and to innovate. Moving business functions into the cloud, for example, might seem a no-brainer to a department, but the CIO will have different priorities, as Francesc Muñoz Molina notes: “We have to establish systems, rules, technology, culture, training in order to balance these issues. So we have a bring-your-own-device policy but with selected devices – not all the devices can be brought to the company. And we have had to apply policies and restrictions to that.”

Nonetheless, says Peers, the needs of the business have forced his IT department to become much more proactive: “We now focus heavily on profiling different users from across the firm – we are trying to take the relationship one step further, anticipating their needs. The pendulum is moving in the direction of people coming to us every time.”

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The Future: Autonomy and Success Go Hand in Hand

The scope of business unit freedom to make technology decisions may currently be expanding only slowly, but CIOs, board members, IT and business managers alike all see it as integral to the future success of the business. More than eight in 10 survey respondents concur with the statements that “greater freedom for business units to make technology decisions is critical if our business is to grow” and “to become more efficient”. This overwhelming sentiment is, moreover, shared without exception across organizations of all sizes and across all countries represented in the survey.

To what extent do you agree or disagree with the following statements? “Greater freedom for business units/departments to make technology decisions is critical if our business is...

� Strongly Agree � Somewhat Agree � Somewhat Disagree � Strongly Disagree

To Grow

To Become More Ef�cient

38%

48%

11%

3%

34%

50%

13%

3%

Most respondents believe that both revenue and profits would increase if they had more access to the services and technologies of their choice. A majority – 56% – say that revenue would increase if they gave everyone as much technology autonomy as they wanted, and 51% say the same of profits. Here too, technology leaders in organizations are even more convinced of this than their business unit peers.

Respondents’ bullishness is even more remarkable when asked to estimate the extent of revenue and profit increases that would come with more technology autonomy. On average both revenue and profit would grow by 25% if employees in the firm were given all the technology freedom they desired, those surveyed believe. The better the current performance of companies in the survey, the higher their estimate of the impact of autonomy on the business.

The returns from autonomy

“Technology autonomy brings with it a definite opportunity for business ROI,” agrees Myron Hrycyk of Severn Trent. Not least is a positive impact on the organization’s finances: “The great thing about all this is that initial investment is often relatively low.”

Even more important may be the results for employees. “This,” says Mr. Hrycyk, is what technology autonomy can enable – solutions that best suit the specific needs of each department, and deliver better satisfaction for the end user. The benefits stem from responsiveness and flexibility – the CIO’s challenge is to deliver this while retaining resilience.”

Indeed, so long as the business units meet IT concerns regarding the security, compliance and cost implications of device or application decisions made locally – preferably through a consultative decision-making process – the technology leaders of many organizations seem well-disposed to expanding technology autonomy. Consultation, trust and partnership are the prerequisites. Given this, there is a good chance that better innovation, customer service, efficiency and ultimately revenue and profit growth will be the results.

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Transcript of Freedom to Choose