Business influence of other C-level execs in IT spending growing

cio

CIOs play key role in buying technologies to help their firms win, serve, and retain customers. At the same time, other C-level execs also partake in project spending as well.

According to a survey conducted by market research firm Forrester in 2016 in the U.S., respondents said 32 percent of their firms’ total technology purchases were made by the business unit without IT involvement. And 17 percent were employee purchases of technology that were reimbursed by companies.

The Business Technographics Budgets Survey, also revealed that of the remaining half of tech purchases made by IT, respondents indicated that 41 percent was business-initiated spending that was purchased by IT, 33  percent was spending for which business provided significant input but was still purchased by IT, and 26 percent was for items that IT purchased without significant business input.

Forrester notes that about 60 percent of total U.S. new project spending in 2017 aligns with business executive roles, while approximately 40 percent aligns with the CIO and tech management function.

forrester chart

Latest trends suggest that the always-changing business environment demands increased contribution from other business executives.

Forrester assumes that its U.S. survey data points out largest part of business-related spending will be COO-related ($109 billion in 2018). After the COO, the leaders in new project spend are the CFO ($28 billion), the customer service head ($26 billion), the head of HR ($22 billion), the head of sales ($18 billion), and the CMO ($18 billion).

An IDC report released in March supports Forrester’s assessment. The report says that LoB (line of business) technology spending will be nearly equal to that of the IT organisation by 2020.

Also Read: Are CIOs losing power to business heads in IT spending?

The firm predicts that LoB spending on technology will achieve a compound annual growth rate (CAGR) of 5.9 percent over the 2015-2020 forecast period.  In Comparison, technology spending by IT organisation is forecast to have a five-year CAGR of 2.3 percent.

Naoko Iwamoto, senior market analyst with the IDC Japan Spending Group, the innovation accelerators have put the line of business units in the frontline of the digital transformation and have forced them to work either alone as shadow IT or in closer collaboration with the IT department than ever before.

IT spending

Market research agency predicts that IT spending will grow 1.4 percent to $3.5 trillion in 2017. Cisco Systems, IBM, Oracle, HP, HPE, Microsoft, Juniper, Google, Amazon Web Services, Apple, Dell and Intel are some of the leading technology companies based in the U.S. and rely on IT spending for their revenue growth.

Recently, 451 Research reportedly said hosting and cloud-services spending among enterprises is growing, both in dollar-value terms and as a portion of overall IT spending.