Managing technology providers to meet business initiatives: A CIO guide
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CIOs have been hearing a drumbeat of public statements about how tech spending is shifting from their control to that of business units, especially marketing. In fact, Forrester Research's Forrsights Business Decision-Makers Survey data indicates that business executives are spending their own budgets on hiring dedicated IT staff, acquiring PC and smartphone hardware, and building mobile applications.
However, that doesn't mean CIOs are losing overall control of the technology budget. The reality is that CIOs will remain very much central to business and government technology budgets for three key reasons.
Reason #1: CMOs don't want to go it alone
While many chief marketing officers and marketing departments may say they act alone in identifying and buying the technology they need to support their marketing strategy, a growing proportion recognize that they need to work in partnership with their tech management colleagues.
Indeed, data from Forrester's most recent US Marketing And IT Alignment Online Survey indicated that 51% of marketing leaders surveyed said they agreed or strongly agreed with the statement "Marketing and IT have shared ownership/responsibility for marketing technology projects." While this was just barely a majority of marketing leaders, this proportion was up sharply from the 21% of marketing leaders in 2011 who voiced these opinions.
Similarly, the percentage of marketing leaders who agreed or strongly agreed with the statement "Marketing and IT select and deploy technologies jointly" rose from 21% in 2011 to 43% in 2013 -- not yet a majority but still almost double the 25% of marketing leaders who disagree or strongly disagreed with that statements. In both cases, a sizeable majority of tech management leaders agreed or strongly agreed with these statements.
Reason #2: Marketing tech spending is a growing, but still small, part of tech budgets
What companies spend on marketing is a fraction of their total expenditures, so it is not surprising that marketing-related tech spending is also just a small fraction of total technology spending. The Forrsights Budget And Priorities Survey, Q4 2013, shows that on average only 31% of total tech budget spending went for new projects in 2013; and of the new project spending, around 15% of new tech initiatives and projects were aimed at sell-side business operations to improve sales, marketing and customer service processes -- areas near and dear to the marketing department. Fifteen percent of 31% equals 5% of total U.S. technology budgets. Looking more closely at software spending specifically, marketing-related spending represented 13% of all software spending and 12% of all tech services spending in 2013, although these shares are rising steadily.
Reason #3: Spending control filters push tech purchases back to the CIO organization
When someone in a business unit buys a piece of software or a set of services, he or she may think that such a purchase decision is the end of the story. But it is not so.
Large, sophisticated companies operate with a formal set of filters and controls around who can purchase what and how it is accounted for. Chief financial officers strive to make sure thatthese filters and controls work in order to be certain that financial reports are accurate and useful. Smaller companies may not have the full range of spending control systems, but they often have informal ways of accomplishing the same goal. While these spending controls are not perfect and can allow quite a bit of tech spending outside the direct control of the CIO's department, they do tend to act as filters that take tech purchases and channel them back to the CIO organization's budget.
About the author
Andrew Bartels is a principal analyst at Forrester Research. His research focuses on the long-term business impact of information technology.
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Andrew Bartels asks:
Is your CMO among the 51% who say they would rather work with the CIO than go it alone on technology spending?
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