Cloud computing not top priority for Irish CIOs in year ahead

20 Oct 2011

CIOs claim that a bottom has been reached for IT reductions. A new survey reveals that cloud computing is still seeing a slow take-off in Ireland, with two-thirds of deployments so far in software-as-a-service (SaaS) applications.

The latest Deloitte CIO survey reveals that only three in every 10 (31pc) Irish CIOs believe their organisations view IT as a value-adding partner.

Representing a drop of 7pc on last year’s findings (38pc), this reversal in sentiment highlights the considerable challenge facing IT departments in proving their value to their overall organisations.

The 2011 survey reveals that the bottom of IT budget reductions may have been reached, with 55pc of respondents predicting no change or a budget increase, while 45pc predict a decrease, a swing of 15pc from 2010. Some 15pc of CIOs are even anticipating increases between 11pc and 30pc in the year ahead.

Compliance now No 1 priority for IT departments

Cost reduction remains an important priority for IT departments in 2011; however, it has been replaced as the No 1 priority by compliance. IT cost reduction and security also remain priorities and are joined by hardware and software consolidation. Enterprise mobility and virtualisation are also new to the list, overtaking cloud computing.

Highlighting the increased importance of compliance, in 2010, 68pc of participants expected regulatory workload to increase over the following 12 months. This has borne out with 70pc of CIOs reporting an increase in regulatory requirements and nearly two-thirds anticipating a further increase in 2012. Of particular significance is that now more than 50pc (29pc in 2010) of IT departments are struggling to meet these reporting requirements and deadlines.

The main issues behind this struggle to meet regulatory reporting requirements and deadlines are the manual overheads of reporting and, closely related, the associated cost of compliance. This shows that CIOs need to move from a fire-fighting approach to regulatory reporting to an enterprise information management approach with a focus on automation.

Time for game-changing technologies, like cloud

“It is encouraging to see the continued stabilisation in IT budgets. However, it is clear that IT/business alignment has been the victim of a relentless focus on IT cost reduction and harsh cost-cutting measures over the last few years,” said Harry Goddard, partner, Consulting, Deloitte.

“With businesses operating in an ever-increasingly competitive and fast-moving environment, and public-sector restructuring urgently required, the CIO needs to squeeze value from limited resources by adopting ‘guerrilla’ tactics. Without the budgets and headcounts of years past, the ‘guerrilla’ CIO must fully leverage ‘game-changing’ technologies, such as cloud computing and enterprise mobility.”

In 2010, adoption of cloud computing was relatively low (33pc), however, more than half of CIOs indicated their intention to increase the use of cloud. Despite these sentiments, there has only been a minor increase in usage recorded in 2011 (40pc) with SaaS accounting for more than two-thirds of cloud usage (45pc in 2010).

The only type of data CIOs are more likely to hold in the cloud in 2011, compared to last year’s survey, is employee data. Customer data, supplier data and billing information have seen the greatest falls in likelihood, presumably attributable to data security fears.

“Cloud computing was a topical trend in 2010 and still features at the top of the hype cycle,” Goddard explained.

“Given that it is not a top priority for respondents over the next 12 months, this suggests that CIOs are yet unconvinced to see appropriate opportunities to leverage the cloud to achieve cost reduction and to support consolidation. However, over three-quarters of participants intend to increase their usage of cloud computing over the next 18 months. With limited capital budget available, and the need to be ever more agile in enabling accelerated business growth and change, cloud computing with low capital expenditure and speedier implementation should be a key tool for CIOs. Perhaps 2012 will be the year the cloud becomes a priority for Irish CIOs?”

Smartphone apps now on CIO radar

The 2011 survey also reveals how mobile application development has taken off, with 40pc of CIOs having developed mobile applications. Employee application development dominates, with 30pc of organisations having developed employee applications compared with 22pc who have developed consumer applications.

Employee mobility enabling business growth and the increased productivity enabled by mobile enterprise access are the main benefits for organisations adopting mobile applications. However, there is a question of whether this increased productivity comes at the cost of employees’ work/life balance, as the ease of enterprise access blurs the boundary of work hours.

This reluctance to develop consumer applications is in contrast to the continued growth in smartphone usage.

Despite one operator reporting a 40pc increase in the number of active smartphone handsets in 2010, two-thirds of CIOs who have not yet developed any mobile applications still have no plans to develop consumer mobile applications over the coming 18 months.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years