Research report

Transforming IT Operations

Analytics and automation are fueling an IT operations revolution that’s driving business value. Are you ready?

TABLE OF CONTENTS
For CIOs, a new era of data-driven operations Introducing the IT Operations Readiness Index Operations is becoming a strategic focus To drive customer value, invest in operations The race to preemptive is just beginning
Artificial intelligence plus talent equals success Vendors are a data goldmine Security is the tip of the spear for data-driven operations IoT is the bridge to the business Start your own transformation journey
Your Next Steps in IT Operations Readiness Methodology Acknowledgements About Cisco Related Content

For CIOs, a new era of data-driven operations

When IT operations is fueled by data and empowered by intelligent automation, amazing things happen.

IT leaders can look beyond the rear-view mirror of monthly reports, as their teams move on from manual operational tasks like patching and configuration.

Instead, they can harness the power of Artificial Intelligence (AI) to make decisions based on insight that’s realtime, even predictive. They can use automation to continuously optimize IT infrastructure: effortlessly provisioning and scaling services, assuring compliance, blocking security threats, and monitoring performance.

The end result? Operations is no longer a battle to maintain uptime in the face of growing infrastructure complexity. It becomes an opportunity to anticipate what the business and its customers need, to innovate and deliver faster. In other words, to create value at the speed of change.

It’s an exciting vision—particularly for Chief Information Officers (CIOs) who might feel that operations has traditionally distracted from efforts to innovate and partner with the business. But how do you make that vision real?

Introducing the IT Operations Readiness Index

How real is the vision of data-driven, automated operations? Where are organizations today? And what does it take to get there?

These are questions Cisco set out to answer in the IT Operations Readiness Index, a global research study of more than 1,500 senior IT leaders.

The heart of the IT Operations Readiness Index is a four-step model for IT operations maturity, focused on how organizations handle events they face (see Figure 1).

As organizations advance along this continuum, they use data to look further into the future and continuously optimize their operations.

Take a simple example: a network outage. A reactive organization would have no warning before traffic stopped flowing. Teams of administrators would scramble to get systems back up and running.

A predictive or preemptive organization would detect early indicators of the impending outage in real time (such as a cluster of error messages), diagnose the root cause, apply a fix, and reroute prioritized traffic to maintain service levels.

Potentially, this could occur with no human involvement, as AI finds the patterns and automation executes the responses.

The IT Operations Readiness Index validates the four-step maturity model and identifies the behaviors that set more advanced organizations apart.

IT leaders can use the model to benchmark themselves against their peers and chart a course for change.

Let’s examine the findings.

Operations is becoming a strategic focus

Plenty of initiatives are competing for attention—and budget. IT leaders are recognizing that transforming operations is a priority.

IT operations infamously consumes the lion’s share of IT budget. According to ZK Research, 78 percent is spent on “running the business,” leaving precious little for innovation.

The accepted narrative is that operations budgets should be cut to free resources for transformation.

Instead, our data suggests the answer is to invest in transforming operations itself.

On average, respondents have allocated 28 percent of their current IT budget to operational initiatives focused on IT optimization and issue remediation (see Figure 2).

That’s already a significant share—but more than two thirds expect to increase that spend in the next 12 months.

Where is this money going? Respondents told us they had big plans: to gather operations data from more areas of their infrastructure (which in many cases involves hardware refresh or implementing a collector service); to perform more analytics (with associated costs for tooling, AI training, services, and people), and to extend automation into more processes and infrastructure areas.

[Relevant content: The Busy Executive’s Guide to New Data Tools]

To drive customer value, invest in operations

Organizations at all levels of maturity reported benefits from investing in operations. These benefits go beyond traditional operations KPIs, right through to the customer.

If 28 percent of IT budgets (and growing) are going toward transforming operations, is this investment paying off? In short, yes.

Our data shows that the vast majority of organizations report a wide range of benefits as a direct result of their investment in operations throughout the past year.

Respondents see benefits (often “significant” benefits) in external customer experience, innovation, and responsiveness — outcomes that any transformational CIO would seek. Predictive and preemptive organizations reported even stronger benefits.

Operations data delivers value to the business

The positive impact of IT operations on the business goes beyond simply delivering infrastructure well (for example, better system availability would tend to make for happier customers).

