Business Brains

Corporate IT in 2015: much smaller, less visible, externally sourced

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New report predicts that by 2015, many IT departments will only be a quarter of their current size, and eight out of ten application IT dollars going to outside service providers.

Is the "IT department" becoming a thing of the past?

The Corporate Executive Board released a five-year outlook for corporate IT, and essentially paints a picture of greatly shrunken IT departments that have either been absorbed into business units, or essentially outsourced to clouds and business providers.

CEB predicts that by 2015, many IT departments will only be a quarter of their current size, and eight out of ten IT dollars going to outside service providers.

CEB says it interviewed hundreds of IT and business leaders to come to these conclusions, and given that five years isn't a very long time off, many of these changes are already underway:

Shift 1: Information over process: CEB apparently agrees with Nick Carr, who famously wrote a few years ago that since IT will be as ubiquitous as electricity, it won't give any company a leg up in the market.  "In theory, a start-up could use the cloud to obtain the same functionality, scale, and quality as an industry leader," CEB observes. "Differentiation will lie in how an organization manages change, integrates its service portfolio, and critically, exploits the information the services generate." Competitive advantage will come from business intelligence, collaboration, or the customer interface.

Shift 2: IT embedded in business services: IT will be less visible as a distinct and separate department in organizations. "Technology will be consumed as part of business services as the IT function merges into a business shared services group alongside other corporate functions," CEB reports.

Shift 3: Externalized service delivery: In five years, up to 80% of application spending will be external services, CEB predicts. "As this occurs, internal roles will shift from being technology providers to technology brokers."

Shift 4: Greater business partner responsibility: The need for competitive differentiation through information management may be beyond local IT departments' capabilities. These needs will be increasingly addressed by business partners.

Shift 5: Diminished standalone IT role: "As IT roles migrate to business services, evolve into business roles, or are externalized, the scope of the IT function will diminish and its headcount fall by 75% or more," CEB predicts. "Strategy, architecture, risk, program management, user support, and relationship management will exist at the business services level, not within the IT function."

IT workers need not despair about their jobs, however. The hottest jobs this year and through the coming decade are either in healthcare or IT.  Through 2018, demand will be insatiable for computer systems analysts, computer software engineers, and network systems and data communications analysts. If CEB is right, IT-savvy workers will likely to either be part of the business, or working for cloud and service providers, versus internal IT departments.

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure