Where the IT dollars flow in the Digital Age

We’re all looking at digital technologies and how powerful they are in shaping an organization’s future. If you read the press, you’d likely think that digital is all about the CMO-driven digital agenda for growth and changing the relationship with users (customers, employees and partners). But the press can be deceiving.

At Everest Group, we recently conducted research around digital tech implementations. One of the most interesting parts of this research is that we found that there are two ways to think about digital: digital for growth and digital for efficiency – how we operate, cut costs and make a business easier to run. Clearly there is a lot of work around both kinds of digital projects these days, and hopefully both extract a significant return on investments.

Which area gets the most funding green lights in the digital transformation journey – those IT group driving efficiencies or the marketing group driving growth?

A surprising finding of our research into the amount of money organizations spend on these projects is that they spend more money on digital for efficiency than digital for growth – in fact, quite a bit more. Our research revealed the top five areas of digital IT initiatives currently are:

• 60 percent – big data
• 60 percent – cloud infrastructure
• 58 percent – cybersecurity
• 30 percent – SaaS
• 29 percent – mobility and workforce enablement

Digital marketing initiatives (23 percent) ranked sixth in spend. If you look at all the other functions with digital impact in an organization, there is such a richer and bigger space than just customer interactions. It’s not that customer interactions are not important. But let’s not lose sight of the areas capturing a greater amount of spend in digital to improve efficiency.

If you read the press, you likely also think there is a clash of interests between CIOs and CMOs and that the roles are converging. The media has become a breeding ground for articles and blogs predicting CIOs are becoming an endangered species.

I don’t believe the two roles will converge. Our research into digital tech spend potentially suggests they won’t. And at the end of the day, the CMO role is a very important function; but businesses won’t turn all IT over to a CMO-oriented executive.

However, I think CIOs and CMOs will become allies and work together more extensively.

Remember Spencer Johnson’s 1998 bestselling book, “Who Moved My Cheese?” Haw, one of the characters in the story, wrote a statement on the wall: “Movement in a new direction helps you find new cheese.” It was to remind himself that cheese grows old and we need to anticipate change.

Change happens in the business world because technology keeps moving the cheese. Value-minded CIOs and CMOs need to seize the chance with digital technologies and move in a new direction – to operate from new levels of thinking and develop a capability to adapt to change quickly.