It also comes from the business making direct use of IT operations data.

Already 40 percent of respondents say their organizations rely “heavily” on IT operations data to make business decisions.

The potential use cases for applying operational data to business decisions are endless, everything from optimizing a retail store layout by analyzing Wi-Fi traffic to improving team productivity by analyzing the adoption and utilization of collaboration tools.

Ambitious IT leaders will use operational data to forge closer relationships with their business stakeholders.

The race to preemptive is just beginning

Organizations are spread across the maturity spectrum. And relatively few have attained preemptive operations. But the opportunity is huge.

Only 14 percent of our respondents say they have achieved consistently preemptive operations today.

Looking ahead two years, we see a very different picture. Two-thirds of organizations expect to attain predictive or preemptive capabilities, with only seven percent left at reactive.

As most IT leaders would admit, IT transformation does not always progress smoothly. And realizing these ambitions may prove challenging. But there’s a clear message that the clock is ticking.

“Organizations can’t stay reactive. Very quickly, these businesses will fall behind and many will go out of business.”

Zeus Kerravala, ZK Research

“Preemptive” doesn’t mean “perfect”

Our survey looked in detail at the methods and capabilities our respondents use to run their infrastructures.

For example, do they collect infrastructure telemetry data periodically, or gain better insight by streaming it in real time?

While preemptive organizations are significantly ahead in adopting such cutting-edge capabilities as continuous analytics and process orchestration, Figure 5 shows that these practices are far from universal even in this elite group.

Even if an organization has attained preemptive ability, they still have many opportunities to advance further.

All organizations should create a culture of continuous learning and improvement to stay ahead of the curve.

Artificial intelligence plus talent equals success

The combination of human talent and leadership with AI will shape the future of IT operations.

On the leadership front, 70 percent of respondents say they have a Chief Data Officer (CDO) in place.

The CDO often has a broad role encompassing privacy and compliance, customer data, and intellectual property.

But our research shows that CDOs can play a valuable role liaising between the business and IT to ensure that the organization gets full value from operational data.

Organizations with a CDO say they have allocated a greater percentage of IT budget to operational initiatives (31 percent vs 15 percent for those who have no plans to appoint a CDO).

A CDO can also partner with the CIO to help bring new roles and disciplines to IT teams. For example, organizations with a CDO employed on average 55 data scientists; it fell to 36 in those with no plans to hire a CDO.

As new technologies continue to disrupt familiar ways of working, these evolving roles will be critical to the future of IT operations.

AI is critical for turning data into value

Forty-two percent of our respondents believe that artificial intelligence (AI) will be the biggest disruption to their automated operations in the future (see Figure 6).

Already, 51 percent use AI for automation to some degree, with another 38 percent planning to do so in the next 12 months. Organizations with a CDO in place are more likely to use AI.

With the speed, complexity, and sheer size of the data sets being gathered from IT infrastructures, static business rules and manual data processing will be unworkable. AI is the answer. Cognitive systems see patterns in data that humans cannot, at speed, and economically at scale. The insights and recommendations from AI systems can inform human decision-making, or AI systems can be trusted to make autonomous decisions.

The use cases are innumerable. For example, service providers can use predictive models built on AI and machine learning (ML) not just to track customer churn rates on aggregate, but to monitor how micro- segments of customers use different services, and adapt everything from traffic prioritization to marketing messages to maximize retention and lifetime value for each individual.

Vendors are a data goldmine

More advanced organizations turn to vendors to assist with all stages of the operations lifecycle. But the real value lies in the data they hold.

As you’d expect, almost all organizations use outside vendors in their handling of operational data, to out-task particular processes such as data aggregation or alerts; or to provide analytics and automation tools, increasingly with AI/ML capabilities baked into the service.

Preemptive organizations make more extensive use of vendors across the board (see Figure 7), and all organizations say they plan to increase the range of activities they use vendors for.

Our data suggests that organizations will increasingly look to vendors as a source of data sets to supplement internal telemetry. AI and machine learning are as good as the data that feeds the algorithms, and vendors offer access to global data sets.

For instance, internal network monitoring will measure your network’s performance, but only a vendor with performance data on thousands of networks can place your own success in context. These vast data sets also enable AI engines to build accurate, predictive models.

