As CMOs Grab IT Budget From CIOs, Cloud CapEx and OpEx Shift

If analysts are correct, and the CMO eventually wrests control of the IT budget from the CIO, then spending on cloud computing will get a lot less predictable and a lot more complicated.

By Bernard Golden
Mon, January 28, 2013

CIO — Gartner made a big splash late last year with its prediction that by 2017 the CMO will spend more on IT than the CIO. Likewise, IDC predicts that what it terms "line of business executives" will control 40 percent of IT spending by 2016.

This generated a lot of discussion, as in this example from Gigaom. Most of the discussion focused on predictable topics: The relationship between CIOs and CMO (not very good), what type of apps CMOs focus on (very interesting, and something I'll address below) and how vendors need to change the way they go to market when selling to a CMO (everyone thinks it will be different, but nobody's sure exactly how).

(I think you can generalize from CMO to the line of business executive, or LOB, and take as a given that they have similar goals and objectives. In the discussion below, when you read CMO, think CMO/LOB.)

It's interesting that nobody seemed to comment on the type of IT spending that this shift portends. It was, in effect, as if everyone assumed the pie, though cut differently, but it would be the same kind of pie.

Analysis: Does the Rise of the CMO Threaten CIOs?

This is dead wrong. Everyone needs to rethink their assumptions about IT budgets when considering how they're spent by CIOs and CMOs. It is crucial to understand what this shift means for the relationship between IT CapEx and OpEx, and it's especially important to understand what the difference this means regarding the metrics the two roles (CIO and CMO) are measured by: Total cost of ownership (TCO) and return on investment (ROI).

What should we think about this prediction that CMOs will come to control more than half of IT budget? There are several obvious implications—and, I should note, they are true whether CMOs control 25 percent, 50 percent or even 75 percent of the IT budget. It's vital to understand how the dynamics of IT spending are going to change in a world in which CMOs control a significant portion of the IT budget.

Less Money for the CIO Means Less Control, Clout

First, and most obviously, if you're a CIO who controls less of the overall budget, you have less clout within and outside the company. To vendors, you are more or less interesting based on how much you might spend. If you have less money, you're less interesting.

One can predict that CIOs, in particular, and IT organizations, in general, will move to an influencer role—meaning they'll affect the evaluation but won't make the decision, or hold the purse strings. A corollary is that CIOs and IT organization personnel will undergo an uncomfortable learning process as they shift from frontline decision-maker to part of the supporting cast.

The shift of attention to CMOs will cause change for vendors as well. Vendors can expect more emphasis on business outcomes and benefits, with less focus on standards, functionality and feature checklists.

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