How CIOs need to adapt or die in the world of digital transformation

There is a tectonic shift happening in IT. Or to be more specific, there is an irreversible change occurring in who drives and controls IT spend. According to Gartner, today around 83% of all IT spend is controlled by the CIO or his/her reports. Within three years, the picture will be very different, at least half of all IT spend will happen at individual business unit level. 

To put it another way, by 2020 the CIO will at best control just 50% of the total IT spend across the organisation.

This is being driven by something often referred to as a business or digital transformation. In fact, there are many names for it, but the drivers are the same, empowering business units to self-determine their IT needs in order to foster the agility, competitive advantage and profitability to succeed.

This shift in IT spending power to individual business units is driving the ‘disruption gap’.

The disruption gap

In the past, when the business needed technology to support new initiatives or to improve productivity or profitability, it turned to IT to help scope, source and manage the project.  Because the business was reliant on IT, there was a strong alignment between the two.

Today, thanks to the explosion in cloud and mobile apps, infrastructure-as-a-service offerings and lower entry point pricing for enterprise systems, business units are increasingly going it alone when it comes to defining, sourcing and managing new IT initiatives. This will prove to be extremely beneficial for individual business units.  However, it could also prove disastrous in terms of clever and careful IT provisioning and spend.

The trend towards self-determination is creating a gulf between the central IT function – the CIO – and the rest of the business. And this gulf is the disruption gap. 

Why is the disruption gap bad for business?

A key evolution in the role of the CIO has been to help the CFO plan for the organisation’s future spend. The CIO isn’t just about ‘getting stuff done’, they are planning ahead and determining what investments are likely to be required and what they will cost. At the same time, they are responsible for ensuring the organisation is spending wisely and driving real business value from their current investments. 

The disruption gap makes both of these responsibilities simultaneously more difficult and more critical than ever.

Put simply, the more people there are across the organisation creating IT spend, the more opportunity there is to over-spend, whether through duplication, missed opportunities for better pricing deals or even software that no one uses.

Today, Gartner estimates that around 90% of organizations waste as much as 30% of their software spend each year on shelfware, the wrong licenses or contracts and agreements they don’t need.  And that’s with IT controlling 83% of the spend. Imagine what it will be like when 50% of IT spend rests not with a handful of budget holders, but potentially hundreds.

Managing IT spend via a paper trail won’t cut it.  If the CIO is to continue fulfilling the role as the chief guardian of realising the full value of IT investments, the CIO needs one thing above any other: visibility.

With visibility comes influence

So how does the CIO get visibility? With true, multi-platform auto discovery that extends from mobile devices to desktops, from datacenters to the cloud. Wherever and however software and services are consumed, the CIO needs to know about it. 

Using technologies like software asset management, the CIO puts themselves in the unique positon of being the only person across the company with the big picture. With insight into all areas of the business, the CIO can redefine his/her role. 

Nothing is going to change or reverse the trend of digital transformation. So the CIO shouldn’t waste time fighting it.  Neither should they try to control other people’s spend.

Instead, as in many other areas of business, the CIO needs to become familiar and expert in the art of matrix management.  And, as anyone involved in running successful matrix management structures knows, success comes not through control but influence.

Knowing more about what’s happening on the network and what is being spent on software and services puts the CIO in the perfect position to influence how the organisation and individual business units consume software, driving substantial cost savings, efficiency gains and preventing security risks. Armed with the insight provided by good software asset management, the CIO can become the chief broker of IT spend, the go-to person for business units looking to drive the best deals with vendors and the creator of virtual teams across multiple business units with common interests and goals. 

 

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