The IT department is merely “re-arranging deckchairs on the Titanic”  and risks being pulled apart as frustrated business execs start buying in their own tech expertise instead, CIOs have been warned.

IT chiefs that don’t raise their game when it comes to innovation will see their authority undermined within the next three years as execs hire their own staff to build new tech services, bypassing the IT department and creating a two-tier system according to a report by Forrester Research. The IT department could end up looking after the legacy infrastructure while the exciting development work is done by teams in business units.

Forrester warned: “The CIO will potentially be relegated to managing the interfaces to the legacy systems of record and managing the underlying infrastructure.”

The analyst firm said the IT department needs to find a way to work with business to cut legacy costs and focus on new priorities such as mobile.

“Without the business signing up for aggressive app rationalisation, IT can never do enough server virtualisation to significantly impact the budget. IT is just re-arranging the deck chairs on the Titanic if it does not engage the business on eliminating applications.”

The Forrester report Business execs increase direct IT spend to support systems of engagement is grim reading for CIOs and those working in the IT department.

When business and tech execs were asked to rate IT’s capabilities, in every case IT rated itself higher than the business did. Only 39 per cent of execs thought IT consistently delivered projects on time and on budget, something Forrester described as “the basic building block of IT’s credibility”.

Marketing and R&D chiefs also gave the IT department a failing grade because it does not help them to innovate, and the analyst house warned: “Given the pace of technology change and the business’ need to improve products and services and deal with rising customer expectations, this leaves IT at risk of being bypassed for services firms and consultants.”

As a result, business units are taking direct responsibility for IT, cutting out the CIO and the IT department. While the majority (59 per cent) still get their tech from a central corporate IT group, 20 per cent now have a dedicated IT unit in their business unit or department, up from 10 per cent in 2010.

Forrester said this reflects the business’ “frustration” with centralised IT and the accessibility of cloud services and mobile technologies that can bypass IT. The research also found that business execs are getting more involved in tech decisions.

Worrying for the CIO is the reason given for this increased involvement, that “technology is too important to the business not to be engaged and that IT does not understand the business well enough to be left to its own devices”.