Leon Kappelman has his finger on the pulse of IT. As lead researcher on the Society for Information Management’s annual IT Trends Study, he’s helping organize and analyze the data from this year’s survey that will be released at SIMposium 2015. The good news is that IT investment is up for the fourth consecutive year. But while the study found the heart of IT is beating strong, many CIOs may be on life support.
This year’s survey indicates that IT spending on average is 5.3 percent of revenue, up from 5.15 percent last year and above the 10-year moving average of 4.25 percent. In 2011, spending was only 3.55 percent of revenue. While the increases of the last four years may in part be accounted for by "catching up" from the low investment rates during the great recession and slow recovery, the survey research team believes the higher levels are an indication of investments in cloud, shared services, security, analytics, data centers, health care informatics and digital marketing. As Director Emeritus of the Information Systems Research Center and a professor of Information Systems in the Information Technology & Decision Sciences Department of the College of Business at the University of North Texas, Kappelman teaches aspiring IT leaders and has consulted with organizations to help them better manage information, human, and technology assets. He’s been the primary investigator for the SIM survey for the past three years and a consumer of its results since it’s inception more than 35 years ago.
Kappelman says this year’s study indicates continued focus on analytics and security, as well as greater spending on custom application development. The shifts he’s interested in are noticeable not so much in spending changes but in priorities as organizations recognize that in order to be agile, fast and flexible they cannot afford to be stove piped.
“IT management is looking forward to focus on the things that indirectly make the business better,” he says. “Last year, speed of business change and agility were higher priorities, this year IT-time-to-market and IT agility are the higher priority. IT can’t directly address those business issues, but by making IT more responsive they can help. They are becoming more realistic about what they can affect.”
Still, says Kappelman, CIOs should not be lulled into believing those higher investments reflect broad satisfaction with their own roles. Other studies he monitors indicate that CEOs and other business leaders are less than satisfied with IT leaders.
He believes the CIO role is at a watershed similar to the late 1990s when the Y2K scare and the dot com boom focused business boardrooms on both the negative and positive potentials of IT. After 2000, many CIOs couldn’t make the transition to be more a “part of the business,” he says. “I think we’re at one of those moments again because the visibility of IT is even higher now.”
“CIOs have a really complicated job and they can’t pull it off without a strong team,” he says. “What I’m seeing in the data is that more than 70 percent of the time senior management is saying ‘I don’t like our CIO or what we have on the IT bench and so I’m going outside for our next CIO.'"
As a result, he believes one-third to one half of existing CIOs won’t be around within five to ten years, but that may be a needed transition. “Those organizations where IT is not strategic are not going to thrive, because the organizations that do run IT strategically and help create value are going to kill them.”
Ultimately, though, new IT leaders will come up the ranks better prepared, says Kappelman. “The underlying problem is how many current IT leaders got into this business to talk to customers and the answer is none,” he says. “Those who have grown up as customers and consumers of IT, the younger people that really were consumers, are going to have a really different perspective in five, 10, 15 years when they become IT leadership. They’re starting to have an influence already.”
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The lead researcher on the Society for Information Management’s IT Trends Study, Leon Kappelman also founded and chaired the Society for Information Management's Enterprise Architecture Working Group. He is Director Emeritus of the Information Systems Research Center and a Professor of Information Systems in the Information Technology & Decision Sciences Department of the College of Business at the University of North Texas, where he is also a Fellow of the Texas Center for Digital Knowledge. An accomplished author and speaker, Kappelman has testified on high-tech issues several times before the US Congress, spoken at a United Nations IT conference, and participated in White House industry round tables. His work has been reported in the Wall Street Journal, New York Times, Business Week, Newsweek, Dallas Morning News, Washington Post, L.A. Times, and scores of other newspapers and magazines; he has appeared on CNN, CNBC, PBS, ABC, as well as numerous local and regional television and radio stations.
