How IT leaders are taking charge across the enterprise Impact AI AN INNOVATION ROADMAP FOR IT © 2024 ServiceNow, Inc. All Rights Reserved. Confidential. 2 The new IT leadership agenda 03 The new remit and role for IT 05 CONTENTS What Pacesetters do differently 11 Planning for the future 15 AN INNOVAT ION ROADMAP FOR I T © 2024 ServiceNow, Inc. All Rights Reserved. 3 THE NEW IT LEADERSHIP AGENDA AI has created a moment of truth for IT leaders. CIOs and other tech leaders are becoming “chief everything officers,” responsible for whatever tech touches. They are expanding their attention beyond their traditional responsibilities and working closely with colleagues across the org to usher in a new era of AI-enabled business transformation. IT leaders are increasingly tasked with putting technology at the core of business strategy, taking on a wider role, leading the next wave of digital transformation, leveraging AI for the benefit of the business, and aligning IT operations with business goals—all while helping to revolutionize the way people work. Yet some IT leaders aren’t just surviving in this challenging environment; they’re excelling. To learn what they’re doing so well and how their peers can benefit, we paired up with longtime research partner ThoughtLab to survey 500 global IT leaders and their direct reports. We identified their challenges and what top performers—whom we call Pacesetters, roughly a quarter of the total cohort—are doing differently. Pacesetters are meeting these challenges head on by being responsible for more areas of the business than peers. In fact, we identified respondents as Pacesetters if they contributed to seven or more areas of their organizations’ performance, such as cost savings, revenue growth, profitability, customer engagement, and shareholder value. Additionally, Pacesetters are cultural changemakers in their organizations, using their hard tech and soft human skills to help with hiring and training colleagues to adapt to the AI era. They’re working strategically with senior leaders such as the CEO and the CHRO to help bust silos so their orgs can get the most benefit from this new technology. They’re also more likely to be transforming IT from a cost center or revenue generator to a hybrid model, allowing them to respond faster as business needs arise. They are decentralizing the IT function, embedding knowledge and resources throughout departments to leverage emerging technologies and speed up deployment to more quickly benefit teams on the ground. In this report, we explore the challenges IT leaders are facing now and what they think will happen in the near term. Our IT Pacesetters may be ahead of the pack, but the race to transform enterprise IT for the AI era has just begun. AN INNOVAT ION ROADMAP FOR I T THE NEW IT LEADERSH IP AGENDA © 2024 ServiceNow, Inc. All Rights Reserved. 4 01 02 03 Organizations need IT to step up IT leaders are no longer being evaluated solely on their ability to manage the IT estate. Increasingly they are also being graded on their impact on business metrics such as revenue and shareholder value. The Pacesetter teams in our study are already serving as strategic partners for CXOs. IT as performance driver Companies are transforming IT into a hybrid cost/revenue center to advance business goals such as growth and efficiency. The largest companies have the most ambitious plans. Two-thirds say they’ll be operating hybrid IT functions in the next two years. IT leaders need new skills To weather the storm, they’ll need stronger business acumen and sharper interpersonal abilities. Pacesetters are already leading from the front as cultural change agents. TOP TAKEAWAYS AN INNOVAT ION ROADMAP FOR I T THE NEW IT LEADERSH IP AGENDA THE NEW REMIT AND ROLE FOR IT AN INNOVAT ION ROADMAP FOR I T © 2024 ServiceNow, Inc. All Rights Reserved. 6 46% 48% 50% 51% 52% 54% 59% 59% 62% 67% Business growth and shareholder value Drive value and ROI from technology investments Workflow digitization and automation Ethics and governance of AI and emerging technologies Customer and employee experience Talent management and skills development Digital transformation Change management Cost management and profitability Strategy and vision I am more focused on … AS BUSINESS CHANGES, SO DOES ITS LEADERSHIP Changing role of IT leaders With technology now at the center of business strategy, all IT leaders' roles and responsibilities are becoming more collaborative and centered on maximizing ROI from AI. More than six out of 10 tech execs say they are now active partners with the C-suite in formulating business strategy and change management. Further, almost two-thirds of those surveyed say they are more focused on cost management and profitability than they were in the past, more than half are engaged in talent management at their companies, and almost half say they are focused on increasing growth and shareholder value. Slightly more than that are increasingly focused on the responsible use and rollout of AI and other emerging technologies. AN INNOVAT ION ROADMAP FOR I T THE NEW REMIT AND ROLE FOR I T Q15: How is your role changing at your organization? © 2024 ServiceNow, Inc. All Rights Reserved. 