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Don't worry CIOs: You still control tech spending

Don't worry CIOs: You still control tech spending

In the digital era, business executives are becoming more involved in acquiring corporate technologies. But the CIO still largely has the final say for most technology purchasing decisions.

CIOs still control the purse strings for most corporate IT, owing to the complexity of broad technology implementations. But other business executives play an ever-larger role in acquiring digital tools, underscoring technology’s growing importance, according to new reports from Forrester Research and CompTIA.

To what degree business executives buy technology or influence tech purchases is tough to pin down. What is certain, however, is that it's a natural and necessary shift at a time when companies are increasing investments in business technology intended to win, serve and retain customers, according to Forrester Research analyst Andrew Bartels, lead author of the report, “C-Suite Tech Purchasing Patterns."

Over the past decade, CIOs have anxiously watched as leaders in marketing, sales, and HR purchase cloud software without consulting them. The concerns are valid; technology that hasn't been properly vetted or tested poses cybersecurity threats or integration challenges, forcing CIOs to step in to fix problems or assist with implementation, Bartels tells CIO.com.

CIOs still own the MOOSE

Bartels says the degree to which business executives are putting CIOs in such precarious positions is up for debate because surveys don't paint the whole picture. In short, the statistics vary based on who is telling the tale, with respondents excluding some forms of technology from their consideration.

For example, U.S. business executives Forrester surveyed in 2016 claimed that 32 percent of their total technology purchases were made outside the purview of IT. But Bartels says this can't be accurate because he estimates that 70 percent of all technology spending is on MOOSE, or maintenance fees, outsourcing agreements, telecommunications services, operations and maintenance staff, as well as associated servers, storage, PCs and other hardware equipment IT typically controls. The remaining 30 percent of U.S. tech spending goes to new projects, where business involvement is greatest.

There's little question that the rising importance of digital technologies has required business executives to partner closely with and inform purchasing decisions. But Bartels says just 5 percent of all new tech purchases will be fully controlled by business by 2018. One reason: acquiring technologies to run in a corporate environment is a complex, sometimes messy enterprise that often requires multiple stakeholders at each stage.

Tech Purchasing Patterns Forrester Research

"The growing tech-savviness of business leaders and the wider availability of cloud solutions does mean that business leaders are playing a bigger role in the front end of this process," Bartels says. But the persistence of licensed software, the growing adoption of cloud as a replacement for licensed software, and challenges of implementing and optimizing solutions mean that CIOs and tech management teams still play a dominant role in overall tech purchases. Moreover, CIOs are procuring software-as-a-service (SaaS) solutions — the top shadow IT target for business leaders — more than ever as it allows them to meet business requirements. “That becomes a mechanism to manage demand,” Bartels says.

CompTIA just announced similar findings from a survey of 675 U.S. businesses in its report, “Considering the New IT Buyer."

Carolyn April, Comp TIA's senior director of industry analysis, found that 45 percent of respondents said that ideas about technology come from different areas of the organization and 36 percent said more executives are involved in the decision making. In addition, 52 percent of those polled used business unit budget to pay for technology purchases in the last year. April said business heads tend to buy cloud software that they can provision quickly within their department.

CMOs like to buy their own tech

CFOs, COOs, supply chain heads, and heads of customer service are more likely to partner with IT to procure the technologies they require — even SaaS or other cloud solutions.

And although CMOs — long a chief perpetrator of shadow IT — will assume control of 36 percent of all marketing technology-related new project spending by 2018, Bartels says that many are working more closely with their CIOs than they have in the past. A chief reason for this is that as CMOs assume more customer acquisition duties, they find that managing the customer lifecycle requires the CIO's technical expertise in managing and aligning business data.

“Their responsibilities start to align more closely with the CIO because they need to link the data from marketing, sales and customer service to give a more holistic view,” Bartels says. “And they need the CIO as a partner because they know they can’t do it themselves.”

Such a partnership is in full force at companies such as Clorox, where CMO Eric Reynolds and CIO Manjit Singh talk daily to keep fingers on the pulse of the company's customers.

"It’s about giving the right message to the right person at the right time,” Reynolds told CIO.com. “That transformation requires an enormous rethinking of data and technology and also in how we approach marketing.”

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