Bulk of IT spend tipping away from CIOs
IT departments are now directly responsible for less than 60 per cent of enterprise IT spending, report shows.
Responsibility for IT budgets is slipping away from chief information officers as business units increase their involvement in technology strategy and purchasing decisions.
IT departments are now directly responsible for less than 60 per cent of enterprise IT spending, down from 74 per cent, according to a survey of more than 1400 IT and business decisions makers in the Asia-Pacific region.
''Business leaders focused on business outcomes and innovation directly controlled 33 per cent of enterprise IT spending in 2012,'' the Forrester report says. ''The influence of business leaders on IT spending at organisations across Asia-Pacific is climbing to levels never before seen.''
The erosion of IT's power base has been going on ever since marketing departments began taking an interest in the hosting of their websites. Since then, business units have been increasingly involved in the purchase of customer relationship management and other software, and now cloud computing resources.
The Forrester report notes that many CIOs seemed to be oblivious to the trend. ''Many of the Asia-Pacific CIOs we speak with do not see or accept the growing influence of the business, but the signs are clear.''
It also identifies a large increase in the percentage of IT spending influenced by business leaders, in addition to that directly controlled. On average only 32 per cent of the budget channelled through IT is spent without significant business input, down from 49 per cent in 2010.
''The top reason that business leaders are spending more on technology is because they believe that it's too important for the business not to be involved.''
Forrester advises CIOs to gain visibility into all the IT spending within their organisations and ''create guardrails within which their business leaders can spend on IT more responsibly''.
However, Geoff Lewis, founder and CEO of Australian IT management and consulting services provider ASG Group, said such strategies would not work in the long term and, to survive, CIOs need to take on a new role: adding value to company data.
Lewis said that ASG had recognised some time ago growing dissatisfaction among CEOs and CFOs with their IT departments and had changed its business model to serve CEOs and CFOs directly.
"We started positioning our business to move away from traditional IT outsourcing to one where we provide our solution as a service model. With that there is less need for an IT department because we provide the software as service."
He expected this by-pass IT model to grow and suggested CIOs should recognise that their future lay in managing information, not technology.
"The CIOs' job is definitely going to evolve into being about information. Their title today is a bit of a misnomer. Ninety per cent of them are chief technology officers, they are focused on the technology."
Another survey of 2000 IT leaders in 20 countries by Harvey Nash, a global technology recruiter, has arrived at similar conclusions. In Australia, it found 61 per cent of IT leaders think the role of CIO has become more strategic, but 27 per cent believe they have lost control over some technology assets. While the technology chiefs said their relationship with finance and operations remained very strong, their weakest link was with marketing. Some 43 per cent believed they lacked support from the board to achieve IT vision.
Lewis said it was now much harder for organisations to gain competitive advantage from technology.
"What does differentiate you is how you take value out of your information. For example, a bank has much information about its customers. It can start to analyse that information to create more value. That's where the CIO has got to move to.
"The conversation they should be having with CEOs and CFOs is 'What information do you need to drive this organisation, to make it more profitable?' Some of them can understand what is required and drive that transition, but a lot of them are technology dinosaurs who want to hang on to the management of the technology."
Is control of IT slipping off the hands of IT chiefs? Let us know what you think in the comments.