The CIO role has become a transformational one. Forty-six percent of IT leaders say their work is primarily focused on transforming the business, according to our 2020 State of the CIO survey.\n\nBut the new decade also sees CIOs taking on strategic responsibilities in a wide range of endeavors, requiring them to strike a difficult balance between business innovation and operational excellence. In fact, 58 percent of IT leaders surveyed for the 2020 State of the CIO see their CIO role becoming a business strategist position in the next three to five years.\n\nHow they expect to advance the business and keep IT assets humming can be gleaned in part by where they spend their budget, and this year, IT budgets are increasing, says John McKnight, executive vice president of research and analyst services at Enterprise Strategy Group.\n\n\u201cCIOs tell us that 56 percent of enterprises expect to increase IT spending in 2020,\u201d McKnight says. \u201c[Around] 40 percent will keep their budgets flat and [around] 5 percent plan to cut spending. Overall, we see enterprises expecting modest YoY budget growth from 2019 to 2020 with an estimated mean annual spending change of plus 3.2 percent.\u201d\n\nFor most organizations, cybersecurity is of prominent importance, and that\u2019s where they are focusing significant portions of their IT budgets, he says.\n\n\u201cStrengthening cybersecurity is the No. 1 business initiative that will drive technology spending in 2020,\u201d McKnight says. Other key areas are using data analytics for real-time insights and improving customer experience, he adds. These three trends will have significant impact on CIO leadership in 2020 and beyond.\n\nHere, we take a look at the business priorities driving IT investments this year and discuss with several CIOs the areas they\u2019ll be investing in to bring 2020\u2019s business initiatives to fruition, and where they see other CIOs needing to place their budget bets.\n\nTop 12 IT budget priorities\n\nThe three main business drivers for IT budgets this year are increasing operational efficiency, cited by 37 percent of State of the CIO survey respondents, improving customer experience (35%) and increasing cybersecurity protections (33%).\n\nAs part of ongoing modernization efforts, CIOs are also earmarking IT budget to help transform business processes (30%) and improve employee productivity (21%). CIOs are also taking aim at the bottom line, with 24 percent of CIOs devoting IT spend to improving profitability, 19 percent to increasing topline revenue, and 15 percent to introducing new digital revenue streams.\n\nTo fulfill these mandates, CIOs report the following technology initiatives as driving the most IT investment at their organizations this year:\n\nDoubling down on customers\n\nFor Citrix CIO Meerah Rajavel, 2020 will see a greater need for CIOs to better manage the pressure for increased efficiency, cost reduction and innovation.\n\n\u201cIn my opinion, this is the place IT needs to practice what we preach and leverage modern technologies like AI\/ML, analytics, etc., to automate IT tasks and become a data-driven organization,\u201d she says. \u201cEvery CIO is a P&L owner, and if you run IT like the business with budget as your \u2018L\u2019 and your value contribution to top-line and bottom-line as a \u2018P,\u2019 your discussion with the CEO, CFO, and board will be very different.\u201d\n\nCustomer engagement is a major 2020 priority for Rajavel\u2019s IT department at Citrix.\n\n\u201cAs we move to a SaaS model, my priority is aligning our digital\/IT capabilities to support the transition with greater customer engagement. We also have focused initiatives on operational excellence. As a company, we are focused on helping our customers deliver a superior employee experience that drives engagement and productivity,\u201d she says. \u201cAnd we are doubling down on delivering solutions that enable companies to provide secure and reliable access to the applications and insights their employees need and prefer to use to perform at their best.\u201d\n\nEmphasizing employee engagement\n\nCustomer and employee experience is also a priority for Barry Shurkey, CIO of NTT DATA Services.\n\n\u201cWe want to increase the productivity of our 50,000 NTT DATA Services\u2019 employees while simplifying, stabilizing, modernizing and securing the corporate IT portfolio,\u201d he says.\n\nFor Shurkey, doing so is a question of transforming culture \u2014 and of metrics.