No matter what way you look at it, IT departments and Chief Information Officers (CIOs) still control technology purchasing decisions in most businesses. Despite evidence to suggest that the business side is increasingly involved in IT decision making, the buck generally stops at the CIOs desk.
According to new Forrester research, business-controlled technology decisions — meaning business executives choose, implement and run applications without CIO involvement — was as low as 6.3 percent in 2013, despite repeated claims over the past year by CIOs that they are losing control of IT budgets.
Can't We Just Get Along?
In an ideal world, it shouldn’t matter and there should be no conflict between IT departments and business leaders. The reality is still somewhat different. The research, Understanding Shifting Technology Acquisition Patterns, is not an attempt to add fuel to the fire created by an often strained relationship, but simply an attempt to understand what is happening.
In research published by IBM earlier this month, "pacesetting" enterprises in the SaaS space – those that had the highest levels of SaaS adoption – were also enterprises where IT and business had reached a happy balance with both sides of the business working together.
Unfortunately, in the overall group of SaaS adopters, this was the smallest group of all at only 19 percent of those surveyed.
For this study, carried out by Andrew Bartels, the reality is that cooperation appears to be the exception rather than the norm. The research was based on data from Forester’s Tech Industry economics database on the distribution of US spending by type of IT goods and services.
Bartels set himself the task of trying to estimate how much control of tech spending has moved away from the CIO and moved into the hands of line- of-business managers by looking at new technology purchases in the US between 2009 and 2015.
The conclusion, he said, was that business controlled 6.2 percent of spending in 2013. And by 2015, things won’t get much better, with just 7.2 percent of spending executed by business units without CIO involvement.
What's the problem with this? Well, it's business users that will have to use the technology once it has been deployed. At that point, IT departments often step out of the equation unless something needs to be changed, or something goes wrong.
Tech Spending Balance
However, digging deeper, the picture is slightly more complicated. To say CIO’s control tech spending is a generalization that doesn’t entirely hold up.
Just like SaaS spending, the perfect situation is one where both tech and business works together for the good of the enterprise. In such a case, either side of the business identifies a problem, and both help find a solution or vendor that can resolve that problem. However, only about one third of all purchases will fit that profile by 2015.
In fact, in almost half of purchases, CIOs are making the decisions, even if that percentage is expected to fall from 55 to 47 percent over the same period. Another 10 percent will be new technology spending that starts with the business, but then pulls in the IT department for implementation and management.
It is not as straight forward as this with six different steps in the process of buying and owning technology. Those steps include:
- Identifying need
- Prioritize and fund project
- Identify and choose vendors
- Implement solutions
- Manage vendor and solution
- Renew or replace solution
By analyzing the degree of involvement that each part of the enterprise has in each of these stages, Bartels has managed to identify five different models for purchasing IT products.
If business units are heavily involved in the initial stages here, it is logical they would have little involvement in the latter stages like upgrades,or replacements, or even in the middle stages as applications and deployments need to be maintained.
5 Tech purchasing Models
Before looking at these five models, for clarity it is important to keep in mind that Bartels has only used spending on new technology. He points out that if all technology was considered, the figure for IT and CIO involvement would be much higher, firstly because of maintenance and end-of-life considerations and, secondly, because in the past IT departments and CIOs had almost complete control of technology decisions. The five models he has identified are:
1. Business owns all steps
This was by far, the least populated category of all, and includes subscription revenues for software-as-a-service (SaaS) products, for customer relationship management, marketing automation and collaboration software, which is being bought at departmental, or business unit.
While this peaked between 2010 to 2012 as business rushed to invest in mobile devices, it will have leveled off by 2015. Direct business investment in SaaS, though, is still on the rise.
2. Business starts, CIOs run
This is about 10 percent of all purchases: business initiates the process, and CIOs take over. It usually begins by businesses identifying the need and choosing the vendor, but integration with legacy systems has to be done by IT. Many of the SaaS technologies, as well as CRM or collaboration technologies fall into this category.
3. Business and CIO together
If a third of all purchases are made like this, the fact that it is only a third is less than ideal as the best business results have been shown to come from enterprises where both sides of the enterprise work cooperatively. Enlightened CIOs, Bartels said, have been encouraging the development of cross-functional teams that can identify business needs, outline the scope of projects, and finally deploy the technology. The percentage here will rise from 34 percent to 36 percent by 2015.
4. IT buying for business
This category of purchasing will fall from 27 percent in 2010 to 25 percent in 2015. These are what Bartels described as classic IT projects in which the CIO identifies a technology to resolve a business issue and includes business representatives on the implementation team. This is still the primary kind of purchasing for big IT on-premises applications.
5. CIO owns projects
This has fallen from 27 percent to 22 percent with some of these projects purely IT orientated. This includes servers, storage, communications equipment, operating software, app servers and integration technologies among others. The CIO will remain dominant here.
If CIOs are losing some of their control over purchases, it is clear that they are still the dominant force when it comes to IT. While there are some low-lying purchases that can be made by business on its own around the device or SaaS space, the CIO will ultimately be tasked with integrating them.
There is no point, for example, in developing business-based bring your own device (BYOD) strategies, if IT is not happy that the access they are offering users to enterprise systems are secure and will not result in the loss of data, or confidentially.
By the same token, SaaS technologies are easy to order, but less easy to integrate into an enterprise IT infrastructure and there is no point in having a CRM system, for example, that cannot access enterprise information.
The ideal, obviously, is for CIOs to develop a close working relationship with those who are working on the business side of the enterprise. In such a case, business manager will be able to sit down with IT, discuss its needs with IT, which will also be able to outline its perspective and issues with particular kind of deployments.
The fact that only a third of enterprises in the US have developed this environment means that there is a large number of enterprises that haven’t. C-Suite leaders also need to be involved at this level, particularly where a good working relationship has not developed. Developing this relationship should be a key management task for enterprises that want to grow.
Title image by dotshock (Shutterstock).