2014 outlook: Innovation agenda makes shadow IT OK

A rise in operational spending bodes well for hiring, which remains a bright spot in the tech industry

A rise in operational spending bodes well for hiring, which remains a bright spot in the tech industry. The biggest drivers of IT spending growth are cloud computing, mobility, big data and social networking technologies.

"Cautious optimism" has been the prevailing sentiment in the tech industry for the past few years, but in 2014 can we finally expect more confidence?

Maybe, say industry watchers.

“I wouldn’t say the mood is ebullient, but it’s a stronger, more upbeat outlook than there has been the last few years,” says John Longwell, vice president of research at Computer Economics. “Large companies seem to be investing in operations and hiring. That’s the positive takeaway. But they still seem to be restrained on the capital spending side.”

"I would categorize it as the absence of pessimism," says Johna Till Johnson, president and founder of Nemertes Research. But most folks “still seem somewhat overworked and understaffed.”

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A rise in operational spending and the need for more staff bode well for hiring, which continues to be a bright spot in the tech industry. “I would remove ‘cautious,’ but I wouldn’t go as far as saying we’re going to see one of the biggest boom years we’ve ever seen,” says Jack Cullen, president of IT staffing specialist Modis. “I think it’s going to be a strong year.”

Project priorities

Timothy Walsh, senior IT architect at American Electric Power (AEP), says the electric utility is embarking on a number of projects in 2014, including retiring Windows XP and migrating to a new storage platform. AEP also is planning a wireless infrastructure upgrade, prompted by an increase in BYOD.

“As more users have started bringing in smartphones, tablets and their own laptops, the use of wireless has skyrocketed to the point we’re now unable to provide adequate coverage in various meeting rooms throughout the plant,” Walsh says. “The upgrade will position us to better support our users as they move into more of a mobile work environment.”

Ryan Taylor, CEO of consulting firm Dime IT, says his company’s clients are expanding their budgets as the economy improves. “Companies have been really stretching their hardware refresh cycles to the extreme,” Taylor says. “It's a relief for IT departments everywhere as we'll all be able to replace/upgrade versus fix/Band-Aid.”

On the network front, 2014 “will be a big year for network management,” predicts Zeus Kerravala, principal analyst at ZK Research. “Over the last five years, things have become more consumerized, more virtualized, more mobile, more wireless. The environment has become increasingly more complex.”

IT managers are looking for tools that can help them monitor application performance through the lens of the end user, and old-school management platforms from the client-server era aren’t going to cut it, he says: “Eighty percent of customers are now looking for alternative solutions for network management.”

One technology that’s not yet on the investment list for most companies is software-defined networking (SDN), despite all the hype in 2013. It’s just too early, Kerravala says. “For most mainstream enterprises, 2014 should be the year you learn about SDNs and what it can do and how it can benefit your organization. It’s not the year to deploy.” (Related: SDN in 2014: More of everything

In the big picture, IDC is forecasting worldwide IT spending to grow 5% year over year to $2.1 trillion in 2014. There's nothing surprising about the biggest drivers of that growth: cloud spending (IDC says it will surge by 25% in 2014, reaching over $100 billion); big data (projected to grow by 30%, surpassing $14 billion); mobile computing (sales of tablets will be up by 18% and smartphones by 12%); and social technologies (set to become increasingly integrated into enterprise applications).

“A lot of what we’ve seen in 2013 is what I suspect we’ll see in 2014: Companies are still trying to figure out how to handle big data, how to find people with big data expertise, how to tackle security, and how to tackle mobility. We’re hearing a lot of the same themes,” Cullen says.

While the dominant tech priorities are all familiar, what’s new about 2014 will be the focus on innovation as an explicit initiative for IT, says Johnson. “Pretty much all of our clients have an innovation initiative underway,” she says.

That means not simply deciding to be more innovative, but taking steps to make it happen: putting someone in charge of an organized innovation initiative, setting a budget, establishing metrics to measure progress, defining processes -- and realizing the limitations of an innovation program. “How do you put in place a way to become innovative on an ongoing basis, knowing that innovation is like creativity? You can’t force it. That’s the big challenge that people are wrestling with,” Johnson says.

Another challenge for IT is understanding that innovation won’t happen without failure.

