A recent McKinsey survey sheds light on what the C-suite should think about in terms of its IT talent needs, from top skills to development to the talent value proposition.
According to McKinsey & Co's recent IT Under Pressure survey, two-thirds of executives surveyed believe that "it's a significant challenge for their organizations to find, develop, and retain the right IT talent." The question is: What kind of IT talent will you need in the near future?
The most pressing talent needs
McKinsey puts it this way: What are the top five areas where your technology-talent needs will be the most pressing in the next 12 months?
Across all the respondents (n=807), the most pressing tech talent need was analytics and data science (Exhibit 6), a role that requires more business experience and people skills than the traditional nuts-and-bolts, operational focus of IT departments.
The results differed by vertical, but there's a good argument to make when it comes to planning for change. The high-tech/telecom sector (n=151) named cloud and distributed computing as its biggest need, but analytics and data science was a very close second (45% vs. 44%, respectively).
Manufacturing (n=110) placed joint IT and business expertise as its top talent need, and analytics as its second. Professional services (n=162) named analytics as its biggest talent priority, with joint expertise in third place (cloud was second). Four of the five verticals have business-related and people-focused talent needs at the top of their list.
The one exception for pressing talent needs is financial services (n=133), which had enterprise application architecture and mobile or online development as its top two talent areas. Considering the substantial needs of online banking and client service, this result is not a surprise.
Business chops and people skills
Is the IT function progressing closer to the business? Is IT becoming more people-centric? The trends in this McKinsey survey, and two reports that I recently blogged about, present that argument.
Lokesh Jindal, commenting in my article about CA Technology's Future of IT report, said that the "future of IT is about being a trusted advisor." In my article about EY's Born to be digital survey, one of the takeaway messages was that the career path of the IT leader would look more like a business executive.
Spend trend: analytics and innovation
Another good indicator in the McKinsey survey is to follow the money. Concerning IT budgets (Exhibit 2), respondents were asked what they expect the IT spend to look like in three years.
Innovation and analytics posted the largest projected gains (6% and 4% higher, respectively). The largest drops were in infrastructure (down 8%) and core transactional applications (down 4%).
The authors surmised that increased cloud computing deployments could account for the drop in infrastructure spend. But again, the signs indicate changes down the road: innovation (the number one driver of disruption) and analytics.
More importance, less confidence
The IT department is becoming more than a cost center, even if institutional inertia still supports that view. In one of the more noticeable shifts in survey results, "reducing IT costs" as a priority went from first place in the 2012 results (52%) to fourth place in the (current) 2013 results (31%) (Exhibit 1).
The top IT priorities in the current survey are "improving effectiveness of business processes" (61%) and "improving cost efficiency of business processes" (48%).
So rather than making sure that they don't "pay too much" for IT, the decision makers surveyed want to derive the most value from their IT dollar. Does this sound as though IT is taking on more strategic significance? I think so.
Interestingly, with the shift in perception and the level of attention paid to IT comes more dissatisfaction with the IT function. Confidence in IT's ability to enable business goals (Exhibit 3) is down from the 2011 and 2012 results, especially in areas like entering new markets, creating new products, and tracking profitability.
Talent and skills: What's your process?
Two-thirds of McKinsey's 2013 respondents believe that IT talent is a significant challenge, yet the authors report that CIOs on average only spend 8% of their time developing talent, arguably a disconnect between needs and practices.
More bad news: only 23% of executives said that they use formal, consistent processes for managing talent. The report states that this is the "lowest share across all the governance processes that we asked about."
More established processes included: allocation of IT resources to projects (47%), IT portfolio planning (42%), and IT resource planning (41%). Putting a talent process in place will require a fix at the top of the organization.
Getting talent requires leadership
While a review of IT human resources best practices can provide a good deal of clarity and direction regarding the talent issues the survey raises, no amount of awareness will take the place of management's resolve to hire the right IT pros with the right skills and retain them.
Their proposal is a stronger talent value proposition — one that covers culture, compensation, benefits, and career development. Part of the urgency is that in the near term, it could become harder to find the skills and personnel needed because of the disruptive shift underway in technology.
Another strengthening factor will be among those organizations that embrace digital transformation; they will have the strategic objectives and projects in place that will require the widest scope of cutting-edge IT skills.
It's a win-win, in other words. By showing leadership in tech transformation, companies can attract the IT talent they need, while the IT pros they hire will gain the most relevant business experience and skills in the current marketplace.
Change really is the only constant in technology.