CIOs Losing Control of Information, Communications Tech Spending

Three-quarters of of CIOs already believe that the IT function in their organization is services focused rather than technically focused.

IT management and logicalis

Chief information officers (CIOs) are becoming increasingly aware that line-of-business executives wield greater influence over IT purchasing decisions and are actively re-shaping IT departments as internal service providers in response, according to a report from managed services provider Logicalis.

More than half of CIOs agree that, by 2016, 80 percent of IT budgets will be based on providing service integration for a broad portfolio of internally and externally sourced IT and business services, while just over three-fourths (76 percent) of CIOs already believe that the IT function in their organization is services focused rather than technically focused.

Nearly half of CIOs today admit they want the majority (50 percent or more) of their IT services to be provided or managed by external service providers, including those providing cloud services like infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS).

"CIOs have constantly struggled to be seen as a strategic part of one’s business, often viewed as a cost center. As we came out of the recession the last couple of years, new business dynamics have put a lot of pressure on IT to be more innovative, Mike Martin, senior vice president for solutions and services at Logicalis US," told eWeek. "Mobile and social networking are key drivers to connect customers, suppliers, partners, and employees. Big Data is driving new business models and routes to market. Cloud computing is enabling business to easily consume these new solutions."

Martin explained that as a result, CIOs have lost control as they deal with the traditional IT for business delivery model and are unable to deliver these strategic business needs fast enough.

The report also found 41 percent of CIOs said they expect to rename their IT department in the next two years to reflect its growing service management role.

More than half of CIOs think line of business (LOB) colleagues have gained more power over the last 12 months, and 28 percent admit that LOB colleagues already hold the balance of power in IT decision-making, making at least one- half of these decisions.

Around two-thirds (65 percent) of CIOs said they are prepared to pay more for business-oriented IT pros, with 25 percent of CIOs expecting to pay five to 10 percent more, while 22 percent of CIOs expect to pay between 10 and 20 percent more for these skill sets.

Most CIOs indicated a desire to spend at least half (50 percent or more) of their time on strategic initiatives, up from 74 percent of CIOs who said the same 12 months ago.

However, more than half (55 percent) of the CIOs surveyed are still spending 70 percent or more of their time on low-value, day-to-day tasks.

The survey also found more than one-third of CIOs find technical skills are the top priority when recruiting IT staff, while the remaining two-thirds instead look first at business skills like communication, service management and business analysis.

"I think more and more IT spending will be controlled by line of business. While the line of business will control more of the IT spending, CIOs will be expected to provide a platform for delivering services from both traditional IT and services providers providing the governance and controls required of any business," Martin said. "The strong CIOs will transform themselves to think and act as a Service Provider and establish a services centric mindset to delivering IT. This will enable CIOs to focus on innovation, while providing speed to market and transparency of cost."