“I think for IT there’s a special hurdle, which is getting over the fear of failure,” Johnson says. “For the past 10, 15 years, IT has been told that their role is, effectively, to keep the lights on. Keep the servers running, keep the networks running. If you go down, the company goes down. With innovation, it’s all about failing 99% of the time so you can find the 1% of the time when you succeed.”

It’s a new world for IT, says Brian Hopkins, a principal analyst at Forrester. “I think it’s an exciting time to be in the tech industry for those that understand where they are. It’s also a chaotic time.”

Markets are becoming increasingly harder to predict, and disruptive technologies can come along and change things overnight -- a scenario that’s anathema to traditional business.

“Businesses like to be able to really plan things out,” Hopkins says. “It takes a long time to change a billion-dollar company.” In today’s environment, “companies need to go from good planners to really good, fast customer followers,” he says.

That puts pressure on IT to keep pace, and it’s a marked departure from the last few years of cautious investment. “We just came from a recession, where the whole point of IT was to make it more cost effective. Companies traded off agility for cost effectiveness and standardization. Now we’re asking IT to really be nimble,” Hopkins says.

He, too, believes IT has an increasingly important role to play in helping to drive corporate innovation.

“In companies where innovation is the top priority, if you asked them how they plan to innovate, the number one way is with new products and services. Number two is new technology systems,” Hopkins says. “There’s a high expectation that technology is going to drive those new products and services and support them.”

But a critical mistake that some IT executives will make is to tackle innovation in isolation, rather than as part of a corporate-wide initiative. “You find CIOs who say ‘I’m going to make IT really good technology innovators before I start talking to the business.’ That’s disastrous,” Hopkins says. “Other businesses make technology innovation part of their sustained practice of business innovation -- which is the best way to do it. But it requires a level of trust between business and IT that a lot of organizations don’t have.”

IT pros need to shift their view from inside IT to outside the business, and look at the business from a different perspective. “IT is at a junction. IT can fall back and be about keeping the lights on, infrastructure delivery, servers, storage devices,” Hopkins says. “Or it can move to be more of an agile broker of services and really a business partner for innovation and growth.”

Accepting cloud, BYOD

Among its predictions for 2014, Forrester says cloud will join the formal IT portfolio. This will be the year IT “relents, stops fighting and gets with the program formally by developing real strategies for embracing the cloud, managing cloud-based application deployments and empowering the business to keep being agile.”

Some IT pros are already on board. “I love how these platforms enable a fast deployment of a service, no additional hardware, limited implementation needs and high availability,” says Shane Fender, a corporate IT leader at Guardian Analytics. “These are things that all IT professionals look for and seek, and now it is available at a low monthly cost with very little upfront effort or investment. We need to embrace this technology.”

Likewise, IT departments need to accept that business users will have more say in the devices they bring to work and the services they deploy. The IT department “cannot hold or control these technologies in a way that we are used to,” Fender says, but “we need to evolve and adapt to this.”

So-called “shadow IT,” whereby users circumvent the IT department and procure apps and devices on their own, is rampant -- but not just among non-IT employees. In a new report from consultancy Frost & Sullivan and McAfee, 80% of respondents (which include an equal number of IT pros and line-of-business employees) admitted they used SaaS applications in their jobs without official approval.

“Stop trying to control it,” Hopkins says. “Shadow IT is your friend if you know how to use it. It’s an indicator of that demand that you’re not meeting, or you can’t meet and may never be able to meet.”

AEP’s Walsh has a similar view. “IT has lost its grip on technology, so we either embrace the new reality or we’ll fail,” he says. “IT has to position itself to help the users make smart decisions when they purchase products and services.”

For the utility, that means operating closer to the front of the adoption curve than it has in the past -- it’s adopted virtual desktops and is streaming applications to devices to give its end users what they need, for instance.

“Yes, the trend could easily undermine IT’s perceived place in the company, but only if IT doesn’t adjust and embrace the changes,” Walsh says. “IT has been innovators since day one; this is just part of it.”

Ann Bednarz covers IT careers, outsourcing and Internet culture for Network World. Follow Ann on Twitter at @annbednarz and reach her via email at abednarz@nww.com.

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