The IT department is fast becoming a brokerage house, an intermediary between buyers (as in lines of business managers) and sellers (as in cloud service providers). More than one-third of IT departments already act primarily as services brokers, and this model is expected to expand rapidly in the next 12 months, according to new research commissioned by Avanade, a managed services provider.
The idea of IT as a brokerage is just one aspect of the emerging role of the new CIO, one that looks more like a consultancy to the business rather than the keeper and controller of all things technical.
In their new role, CIOs will lose a chunk of their budget. They’ll no longer drive initiatives to adopt innovative technology. They’ll be asked to maintain legacy systems, in addition to building skills in cloud services and system integration.
CIOs as Value-Added Executives
If all of this sounds a little scary, don’t despair: The new CIO will also gain more influence on technology decisions than ever before.
“Successful IT leadership of the future is less about control and more about how you add value to the business,” says CIO Chris Miller at Avanade. “We’re trading control for new responsibilities.”
The global survey of 1,003 C-level executives, business unit leaders and IT decision makers conducted in February and commissioned found a dramatic shift in technology spending habits. Specifically, 37 percent of technology spending is now controlled by departments outside of IT, particularly marketing. This comes on the heels of a controversial Gartner prediction that CMOs will spend more on IT than CIOs by 2017.
For CIOs who cling to control over technology spend, it gets worse. The survey found that more than 70 percent of C-level executives and business unit leaders believe they can make decisions for their department better and faster without the involvement of IT staff.
To be fair, a recent Forrester report refutes the notion of IT spending moving out of the CIO’s decision-making domain. Technology management groups, says Forrester, are still heavily involved in core technology processes like implementing digital experience platforms, application development including mobile development, managed services and integration.
CMOs Reallocate Spending to Focus on Digital
Measuring tech spending budgets and where they reside is a bit of a moving target these days. “We’re not necessarily seeing budget shift out of IT,” says Avanade’s Miller. “If you look at the traditional marketing organization, where CMOs used to spend dollars on print ads, they’re now spending that digitally, paid searches, new capabilities online.”
CIOs are also getting pushed out of the new technology game, with startups pitching line-of-business managers directly. According to the study, an IT staff spends a third of its time managing and maintaining legacy systems.
This legacy commitment has a consequence, the reports suggests, with fewer than one in four executives saying IT staff regularly suggest new technology solutions. In other words, emerging tech solicitation and adoption is being done on the farthest edge of a company — that is, business end-users.
“The speed of business is changing, and I think there’s an inflection point where CIOs are going to have to adapt or die,” Miller says, adding, “Do the future CIOs come up from our traditional IT ranks or, as the role of the IT function changes, are we going to see more CIOs come from other organizations, such as operations, sales, marketing, or even finance.”
CIOs More Powerful Than Ever
But it’s not all doom or gloom for the CIO; on the contrary, the future looks bright.
Miller believes the CIO’s new role of broker and consultant will put them in an even more powerful position. The survey seems to bear this out: 68 percent of C-level executives and 63 percent of business unit leaders expect the IT department to have more influence on technology decisions in the future.
In a significant sign of trust, 83 percent of respondents said they are comfortable with IT staff interacting directly with important customers and partners in a consultancy role.
Truth is, technology is dramatically changing the way business departments function. From marketing to finance, sales to human resources, emerging technology is forcing them to become technology experts practically overnight. They already lean on the CIO’s expertise to help them make this digital transformation.
Over two-thirds of respondents say IT is contributing more today than it did three years ago, yet companies are still in the early days of the social-mobile-cloud revolution.
“Technology is driving more of our business every day,” Miller says, which makes the CIO-as-consultant and IT-as-brokerage powerful roles to affect change throughout a company.