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Technology Spending: Business Units Gaining Greater Control

By Dick Weisinger

Business Units are grabbing bigger shares of business technology spending. Flexera estimates that more than a quarter of technology funding is now controlled by business units. IDC estimates that it higher — more than one half.

Frances Karamouzis, analyst at Gartner, told InformationWeek that “more people are working on certain types of technology initiatives and enabling the enterprise, but quite often they are not reporting to an IT function, either centralized or decentralized. They are reporting to business units. There’s more value happening, greater innovation being created, but it’s not all driven by CIOs or IT leaders. All of these things are not being purchased by someone in IT and all the vendors in the world know that quite well. Every vendor in the world is looking at that target rich environment and not fully tapped market of buyers outside of IT. This leads to some very interesting market dynamics.”

As a result of this move, the source of technology funding is icreasingly being charged as the cost of goods sold (COGS). John-David Lovelock, vice president at Gartner, explained that this approach flips spending “from an overhead expense that is maintained, monitored and sometimes cut, to the thing that drives revenue.”

Cyndi Tackett, VP of Product Marketing at Flexera, told CIODive that “there’s a disconnect between where IT departments spend their budgets and their goals each year. Managing constrained resources relies on collaboration and agility across business units to balance keeping the lights on with investing in innovative solutions. IT has a really hard time describing the return on investment that they get for every dollar spent. In tandem, these factors perpetuate existing silos and make it even harder for IT departments to make the most of their budgets.”

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