IT budget 2015: It’s about business alignment

February 06, 2015

This post originally appeared as IT budget 2015: It’s about business alignment on our COO, Carlos Meléndez, Under Development blog at InfoWorld and is reprinted with permission from IDG.

CIOs have, largely, made their decisions about what they’ll spend their budgets on in 2015, and while the numbers look rosy, there are few surprises: Computerworld recently reported that spending on services will continue to increase as hardware spend drops, and the SMAC stack— social and mobile tools, analytic systems, and cloud computing still dominates financial planning for IT.

But in all of the discussion about IT spending in the coming year, there’s been little attention paid to the shifting ground underneath IT: in addition to focusing on its spending habits, IT needs to focus on transforming from a cost center into a value creator for the business.

This orientation is radical for many IT departments, which have served as procurement centers for the business for decades, for all the right reasons. Expertise about the solutions that support the business, from email servers to CRM systems, historically lived in IT. After all, it makes sense that people with technical skills and responsibility for technology implementation should be the ones to select and manage those technologies, right?

But what happens when there is no technology to manage? SaaS is rapidly altering the role of the CIO and they need to adapt quickly in order to serve their purpose for the business.

Here’s what’s different today: the responsibility for technology purchasing has been dispersed through the business. For example, Gartner predicts that CMOs will spend more on IT by 2017 than CIOs! Yet, the responsibility for implementing and integrating IT systems still lives largely with the IT department.

Because of this new reality, IT department executives have to revisit how they approach their internal customers: how can IT, from the CIO to entry-level software developers and everyone in between, operate as a value-creating service center to the business without losing the credibility it has earned as the hub of technology expertise? More importantly, how can IT become a facilitator for the business when important technology decisions are being made outside the scope of the IT Department? IT Departments are starting to inherit more technology instead of selecting it.
There’s no simple answer, but I think the answer lives in the alignment of IT objectives with broader business objectives. That’s been said before, so what does it really mean?

It means that, for example, when selecting an email solution, IT can justify selecting Office 365 over Google Apps for Work because the tech guys understand that internal collaboration with existing tools is vital for managing external customer relationships. When designing the IT infrastructure, the department can build it so that when a customer gets a new IoT device, IT is ready to securely support that device from boot-up. And the department designs front-end apps that tailor to the desired customer experience and enable fast and easy interfacing with the right systems for both internal and external customers.

By shifting its approach to value creation, IT can help the business quickly understand and take advantage of new opportunities that new devices and software systems can bring. This is a big shift from the contain-risk-and-control-procurement approach that technologists employed in the pre-BYOD, pre-IoT, pre-SaaS days. But it’s a change worth making.