Technology: Are CIO's Destined to Become Technology Accountants?

Last June, a report by Gartner Inc. and the Financial Executives Research Foundation (FERF) reported a shift in the relationship between IT and business operations.  42 percent of IT organizations now report directly to the CFO, and in 45 percent of organizations, the CFO plays the lead role in determining IT investment strategy, and in 26 percent of organization, IT budget decisions are made solely by the CFO.

A parallel report by Liz Herbert, principal analyst at Forrester Research,  found that SaaS and Cloud Computing makes it increasingly easy for non-IT departments to by-pass their IT staff.  On the business side, many departments now directly engage SaaS application services, without any assistance from their internal IT.  Business groups have become the “primary driver” behind the engagement of SaaS applications.  The Forrester report found that 49 percent of SaaS engagements are purchased by line-of-business VP’s and managers.

Gartner predicts that this trend of moving technology decisions out of the hands of IT will only accelerate in 2012.   In 2012, 35 percent of technology expenditures will fall under the management of business units outside of IT.

Daryl Plummer, managing vice president and Gartner fellow, said that “the continued trends toward consumerisation and cloud computing highlight the movement of certain former IT responsibilities into the hands of others.  As users take more control of the devices they will use, business managers are taking more control of the budgets IT organisations have watched shift over the last few years. As the world of IT moves forward, CIOs are finding that they must coordinate their activities in a much wider scope than they once controlled. While this might be a difficult prospect for IT departments, they must now adapt or be swept aside…   CIOs will see some of their current budget simply reallocated to other areas of the business. In other cases, IT projects will be redefined as business projects with line-of-business managers in control.”

Increasingly, the role of IT is becoming one more of coordinator or bean counter rather than implementor.  Plummer said that “what it means is that IT has to change itself.  It has to change itself to become more of a broker of services than just a provider of technology, or even as a technology service provider. Many IT providers think of themselves as service providers to the business, when in fact, 80% of IT budgets go to just keep the lights on… Eight out of 10 dollars spent on IT is ‘dead money,’ because it goes to just keeping the lights on.”