The Hackett Group: IT Making Progress in Digital Transformation, But Still Struggling to Support Broader Enterprise Needs

Critical Development Gaps in Many Key Areas Call into Question IT’s
Ability to Meet High Business Expectations

MIAMI & LONDON–(BUSINESS WIRE)–While IT organizations are making progress with their own internal
digital transformation, they are still struggling to support the broader
enterprise, reallocate the technology portfolio, implement a more agile
technology infrastructure, drive innovation, and improve
customer-centricity, according to 2019 IT Key Issues Research from The
Hackett Group
, Inc. (NASDAQ: HCKT). The research found that IT has
limited capability to address many of their highest priority objectives.
In addition, plans to address these deficiencies fall woefully short,
calling into question IT’s ability to live up to the business
expectation to serve as a true strategic business partner.

A complimentary version of the research is available for download,
following registration, at this link: http://go.poweredbyhackett.com/keyissuesit1902sm.

IT leaders have confidence in their ability to manage cyber and data
risk — their top-ranked enterprise- and function-related priority. But
they are insecure about most of the other top objectives identified for
2019, the research found. The study found that IT organizations have low
capability to address issues in many other areas ranked as the most
important, including: improving functional agility; improving
customer-centricity; improving data management and analytical
capabilities; aligning skills and talent with business needs; and
modernizing data architecture.

The issue is made worse by the fact that IT is severely resource
constrained. The research found that less than 20 percent of IT
organizations report a current or planned improvement initiative in
these areas in 2019. Only one in four is addressing known talent gaps
and alignment issues. Less than 10 percent are working on modernizing
their data architecture.

Looking at budgets and staffing for 2019, IT expects to fare better than
the other business services areas such as finance, procurement, and HR.
Budgets are anticipated to rise by 2.2 percent, and staffing will drop
by just 0.2 percent. Spending is also shifting somewhat, with a
significant increase in the percentage of the budget going to “build”
processes such as infrastructure and application development, and a
slight decrease in spending on “run” processes. But in the context of
predicted revenue growth of 5.7 percent, this still leaves dramatic
productivity and efficiency gaps that must be overcome by continued
gains in operational efficiency.

Digital technology adoption is also on the rise, the research found,
with more than 90 percent of companies showing some level of adoption
for cloud-based applications and a large jump in robotic process
automation (RPA) adoption expected this year. Over the next two years,
IT organizations expect to see dramatic growth in adoption of a wide
array of digital tools and systems, including RPA, ERP modernization,
and data and analytics tools for visualization, master data management,
analytics, and data architecture.

Despite the challenges, IT’s business stakeholders in finance,
procurement, HR and other areas are optimistic about the function’s
future. Two years ago, only about one third said IT had the competencies
and resources to support them in their digital transformation. This
year, that number has risen to nearly half. By 2020-21, 80 percent of
stakeholders say they expect IT to have the competencies required to be
a valued business partner. The question remains, will IT be able to
deliver on this optimistic expectation?

“IT has made progress on partnering with the business to move forward
with digital transformation. They’re improving, and the business is
seeing benefits,” said The Hackett Group Senior Director, IT Research
Advisor Rick Pastore. “But the low number of improvement initiatives
planned for 2019 imply that IT leaders simply don’t know how to fix
their remaining shortcomings, or they’re overwhelmed by the breadth and
depth of the challenge. They’re also hampered by legacy issues like
infrastructure complexity, outdated architectures, and project
development approaches that are an impediment to agility. Given IT’s
ambitious goals for the next two years, it’s critical that they find a
way to regain improvement momentum.”

According to The Hackett Group Principal and North American IT Advisory
Practice Leader Lisa Palmer, “IT organizations have been wrestling with
many tactical projects, with business making demands much faster than IT
can respond. So fundamental structural issues like inefficient legacy
processes, skill gaps, and lack of alignment are becoming more exposed.
Making changes in areas like soft skills, architecture, and culture
doesn’t happen overnight, and it can feel overwhelming. It requires a
holistic approach to reinventing IT. Headway is being made, but it’s
significantly slower than needed.”

The Hackett Group’s 2019 IT Key Issues research, “2019 CIO Agenda:
Developing Critical IT Capabilities,” is based on results gathered from
about 150 executives in the US and abroad, most at large companies with
annual revenue of $1 billion or greater. A complimentary version of the
research is available for download, following registration, at this link:
http://go.poweredbyhackett.com/keyissuesit1902sm.

About The Hackett Group

The
Hackett Group
 (NASDAQ: HCKT) is an intellectual property-based
strategic consultancy and leading enterprise benchmarking and best
practices digital transformation firm to global companies, offering
digital transformation including robotic process automation and
enterprise cloud application implementation. Services include business
transformation, enterprise analytics, working
capital management
 and global
business services
. The Hackett Group also provides dedicated
expertise in business strategy, operations, finance, human capital
management, strategic sourcing, procurement and information technology,
including its award-winning Oracle and SAP practices.

The Hackett Group has completed more than 16,500 benchmarking studies
with major corporations and government agencies, including 93% of the
Dow Jones Industrials, 89% of the Fortune 100, 83% of the DAX 30 and 57%
of the FTSE 100. These studies drive its Best Practice Intelligence
Center which includes the firm’s benchmarking metrics, best
practices repository and best practice configuration guides and process
flows, which enable The Hackett Group’s clients and partners to achieve
world-class performance.

More information on The Hackett Group is available at: www.thehackettgroup.cominfo@thehackettgroup.com,
or by calling (770) 225-3600.

Cautionary Statement Regarding “Forward Looking” Statements

This release contains “forward looking” statements within the meaning of
Section 27A of the Securities Act of 1933 as amended and Section 21E of
the Securities Exchange Act of 1934, as amended. Statements including
without limitation, words such as “expects”, “anticipates”, “intends”,
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Contacts

Gary Baker, Global Communications Director – (917) 796-2391 or gbaker@thehackettgroup.com

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