Aussies prefer in-house ICT

Despite media hype to the contrary, ICT remains predominantly an in-house affair for Australian CIOs.

That is according to global analyst firm Ovum, who says 74% of ICT activities are currently provided primarily by an in-house ICT department, with the figure projected to decline to 61% within the next two years.

Through a survey of 63 CIOs across the ditch, Ovum's IT research director for the region Dr Steve Hodgkinson says outsourced arrangements currently account for 13% of ICT activities, which is expected to reach 20% by 2015.

“We asked CIOs about how they sourced a range of ICT activities and were surprised to find that three-quarters of the activities were currently provided by an in-house ICT department," he says.

"It is always difficult to assess the true rate of cloud services adoption – and to sift fact from fantasy.

"This survey provides a good qualitative assessment of their views on current and target sourcing approaches across a spectrum of 50 ICT activities.

"These spanned the categories of data center, network, application development, information management, applications and end-user services.

"The results reveal a rather prosaic focus on traditional in-house IT operations.”

Around 4% of ICT activities are currently sourced as cloud services – primarily software-as-a-service (SaaS) applications – but overall this proportion is projected to rise significantly during the next few years.

Cloud sourcing of data center and application services, in particular, is expected to comprise more than 15% of the ICT mix.

“The reality for this group of CIOs is that ICT management is still about managing the people, processes, and technologies of the in-house ICT department," Hodgkinson says.

"It is therefore not surprising that a shortage of people and skills was regarded by CIOs as one of their major challenges.

"However, outsourcing and cloud services are projected to account for one-third of ICT activities overall in the next 1–2 years.

"Change is definitely coming, while perhaps more slowly than expected, and momentum for cloud services in particular is expected to build during the next few years.”

Hodgkinson recommends CIOs with ICT sourced substantially in-house should start gaining skills in the procurement and management of cloud-sourced services sooner rather than later.

"New mindsets and skills are required, particularly for counterparty risk management and systems integration, and these skills can only be learned with hands-on experience," he says.

“It’s really all about organisational learning and more agile thinking.

"Also, the experiences of early adopters are that cloud services can be better, faster, less expensive and, overall, less risky.

"Given this, there are productivity and innovation opportunity costs associated with delaying cloud services adoption.”