Decentralisation of IT is challenging the operations of the firm

1. © The Economist Intelligence Unit Limited 20161
A report from The Economist Intelligence Unit
The IT archipelago
The decentralisation of enterprise technology
Decentralisation of IT is challenging the operations of the firm
Technology is permeating every part of almost every enterprise, from the supply chain
to finished products, from accounting to customer service. Once-specialised
technology applications are becoming more accessible to non-specialists. IT
departments are increasingly stretched and unable to meet the rising demands of
business users.
These factors are causing business users to take IT matters into their own hands—which
may benefit them but also often disperses decision making, fragments standards, and
duplicates IT assets. This creates a complexity that is harming operations—increasing
costs, challenging collaboration, and increasing vulnerability to cyber-attacks.
In July and August of 2016 the Economist Intelligence Unit (EIU), sponsored by VMware,
conducted a survey of 600 senior IT and business executives to explore escalating
complexity driven by decentralisation. The findings that follow analyse decentralisation’s
drivers, how it is unfolding, and the impact on the operations of the firm.
The nature of IT decentralisation
More than 40% of IT executives believe that technology is being decentralised across
their companies. Where is this migration unfolding?
Business users say they are purchasing or developing a broad range of IT technologies
and assets—especially their own devices (BYOD), applications and cloud networks. This
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Executive summary

2. © The Economist Intelligence Unit Limited 20162
The IT archipelago
The decentralisation of enterprise technology
is not an isolated trend—while the survey shows that the foremost developers of in-house
IT are the lines of business, the transition is being extended to all major corporate
functions.
The drivers of decentralisation
Why is this happening? IT executives and business cite different reasons.
Executives in IT—perhaps aware of the backlog of projects on their plate—see their own
limited bandwidth as the primary driver of business user-driven IT. A contributing factor in
their eyes is the shortage of qualified IT personnel that that is challenging many IT
organisations.
Business executives see another set of motivations. As technology is integrated into
business operations, they see the need for domain knowledge—for example,
salespeople knowing how customer data needs to be captured—to build, deploy and
manage the new technologies most effectively.
Where is IT decentralisation occurring?
Please give your assessment of the growth of IT activity in the following lines of business or
corporate functions over the next two years (IT personnel)
(%)
Projected rate of growth
Source: Economist Intelligence Unit survey, 2016
13
12
11
11
11
10
10
8
Lines of business
Sales and CRM
Marketing
Product Development
Supply Chain
Finance
Distribution
Human Resourcs
What IT functions are being decentralised?
Please indicate your disagreement or agreement with the following statement about IT
activity in your line of business or corporate function. (Business users)
(% of respondents)
Our department is…
Source: Economist Intelligence Unit survey, 2016
72
56
48
45
40
34
34
33
Authorising new devices for our people
Purchasing third party apps
Building our own apps
Developing our own cloud services
Making our own technology decisions
Reaching agreements with technology vendors
Hiring or training our own IT personnel
Deploying our own security solutions

3. © The Economist Intelligence Unit Limited 20163
The IT archipelago
The decentralisation of enterprise technology
Both of these views are correct, and can be mutually reinforcing—increased business
activity strains scarce IT resources, in turn driving the businesses to develop their own
independent capabilities.
A proliferation of technologies
A consequence of the growth of independent IT silos is the profusion of technology
assets. IT department respondents report a significant proliferation of devices, solutions
and networks within the enterprise (and these are just the ones they know about.)
This profusion of assets—some of them no doubt duplicative—can rapidly escalate the
parameters of even the simplest enterprise IT project.
Take the conservative example of developing a customer-facing app in a company
with three mobile solutions, eight supported devices, and four data management
systems—the solution would require almost 100 implementations. In an era of fast-paced
competitive change, such complexity would significantly delay implementation.
In addition, proliferation typically fragments companies’ buying power.
The effect of complexity on the IT department
IT departments are feeling the strain of this decentralisation on their operations and their
people, executives report:
l Three out of four IT executives say that decentralisation is making IT’s job more
challenging
Please provide your assessment of the number of the following assets that are currently
under operation in your enterprise (managed by either IT or business users).
(IT executives)
Source: Economist Intelligence Unit survey, 2016
11
8
8
8
7
7
Device types
Data management solutions
Cloud services
Security solutions
Data analytics solutions
Mobility operating systems
IT Executives
What are the most important drivers of
change in IT decision making?
(% of respondents)
Business users
What would be your primary reason for
managing a major IT initiative by yourself?
(% of respondents)
Source: Economist Intelligence Unit survey, 2016
28
15
12
36
34
32
IT can’t move fast enough to support the businesses
A shortage of skilled workers is forcing business users
to make decisions
Tech is becoming a larger part of products & services
We know our needs/have the expertise
Deployment requires our business knowledge
Prefer to build solution we will be working with

4. © The Economist Intelligence Unit Limited 20164
The IT archipelago
The decentralisation of enterprise technology
l Almost 70% say that decentralisation is increasing the strain on IT personnel
l Nearly three out of four say that proliferation of IT activities is reducing IT’s ability to
protect the firm from cyber-attacks.
As the technologisation of business continues, these pressures will only escalate.
The effect of complexity on the enterprise
Finally, technology decentralisation has already become a challenge to the operations
of the enterprise though fewer than half of IT executives say it’s happening to them.
l Two-thirds of IT executives believe that decentralisation has raised IT costs for the firm.
l 60% believe that multiple, duplicative systems make cross-enterprise collaboration
more challenging
l 66% state that fragmentation of IT decision-making has increased the firm’s
vulnerability to cyber-attacks.
Given that data security is regularly cited as the highest IT priority in many countries,
increased cyber-vulnerability is perhaps the most immediate challenge created by the
decentralisation of IT.1
Conclusion
The IT archipelago describes a chain of independent IT functions that is emerging across
the enterprise. Given the fast pace of technology change in our times, it seems likely
that we can only expect these islands of assets, decision-making and authority to
continue to rise.
Decentralisation is a part of a larger rebalancing between traditional IT and the business
functions. Our research finds that the process has progressed to the point that it can
harm the operational efficiency and security of the enterprise. Senior leadership must
step in to create a new balance that combines the effectiveness of centralised IT
control with the need for technological agility in the business.
1. Economist Intelligence Unit, The Cyber-chasm: How the disconnect between the C-suite and security endangers the enterprise, 2016
Respondents: IT: 300; Business users: 300
Position in the company: IT: CIOs 29%; VP of IT: 18%; Chief Security Officer: 10%;
all others Directors and above.
Business users: 100% Directors and above.
Size of Company (revenues): 100% over $500 mm. Average size $2.1 billion.
Industries: 20 industries, none more than 10% of total.
Location: 33% Americas; 33% EMEA; 33% Asia-Pacific.
Who took the survey?
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