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IT 2018: Shifts in Budgets, Initiatives and Executive-Level Influence Signify Lasting Changes for IT Departments

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TEKsystems survey finds IT lagging on key new initiatives—such as IoT, AI and VR/AR—that have the potential to change the business

TEKsystems®, a leading provider of IT staffing solutions and IT services, today released the major findings from its annual IT Forecast research. Overall results indicate that confidence in satisfying and supporting core IT has diminished due in part to a strain on declining IT budgets and initiatives now progressing beyond implementation into production mode. Results also reveal a diminishing strategic role for senior IT managerial positions in today’s reshaped IT department, where responsibilities are focused less on new initiatives and more around core IT activities related to maintaining existing implementations, including a focus on security and data access/integrity.

More than 1,000 IT leaders (i.e., chief information officers, IT vice presidents, IT directors, IT hiring managers) were polled in October 2017 on a range of key issues, including IT staffing and budgets, skill needs and expected organizational challenges in 2018. See the full results here.

Key highlights from the survey include:

Expectations for Slower IT Budget Growth and Increases in Overall Staff Salaries Putting Pressure on IT to do More with Less

Q: How do you expect your organization's IT budget to change compared to the prior year?

 

2016

2017

2018

Increase

37%

49%

40%

Stay the same

51%

39%

44%

Decrease

12%

12%

16%

Q: Compared to the current year, how much do you expect your overall IT staff's salaries to change in the coming year?

2017

2018

Increase

36%

58%

Stay the same

63%

40%

Decrease

1%

2%

Q: How do you expect your IT staff's salaries to change in the coming year versus the current year for the following skill sets and technologies? (percent expecting increases)

Skills/technologies

2016

2017

2018

Security

50%

45%

42%

Software engineers / developers / DevOps

50%

49%

40%

Data analytics

44%

41%

35%

Cloud

52%

43%

35%

Architects

47%

42%

31%

Project Management

39%

42%

30%

Networking

46%

41%

27%

Business/system analysts

45%

39%

26%

Mobile

45%

40%

26%

Help Desk Tech, Support

38%

35%

21%

• TEKsystems’ Take: It’s clear that 2018 will not be the year of increased IT budgets - those expecting IT budget increases are close to the lowest levels seen in the previous five years. However, in the face of declining budget expectations for 2018, a high number of IT leaders—58 percent—also indicate that they expect overall IT staff salaries to increase in the coming year. Many of those increases are likely to be marginal due to cost-of-living allowances. Apart from marginal increases, it is also possible that IT managers considering new initiatives in the coming year are anticipating the need to pay increased salaries to individuals possessing high-demand skill sets related to specific initiatives. TEKsystems notes that overall, a declining number of IT leaders are indicating that they expect to increase salaries for key roles in 2018. This may be explained by the fact that while fewer are expecting to increase their hiring of full-time staff for the coming year (those expecting to increase full-time hires for 2018 declined by 7 points to 38 percent), there is a 6 percent uptick in the number of IT leaders expecting to increase outsourcing in 2018.

Ability to Satisfy Organizational Demands for Core IT and Lines of Business Diminishes; Confidence in New Initiatives Remains Unchanged

Q: How confident are you in your IT department's ability to satisfy and support each of the following types of demands?

 

Core IT*

Line of business*

New initiatives

 

2016

2017

2018

2016

2017

2018

2016

2017

2018

Confident

75%

86%

76%

60%

76%

72%

54%

59%

59%

Neutral

15%

9%

16%

30%

17%

18%

24%

26%

26%

Unconfident

9%

5%

9%

10%

7%

10%

22%

15%

15%

• TEKsystems’ Take: Although high, confidence in satisfying core IT demands dropped 10 percent from 2017 levels, and confidence in satisfying new initiatives has not improved from 2017. This relates to budget expectations: As fewer IT leaders are expecting an increased budget in 2018, their ability to satisfy demands will come into question due to fewer resources at their disposal—this even in the face of expected increases in overall IT staff salaries. Organizations must examine this closely as the ability to simultaneously support core IT activities and new initiatives will have a significant impact on the business. These new initiatives, including Internet of Things (IoT), artificial intelligence (AI), augmented reality / virtual reality (AR/VR) and Blockchain, could weigh heavily on future success and partially determine whether they will disrupt—or be disrupted.

IT Lagging on Development / Implementation of Several Key Initiatives; Artificial Intelligence, Augmented Reality / Virtual Reality and Blockchain Overhyped

Q: At what stage is your organization with regard to the following initiatives in 2018? [select only one]

 

Nothing planned for foreseeable future (0 — 12 months)

Interested / planning stage (expect to take action within next 12 — 24 months)

Implementation Phase (Pilot, Advanced Pilot, Evaluation/Refinement)

Security

10%

13%

77%

Cloud computing

18%

20%

62%

Mobile applications

21%

17%

62%

Big data analytics

22%

19%

59%

DevOps

27%

19%

54%

Digital marketing / CX

27%

21%

52%

Internet of Things (IoT)

46%

23%

31%

Artificial intelligence (AI)

54%

21%

25%

AR/VR

69%

13%

18%

Blockchain

71%

13%

16%

• TEKsystems’ Take: In terms of new initiatives, IoT, AI, AR/VR and Blockchain are lagging in development. TEKsystems’ data show that relatively few respondents indicate that AR/VR and Blockchain initiatives are in the implementation phase. A significantly high percentage of respondents have indicated that they have nothing planned in the next 12 months for IoT, AI, AR/VR or Blockchain. This is somewhat unusual, given the potential positive impacts of both IoT and AI solutions, and can be contrasted to other key initiatives such as digital marketing and big data analytics, which are further along on the maturity curve. Part of the lag in implementing key new initiatives may be explained by the fact that IT leaders are not as confident in their ability to satisfy and support new initiatives. This can be attributed to a lack of budget and the overall trend of decentralization of IT, whereby the actual decisions on these initiatives are being taken out of the hands of the IT department.

