Who's on First

IT’s Budget Confusion: Who’s On First?

Who's on FirstIT budgets didn’t exist back in 1938 when Abbott & Costello’s classic baseball comedy sketch, “Who’s On First”, was first broadcast (on radio), but today’s organizations increasingly need a lineup card to figure out who’s who, and what’s what. Between the geeks — i.e. CIOs, CTOs, CSOs, CDOs — and beeks (business execs) – i.e. CEOs, CFOs, COOs and CMOs (as well as LOBs) — technology budgets have become the new Tower of Babel, with nobody speaking the same language.

First, the good news. Gartner says IT spending will increase 4.1% this year to $3.8 trillion, with telecom services accounting for the lion’s share, $1.688 trillion, and data center systems on the hook for $146 billion. The bad news is that CIOs are in the process of losing control of those budgets. Gartner predicts that by 2017 the CMO will spend more on IT than the CIO, while IDC expects that line of business executives will control 40% of IT spending by 2016.

The CIO’s position is becoming even more complex with the emergence of a new c-level executive, the Chief Digital Officer. Gartner predicts that 25% of companies will have a CDO in two years, and 20% of CIOs have already taken on digital officer duties. According to GigaOm analyst Stowe Boyd, the CIO, and possibly even the CMO, will be working for the CDO.

Why? “The inexorable transition from a performance-based IT strategy — where companies had an incentive to manage their own hardware and software, to get the biggest bang for the buck — has been inverted by the quantum shift to cloud computing, and the companies can’t really keep up with Amazon and other ‘cloud center’ innovators’ capabilities in virtualization and power efficiency. The old data center is being dismantled. Likewise, the opportunities for cost savings and increased mobility around BYOD is also decreasing the central role of IT,” says Boyd.

Its whole new digital ball game, said Mark McDonald, group vice president, and Gartner Fellow. “Digital technologies provide a platform to achieve results, but only if CIOs adopt new roles and behaviors to find digital value.” CIOs require a new agenda but in a world of change, “it is concerning that around half of CIOs surveyed do not see IT’s enterprise role changing over the next three years.”

Gartner said CIO roles have been changing, with 67% having significant leadership responsibilities outside of IT. “IT cannot expect to secure additional funding without assuming new responsibilities or producing new results,” said Dave Aron, vice president, and Gartner Fellow. “Reacting to limited budgets by restructuring costs, outsourcing and doing more with less made sense from 2002 to 2011, when the supply of innovative technologies was scarce. Adapting to, and leading, in the digital world requires doing things differently, yet in ways consistent with the demands of digital technologies. CIOs need to make the case that mainstream emerging mobile, big data, social and cloud technologies justify revisiting IT budget and investment levels.”

McDonald has also said not all CDOs are the same, nor are they created equal, and he has identified four types that address two main criteria, Revenue/Policy, and Line/Staff. Regardless of what type of CDO emerges — or doesn’t — organizations will have to learn to communicate better, or else.

“We must, indeed, all hang together or, most assuredly, we shall all hang separately.” — Ben Franklin.

Image credit: Wikimedia Commons