This is the second of four articles that explore the outlook for technology spending — and why corporate tech budgets are bound to rise. The other three are IT Outlays Are Poised for Takeoff, which looks at what’s driving the burgeoning budgets; IT Budgeting Descends to Business Units, which reports on the cloud’s role in decentralization; and Effective Tech Spending: a CFO’s View, in which a finance chief tells why her peers need to know a whole lot more about IT.
Advances in information technology seem to be driving changes in the relationship between CFOs and chief information officers and in the role that IT departments play in the budgeting process.
In the past, IT departments were typically evaluated on the basis of whether they brought their projects in on time and on budget, said John Lieblang, the owner of Measured Value business consulting in Detroit and a former CIO.
With cloud solutions and other new technologies, he said, CFOs are expecting their CIOs to demonstrate what the rate of return will be for proposed IT budget items, along with positioning technology to drive down costs or establish innovative solutions.
With software-as-a-service, for example, IT departments don’t have to handle staging any more or worry about upgrades, bug fixes or maintenance, Lieblang said.
“The transition may be hard. But, on the other hand, it should be very easy now for an IT organization to get the focus on the business drivers and the value-add,” he said. “I think that IT organizations, and the way that IT organizations are being looked at by companies, are at a significant crossroad right now.”
The role of today’s IT department has to change from selecting technology providers to vetting the tech providers chosen by the business unit, said Thoran Rodrigues, the owner of BigData Corp. in Rio de Janeiro, which provides cloud-based big-data services.
That would include making sure that the technology provider will provide benefits, low exit costs, reliability, interoperability, security and the long-term vision that it promised, he said.
The transformation of the IT department’s role can be difficult, especially at large enterprises where the allocation of budget equates to power, Rodrigues said.
“IT needs to evolve, change itself and look at the way it operates,” Rodrigues said. “The CFO really needs to be working with the CIO to put in place the mechanisms that are necessary for IT to change its outlook.”