Will The CIO Still Have Control Over IT Budget?

by CXOtoday News Desk    Feb 11, 2014

IT budget

While there’s a lot of skepticism on whether the CIO has and will continue to have control over the corporate IT budget, a new Forrester Research study reveals that in most large enterprises, the CIO still has the final word when it comes to IT spending in the current landscape. However, the study observes that over time, this may witness a gradual shift and the CIO will work more closely with business units on buying decisions.

A gradual shift

The study, which mainly focused on US-based CIOs, notes that currently nine out of ten new technology purchases are done by and implemented by the CIO and his team, of course with support from business units. In some cases, the business unit chose the technology but it was managed and implemented by the CIO and his IT team.

However, going forward, CIOs may not have the final say in tech budgets, says Forrester. With the emergence of new technologies such as Cloud, mobile and big data, there will be a tech spending shift from the CIO’s department to the business units. According to the report, Business units’ share of new technology spending went up from 2010 to 2012, fueled by purchases of smartphones and tablets as well as increased spend on cloud-based software and services.

The ideal tech-buying process will be one in which the business and the CIO’s team work together to identify a need, find and fund a solution, choose the right vendor or vendors, implement it, and manage it, Forrester VP and principal analyst Andrew Bartels tells The WSJ Blog.

However, Bartels believe that although control over tech spending will shift slightly away from CIOs, they shouldn’t be alarmed. “The fact that business users are taking the lead in identifying opportunities to apply technology solutions to business problems is a good thing, not something to be deplored,” he says.

A Collaborative approach

The situation clearly calls for a collaborative approach, says Forrester and recommends that CIOs cultivate a strong relationship with their business peers, so that they will come to them for guidance in choosing the right vendor, negotiating price, as well as for implementation assistance with appropriate security, data integration and management.

It should happen such that a business leader picks technology and solicits IT’s help in figuring out how to implement it. In that case, it doesn’t matter who purchased the technology but this way the CIO can continue to assume ownership. “Once IT gets involved, it can take over and manages the vendor relationship and solution,” says Bartels.

Read: CFO, CIO together should decide IT budgets

The Study points out that CIO’s role will also remain strong when it comes to new tech replacements for existing solutions. For example, a business wants to replace traditional, on-premises customer management software with new cloud software. In these situations, where complex tech processes and expertise are involved, such as discarding duplicate data from the old system and feeding it into the new system, the CIOs role will continue to be paramount.