 

84%

of our respondents said it’s imperative to have access to data beyond what is collected internally.

Security is the tip of the spear for data-driven operations

Of all the infrastructure areas we looked at, security was the most data-driven across the board.

As Figure 8 shows, more organizations collect operational data from their security infrastructure, analyze that data, and automate security than any other infrastructure area.

Security’s lead is partly explained by the urgent need for investments in compliance. But it’s also due to the business impact that analytics and automation have in security. After decades of education, business leaders now appreciate that fast, accurate responses to security threats protect customer relations and the share price.

Already, the use of AI is becoming common in security for analysis of risk and compliance exposure. Vendors play a central role as providers of threat intelligence, especially because specialist cybersecurity talent is in short supply.

In all these ways, security gives CIOs a glimpse into where their entire infrastructure is heading. Savvy CIOs can use security to prove the value of investing in preemptive operations in other infrastructure areas.

IoT is the bridge to the business

The Internet of Things gives CIOs an opportunity to show value and get closer to the business.

While traditional IT infrastructure is firmly in the “back room,” operations technologies (OT) like IoT offer a tighter collaboration with the business.

In most cases, IoT devices are considered business assets, and the operational data they produce is vital to business operations.

Preemptive organizations see this. Seventy-four percent gather operational data from IoT, compared to 59 percent of reactive organizations.

79%

of preemptive organizations say that Internet of Things technologies are critical to running their IT infrastructure more efficiently.

The nature of IoT deployments clearly exposes the need for new approaches to infrastructure management:

►  IoT devices may be deployed in the millions—automation is the only way to manage them effectively.

►  Operational problems may have serious consequences—there’s far greater demand for real-time monitoring.

►  There’s no guarantee of a constant connection between HQ and remote IoT devices—this is driving investment in edge and fog analytics.

CIOs should use these operational realities to drive investment in transforming operation.

[Related research on key steps to realizing IoT value]

Start your own transformation journey

IT operations are a potential competitive differentiator.

With the right data, key insights mined from them, and the ability to automate operational tasks across your infrastructure, you can deliver a strategically superior service to your business.

The IT Operations Readiness Index outlines four stages of maturity that organizations pass through. We’ve created a five-minute online self-assessment tool that you can complete to map yourself against the model, and benchmark your maturity score against your peer groups.

 

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Your Next Steps in IT Operations Readiness

Wherever you are today, getting to preemptive nirvana requires comprehensive approaches across policy, data, and automation. Here are four actions to focus on first:

  1. Build comprehensive data-collection policies with real-time, event-based collection for training AI systems to accurately predict outages and manage systems security and health.
  2. Supplement internal data with external data to enhance predictive power and to increase the accuracy of predictive algorithms. For example, use social media chatter about a sports event combined with geolocation data to better predict peak network traffic and preempt an outage.
  3. Fully automate the low-risk, high-volume processes. However, for high-risk, high-impact decisions, let AI recommend the action and have a human operator make the final decision.
  4. Finally, make diversity and inclusion a core value and design principle when recruiting the teams responsible for building AI systems. This ensures that systems and predictions are not biased.

Methodology

The IT Operations Readiness Index Survey

Conducted in June of 2018, thirty-eight percent of our respondents identified themselves as a C-level IT decision-maker, such as a CIO, CTO or CISO. Each had strategic responsibility for relevant areas of IT operations, across multiple infrastructure areas. Our respondents represented a balanced distribution of public- and private-sector industries.

We surveyed organizations ranging from 500 employees to 50,000+ employees.

Acknowledgements

Connected Futures, Executive Insights by Cisco

Cisco’s Thought Leadership Team

Strategic Direction
Eran Levy, Project Director

Production and Marketing
Jessica Hill, Program Manager
Riley Mills, Marketing
Luisa Rebolini, Marketing

Research
Ari Kapur, Research Manager

Editorial
Stefanie McCann, Contributor
Kevin Delaney, Editor

Cisco Contributors

Report
Ant Newman, Analyst and Report Author

Project Strategy
Jaishree Subramania, Strategic Direction
Rajat Mishra, Strategic Direction
Rahul Singh, Research Guidance
Joseph Bradley, Strategic Direction

Marketing
Faryn Davis, Project Manager

 

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