Back in July we looked at some of the predictions made by Daryl Plummer, Managing VP and Gartner Fellow for 2012 and beyond. This month we look at what he has to say about IT budgets, as we see control shifting away from the IT department:
“It means that IT has to change itself, to become more of a broker of services than just a provider of technology or a technology service provider. Many IT departments think of themselves as service providers to their business, but in fact they allocate 80% of their budget to keeping the lights on; 8 out of 10 dollars spent on IT is dead money, because it is spent on commodity items. This kind of activity has to change, and this is one of the reasons why they are looking at cloud computing and outsourcing in general. So they can begin to move some of the things that are just about commodity; that don’t differentiate for the company, out of their responsibility and off their plate.
Instead they can now spend more time on the 20% that generates value, that generates revenue; that generates the competitive advantage for their business. That’s how they get back in the game. As the budget begins to shift to other responsible parties, they then begin to broker the interactions between technology and service providers and these business parties will have the money. It makes them more valuable then they have been before, so we will see this movement towards Cloud Computing to respond to this. We will also see a much more efficient IT organisation begin to grow because of this.
The implications in the market is that CIOs have long wanted to give a greater alignment between the IT organisation and the rest of the business. And really underneath that is the hope, as apposed to a reality that the business will better understand the inherent potential of IT. Unfortunately business really does not care about IT. Business has always, and will always care about what it can do to generate more business, to serve more customers, to generate more revenue. That’s what matters to business and the IT department is just beginning to realise that it can no longer be a technology caretaker and a simple cost center.
So the IT organisation is trying to become a value center, helping the business to rapidly figure out how to take that technology has a part of the business, which is what we have always wanted to do. Letting our users do more of what they want to, letting them make more of the choices, maybe not giving them all the devices; and letting them bring in their own device to work, is something that IT organisations will do to respond to this.
And the business managers and employees will begin to see the increased value in our IT, this will result in better use of funding, that IT is given, more collaborative use of funding between CIOs and CMOs and other business managers so that their money is less centered on where it comes from and more centered on how effectively it is used across the entire company. That’s where it can become a very powerful part of the business again and show itself as a value center.”
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