Programmers and Developers Still the Most Critical Roles Driving Success; IT Managers, VPs and Directors Declining in Influence

Q: Which IT roles are the absolute most critical for enabling your organization to achieve success in the coming year?* (stack rank the top three)

Rank

2016

2017

2018

1

Programmers and developers (41%)

Programmers and developers (42%)

Programmers and developers (48%)

2

IT managers (34%)

Project managers (32%)

Project managers (32%)

3

Project managers (30%)

Networking (32%)

Business analysts (26%)

4

Networking (29%)

Software engineers (30%)

Software engineers (26%)

5

Business analysts (28%)

IT managers (24%)

Help desk / technical support (23%)

* Positions that have been in the top five for three years running are bolded.

Q: How difficult is it currently to find exceptional talent to fill roles for the following types of IT-related positions?* (stack rank the top three)

Rank

2016

2017

2018

1

Programmers and developers (65%)

Programmers and developers (42%)

Software engineers/developers / DevOps (45%)

2

Security (45%)

Networking (29%)

Data analytics (29%)

3

Software engineers (42%)

Security (28%)

Security (29%)

4

Database administrators (39%)

Architects (28%)

Architects (28%)

5

Project Managers (38%)

Software engineers (27%)

Business/systems analytics (25%)

* Positions that have been in the top five for three years running are bolded.

TEKsystems’ Take: Looking at the critical roles that enable an organization to achieve success, it’s logical that programmers/developers and project managers would be ranked highly; however, there appears to be a shift in the importance of business analysts and help desk/technical support roles now being considered critical. It also should be noted that VP and director-level IT leaders—ranked among the top five in 2015 when considering the most critical roles for enabling the organization to achieve success—has yet to crack the top five in any year since. TEKsystems believes that key IT initiatives have the potential to change the business and also change IT staffing goals. As these projects move outside the control of the centralized IT department, its staffing needs change. Consider that when asked about the difficulty in finding exceptional talent to fill IT roles, business systems analysts and data analytics professionals are now prominently mentioned. Interestingly, networking roles are no longer considered critical to achieving success or difficult to find. TEKsystems believes this is another indication of the changing nature of the centralized IT department—one where the responsibility for new initiatives is shifting and responsibilities are turning more toward keeping the lights on (e.g., security and data center) and running an efficient organization.

Increased Efficiency a Top Business Objective in 2018; IT Leaders Expect Transformation in the Next 12-24 Months

Q: Which business objectives will IT most need to support in 2018? [select the top-3 business objectives]

Rank

2016

2017

2018

1

Implementing new IT applications and infrastructure (45%)

Improving existing IT applications and infrastructure (47%)

Improving efficiency (35%)

2

Improving existing IT applications and infrastructure (43%)

Implementing new IT applications and infrastructure (40%)

Implementing new IT applications and infrastructure (33%)

3

Improving business processes (34%)

Improving business processes (30%)

Improving existing IT applications and infrastructure (31%)

4

Reducing costs (33%)

Improving efficiency (29%)

Improving business processes (30%)

5

Improving efficiency (31%)

Increasing growth (25%)

Reducing costs (24%)

• TEKsystems’ Take: In 2018, the need to improve efficiency topped the list of business objectives that IT will most need to support in the coming year. This marks the first time that improving existing or implementing new IT applications or infrastructure did not top the list, and supports the finding that centralized IT is becoming more responsible for maintaining established IT solutions, especially in the areas of security and data, and less responsible for newer IT initiatives.

“It appears as though the traditional, centralized IT department is becoming a thing of the past. IT leaders and their departments are being asked to do more with less, as we’re seeing a decrease in IT budgets with tech spend moving outside of centralized IT. That being said, the responsibilities for ‘keeping the lights on,’ including data integration, information security and a host of other duties, remain. This could also be why we see less confidence and movement in launching new initiatives within the department,” said Jason Hayman, TEKsystems Research Manager. “With the migration of tech spend and decision-making to other areas of the business, we’re also seeing a change in the roles and responsibilities of the traditional executive IT leader. The urgency for digital transformation continues to be a major driver for organizations, and could lead to a diminished or altered role for incumbent technology decision-makers as areas of the business continue to take more ownership of their technology initiatives. Adding to this difficulty will be the ever-present war for talent, as organizations are realizing that wage stagnation and the incredibly competitive tech labor market can’t coexist indefinitely, meaning that more money will have to be spent to attract top talent.”

TEKsystems’ Jason Hayman is available for additional commentary. For more information about the survey, or to schedule an interview, please contact Nathan Bowen at nabowen@TEKsystems.com.

About TEKsystems

People are at the heart of every successful business initiative. At TEKsystems, an Allegis Group company, we understand people. Every year we deploy more than 80,000 IT professionals at 6,000 client sites across North America, Europe and Asia. Our deep insights into IT human capital management enable us to help our clients achieve their business goals–while optimizing their IT workforce strategies. We provide IT staffing solutions and IT services to help our clients plan, build and run their critical business initiatives. Through our range of quality-focused delivery models, we meet our clients where they are, and take them where they want to go, the way they want to get there.