\n\n\u201cYou have to instill these priorities into your team, they can\u2019t just be yours. So, it\u2019s important to know how to make these priorities relatable to each and every employee, so they can make an impact,\u201d he says. \u201cIt\u2019s important to have a great partnership with our business units and communicate how you are doing as you progress through the year so everyone stays engaged, and make sure your company or business area has metrics for each of your priorities.\u201d\n\nThat means keeping track of KPIs and metrics to track improvement and help illustrate where budget should be shifted to address changing needs.\n\n\u201cTracking before and after metrics with implementation requires educating teams on what areas are and are not important to measure. By providing a clear but holistic picture of progress from beginning to end with insights on where and how the work is done, CIOs can make informed requests for budget expansion knowing where the funds will be allocated,\u201d he says.\n\nDriving value with data\n\nJames McGlennon, executive vice president and CIO of Liberty Mutual Insurance Group, says he and his executive team have developed a 2020 strategy to support the company\u2019s drive to becoming a top-three property and casualty insurer.\n\nFor Liberty Mutual, that means ensuring \u201cevery deliverable our technology teams produce ladders up to creating business value. This shared vision gives every technology employee a clear understanding of where we\u2019re headed and how they\u2019re contributing to our success,\u201d McGlennon says.\n\nTo those ends, McGlennon\u2019s overall IT budget has increased to help with technical debt and to account for additional investments in areas such as data science and machine learning. Strengthening Liberty Mutual\u2019s security posture, migrating workloads to the cloud, building skills for the future, optimizing costs and gaining more insight into existing data are also major priorities for Liberty Mutual\u2019s IT teams, he says.\n\n\u201cSeveral years ago, we made the commitment to move our tech platforms out of our own data centers and onto the public cloud. Migrating to the cloud gives us the velocity we need to get working software in the hands of end-users faster,\u201d he says. \u201cWe\u2019re helping employees understand the types of skills they\u2019ll need going forward and we\u2019re providing them with a broad range of resources to help them get to the role of the future. We are constantly working to grow our understanding of costs to make better investment decisions.\u201d\n\nThis effort includes leveraging financial tools that help provide the transparency necessary for effective planning and discussions with partners.\n\n\u201cUsing data analytics, we are growing our insight into the true cost of our applications. Tracking the health and age of our applications yields real-time analytics to inform investment decisions and get more for every dollar,\u201d he says. \u201cWe know that data is what\u2019s going to fuel our ability to compete and to delight our customers on a day-to-day basis, so we\u2019re always looking to gain more insight into the data we have and how that will deliver value and drive improved customer outcomes journeys.\u201d\n\nFocusing on cybersecurity\n\nLike many IT executives today, Mike Krza, COO of colocation services at Flexential, is concerned about cybersecurity and regulatory compliance.\n\n\u201cAs we see more cyberattacks and additional regulations every year, CIOs are worried about data protection and security. They also want to make sure they are secure 24\/7 and can grow effectively,\u201d Krza says.\n\nHe adds that he sees many IT leaders looking for ways to establish more control over their costs and to project costs more accurately into the future.\n\n\u201cWe see partners \u2018boomerang\u2019 back from the public cloud to hybrid IT, because of unexpected costs or changing needs,\u201d he says. \u201cWe also see customers going from multiple sites to one consolidated location using colocation, cloud and public cloud access to manage their workloads.\u201d\n\nFor 2020, Krza says Flexential will focus on IT complexity and distributed workloads. Helping customers identify trends, remain secure and acquire the skills necessary to thrive in the future are key initiatives.\n\n\u201cRoles have expanded as IT environments are changing rapidly. The technology for IT is becoming more complex and workloads are getting larger and more distributed. With everything-as-a-service, you need to know more and manage more. To survive in these highly dynamic hybrid IT environments your business really needs to be flexible and able to adapt quickly,\u201d he says.