7 BUSINESS TRANSFORMATION IS A TEAM SPORT Which executives do IT leaders work with most? To reinvent their businesses for a digital-first world, all IT leaders are working more closely with their C-level colleagues across the enterprise. That’s a growing trend: Over the next two years, 70% of those surveyed say they will work more closely with their CEOs, up from 59% now. As their business roles expand, IT leaders will collaborate with a diverse set of leaders. Over the next two years, for example, half of IT execs surveyed predict they’ll work more closely with the CHRO to build better employee experiences and boost productivity using AI and related tools. AN INNOVAT ION ROADMAP FOR I T TH E NEW REM IT AND RO LE FOR I T Q12: With which senior executives do you work most frequently today? With which will you work more frequently over the next two years? 60% 59% 50% 48% 42% 33% 65% 70% 58% 67% 58% 51% Chief Transformation Officer Chief Executive Officer Chief Innovation Officer Chief Customer Officer Chief Operating Officer Chief Human Resources Officer Now In next two years © 2024 ServiceNow, Inc. All Rights Reserved. 8 Technology has moved from an enabler to a core component of the business proposition. This includes the nature, shape, and size of services that we deliver, the cost and capabilities that we require to do it, and the priorities from a business perspective rather than from a technology perspective. It’s about envisioning change, leading change, and understanding the impact of change across the business. — Sam Sahana, chief digital information officer, Walgreens Boots Alliance © 2024 ServiceNow, Inc. All Rights Reserved. 9 MEASURING IT EXECS ON A BROAD RANGE OF METRICS As IT leadership roles expand, their performance metrics are evolving as well. IT leaders are now measured on a range of technology and business KPIs. Given their central role in business transformation, almost two-thirds are measured based on their organization’s revenue and cost performance. AN INNOVAT ION ROADMAP FOR I T TH E NEW REM IT AND RO LE FOR I T We have established metrics to gauge the success of IT initiatives and the value they contribute to our overall functioning. This empowers us to make informed decisions backed by data, drive continuous improvement, and justify forthcoming IT investments. — IT leader, Japan, manufacturing How is performance measured? 47% 51% 56% 56% 57% 65% 75% 87% Vendor management, such as effectiveness of vendor relationships and contract negotiations Customer-centric, such as Net Promoter Score or other CX metrics Innovation, such as number of new technology initiatives and projects Financial, such as IT budget variance or ROI of technology investments IT employee management, such as engagement/satisfaction/retention Business-related, such as impact on overall revenue, costs, and strategy alignment Cybersecurity, such as number of breaches and incident response time Operational, such as IT project delivery success or system uptime/availability Q16: Which types of metrics are used to assess your performance at your organization? © 2024 ServiceNow, Inc. All Rights Reserved. 10 NEW SKILLS FOR NEW EXPECTATIONS Effective IT leadership takes more than just keeping up with enterprise tech trends. In addition to staying on the cutting edge of cloud computing, IT infrastructure, cybersecurity, and AI, IT leaders must be fluent in project management and in softer skills such as leadership, change management, and interpersonal collaboration. AN INNOVAT ION ROADMAP FOR I T TH E NEW REM IT AND RO LE FOR I T The IT department is currently transitioning to a digital platform. This transformation enables quick adaptation to changing technological environments and helps maintain competitiveness. — Executive at a pacesetting French financial services company Q17: Which of the following technical and non-technical skills and knowledge areas will be most important for IT staff generally to succeed over the next two years? Most important skills for IT leaders over next two years 37% 38% 41% 42% 43% 45% 45% 46% 82% Strategic planning Business knowledge/entrepreneurial mindset Analytical/critical thinking skills Collaborative, interpersonal skills Leadership and communication skills Innovative thinking Change management Talent management and development Project management 36% 41% 43% 45% 49% 51% 56% 57% 68% IT modernization and emerging technologies Software development IT governance and compliance Data management and analytics Agile working skills AI expertise and skills Cybersecurity IT infrastructure and architecture Cloud computing Technical skills Non-technical skills