I’m a tad confused here. At the beginning of the year, UK trade publication MicroScope reported on a survey by CEB which estimated that marketing, HR, finance and operations, and other departments within companies were spending up to 40% extra of the official IT budget in what it dubbed ‘shadow spending’.
Then, at the beginning of February, Cisco Consulting Services and Intel published a report entitled Impact of Cloud on IT Consumption Models which argued the UK had reached a tipping point with almost 45% of funding being controlled by lines of business (LOBs) such as HR, sales and accounting.
Cisco UK & Ireland cloud leader Jo Laking commented that “2014 looks to be the year that LOBs overtake IT departments in terms of spending. Almost every conceivable business function can now be delivered from the cloud as a service, empowering departments to seize control of their own spending instead of waiting for a nod from IT”.
You could be forgiven for thinking that two reports saying the same thing, published within a month of each other, suggested a possible trend. But things are never quite as simple as they first appear. Because within days, TechCentral.ie was reporting a survey by Forrester Research which suggested only 6.3% of new technology purchases in the US were made and implemented solely by business units in 2013.
At the beginning of each episode of Soap, the long forgotten but hugely enjoyable spoof TV show, the announcer used to say: “Confused? You won’t be.” Right now, I’m inclined to amend that slightly to “Confused? I am now.”
The Forrester survey also found that 9% of spending involved technology chosen by business units but implemented and managed by the CIO’s team. Author of the report, Forrester vice president and principal analyst Andrew Bartels, was fairly scathing of those suggesting there was a huge shift in tech spending away from CIOs. “Pundits who make sweeping statements about tech spending shifting from the CIO’s department to the business fail to appreciate the complex process involved in buying and owning technology,” he said.
Perspective
And he attempted to put some perspective on the surge in the share of new technology spending by business units between 2010 and 2012 by suggesting it had been fuelled by purchases of smartphones and tablets. Bartels argued the trend would wane as these types of devices become part of consolidated IT budgets.
Nevertheless, in predicting the share of technology purchases made exclusively or primarily by the CIO’s group would fall from 55% to 47% by 2015, he acknowledged that as much as 45% of all technology purchases already involve input from business units. The figure of 45% might ring some bells here, considering it popped up earlier in this column (towards the end of the second paragraph if you want to check) although the emphasis there was slightly different.
And whatever the differences in opinion over how quickly the shift is taking place away from total control by the CIO, the consensus seems to be that it’s a good thing. Bartels argues that “the fact that business users are taking the lead in identifying opportunities to apply technology solutions to business problems is a good thing, not something to be deplored”.
It’s also potentially a good thing for channel partners too if they can cultivate relationships with LOBs and act as the conduit between those LOBs and the IT department to ensure the technology being deployed fits within the overall framework. IT departments are accustomed to viewing technology from the top of the tower while LOBs look at it from ground level. There will be a pressing need for much more collaboration between the two. Channel partners could be well place to provide the collaborative link that helps to mesh the two views together.
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