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IT is increasing efficiency but failing to drive business growth

Thor Olavsrud | Dec. 11, 2012
A study by Juniper Networks and the Economist Business Unit finds that IT is succeeding at improving the efficiency of business processes, but most IT departments are failing to take the next step in becoming a strategic partner for business.

It should come as no surprise-IT has moved out of the data centers and wiring closets and is now working closely with the business side to make existing processes more efficient. And IT departments are succeeding in increasing the efficiency of business. However, they are also falling short when it comes to strategic transformation-to driving business growth in new areas-according to a new survey by Juniper Networks and the Economist Intelligence Unit.

"'We found that businesses today are primarily looking at IT to save money-for organizational efficiency," says Bask Iyer, CIO of Juniper. "IT is not really looked at for growth. But the most financially successful companies are doing what other companies are not doing. They're working closely with IT to develop new products. And they say IT is supporting their business growth by helping identify new opportunities. The highest performing companies are clearly seeing the benefits. They tend to look at the CIO role and IT as a strategic partner rather than as a backroom operator."

"Businesses still view the IT function in the traditional role of improving process efficiency," adds Rozina Ali, deputy editor of the Economist Intelligence Unit. "However, to really take advantage of an increasingly digitized world, companies need to recognize the potential value of IT as a collaborative partner in identifying new opportunities."

The survey, Can the IT Department Keep Up with Exponential Data Growth? was based on the responses of 474 IT and business executives from Germany, Japan, the U.K. and the U.S. The Economist Business Unit says 51 percent of the respondents were C-level executives and the remainder consisted of senior executives and managers.

IT Time Filled by Incremental Improvements, Slowing Evolution

"The reality is that many companies are forced to do more with less, and IT has been pressed to drive these efficiencies by making incremental improvements-data center consolidation, server elimination, disk management, offshoring, etc.," Iyer says.

"In most cases," Iyer says," tasks to make an organization more efficient have filled the dance card of entire IT departments. This focus on operational efficiency has slowed IT's evolution to a more strategic business partner."

"In the networking space, we see the challenges identified in this research most pronounced," he adds. "Network managers often find themselves competing with more tangible, easily understood business applications for strategic budgets and senior-level attention. Networks have a hard time rising to the top of the list of strategic priorities. This is ironic, as the networks have become enablers (or sometimes inhibitors) for those new applications and business models that are more easily understood."

The majority of respondents, 52 percent, say IT's primary responsibility is to improve business process efficiency (32 percent say IT's primary responsibility is fixing hardware and software issues and 25 percent say it's improving security to mitigate potential IT-related threats). Also, overall, 42 percent of respondents agree that IT's main strength is the efficient execution of general business processes.


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