by Gary Beach

Are CIOs Losing Control of Tech Spending?

Nov 14, 20122 mins

Gary Beach cites research showing that a lot of corporate spending for technology (like robotics and embedded chips) is outside the CIO's purview. CIOs need to step up and become "chief digitization officers."

Several weeks ago, CIO‘s VP of marketing asked me to stop by her office to review a puzzling finding in a big-data study, which claimed IT executives said budget concerns could prevent them from deploying big-data solutions. “How could that be?” we wondered, thinking that big data was largely immune to budget constraints. Then we thought about the controversial Gartner prediction that chief marketing officers would have larger IT budgets than CIOs by 2017. Could it be that IT spending levels controlled by non-IT groups (like marketing) are putting additional pressure on IT executives to scale back infrastructure investments?

Some hours later, our conversation snapped into sharper focus when I came across a Wall Street Journal blog post with the provocative headline “CIOs Losing Control of Corporate IT Spending.”

The post discussed a study by Rubin Worldwide, a technology research company, that found that businesses are spending more money on IT than ever before–but less of that budget is earmarked for traditional forms of technology spending. The study was managed by Howard Rubin, the firm’s founder and a senior adviser at Gartner, a man I have known and respected for years and consider to be one of the best analytic minds in the business. So I looked closely at his bottom-line conclusion: Across all business sectors, companies are spending $8.60 on “non-IT” technology for every dollar they spend on traditional forms of IT like infrastructure, application development and maintenance.

In the nontraditional IT spending bucket, Rubin tosses any tech-related expense other than applications and processing, including robotics, process automation, data analytics and embedded chips.

But that eight-to-one gap between non-IT and traditional IT spending still doesn’t compute for Rubin. He sees companies falling down when it comes to leveraging their IT investments, which should be lowering process costs. His advice for CIOs was straightforward: Effectively manage your IT portfolio with “a cohesive view towards creating value.” That may be through direct customer impact, or front-line product engineering work, or risk management. The successful next-generation CIO, he contends, should look more like a chief digitization officer.

Good advice, all of that. My two cents? If I were you, I’d make customer interactions and intimacy your number-one IT priority in the coming year.