That's according to second annual Optimal Services Study from Logicalis.
The study surveyed 177 CIOs across 24 countries, spanning Europe, North America, Latin America and Asia-Pacific.
It also found CIOs are now seeking to reshape IT departments as internal service providers as they attempt to deliver a service-defined transformation.
The study found 57 per cent of CIOs believed line of business (LOB) colleagues have gained more power over the last 12 months, while (28 per cent) admit that LOB colleagues already hold the balance of power in ICT decision-making, taking 50 per cent of decisions or more.
Two-thirds (66 per cent) report that the IT department is responsible for managing LOB purchased technologies and services and 64 per cent believe the trend will continue over the next three to five years, compared with 44 per cent who said the same 12 months ago.
Logicalis president and chief operating officer, Mark Rogers, said helping organisations to quickly respond to on-going business transformation requirements was now the CIO's top priority.
"Most importantly, the survey enables us to take a new look at the IT value decision making chain, and I think we can now confidentially position Shadow-IT as a term used to describe the first evolution of Line of Business influence," he said.
"As we now enter the era of the business taking the prime role in defining IT requirements and outcomes, we cannot continue to describe this new dynamic as something subversive, but as the new way organisations will define and procure their IT needs.
He said this meant that customers would require help to become more service defined.
"We will not only have to help the CIO transition their organisations, but crucially we have to better capture and deliver this multi-sourced business driven agenda, but also more clearly demonstrate how new technologies or services translate into tangible business improvements and outcomes," he said.
More than than half (57 per cent) of CIOs agree that, by 2016, 80 per cent of IT budgets will be based on providing service integration for a broad portfolio of internally and externally sources IT and business services.
Further, 76 per cent already consider that the IT function in their organisation is services focused rather than technically focused
Almost half (41 per cent) expect to rename the IT department in the next two years, to reflect a service-management role.
According to the report, they will have to recruit specialists with broader, business IT orientated skills.
They must also actively reduce the level of technology their teams maintain in house, and they must succeed where they have so far failed -- in refocusing the CIO role on strategic activities
Just 34 per cent of CIOs cite 'technical skills' as the top priority when recruiting IT staff -- the remaining two thirds instead look first at business skills like communication, service management and business analysis
While 65 per are prepared to pay more for business-orientated IT pros -- 25 per cent expect top pay 5-10 per cent more, and a further 22 per cent expect to pay between 10 per cent and 20 per cent more.
Almost half (47 per cent) want the majority (50 per cent or more) of their IT services to be provided or managed by external service providers, including cloud (IaaS/PaaS & SaaS).
Additionally, 84 per cent of CIOs indicated a desire to spend 50 per cent or more time on strategic initiatives - up from 74 per cent 12 months ago -- though a 55 per cent still currently spend 70 per cent of their time or more on low value, day to day tasks.
IDC associate vice persident, Chris Barnard, said the results confirmed major trends within the industry, with the shift to a new technology platform.
"With the IT function at the heart of business growth and innovation as we move to the Third Platform, it is clear that the CIO and IT organisation will have to adjust as business outcomes become the key metric of ICT projects," he said.
"Discussions need to move from being technology focussed towards supporting business goals by acting as a services broker or provider."