The State of the CIO in 2014
Back in early 2013 Gartner research projected that by 2017, CMOs were on track to end up with larger IT budgets than CIOs. Clearly this is not the trend we are seeing today as we believe CIO influence continues to grow rather than shrink.
We simply need to take a quick look into todays Cloud Computing trends and vendor strategies from companies like IBM to determine the current CIO budget trajectory.
Personal clouds are starting to gain traction. As adoption of mobile technology soars and the consumerization of IT accelerates, workers are embracing new types of cloud-based applications such as Evernote, Google Apps, Dropbox and Microsoft Office 365. As a result, data and content is increasingly available anywhere and at anytime, independent of the user’s device.
Amazon has quickly become the retail and SMB leader in cloud services, offering elastic cloud computing and storage through its web services business. Amazon aggressive cost cutting has led to rapid growth, and the company is the clear leader in the SMB cloud computing market.
But Amazon is selling an emerging set of commodity services, and some competitors such as Microsoft have been matching Amazon’s price cuts dollar for dollar. IBM has no interest in selling low-margin commodities and is taking a different route. Instead of competing against Amazon and Microsoft by selling commodity cloud computing and storage, IBM is focusing instead on delivering software via the cloud. IBM’s recent acquisition of SoftLayer, along with several other recent cloud-related acquisitions, has allowed the company to quickly build up their cloud computing business.
Recently, the CEO of SoftLayer publicly stated that IBM will be launching more than 100 products, like e-commerce and marketing tools, delivered via the cloud in 2014, along with 40 infrastructure services like big data analysis. He says that “it will take Amazon 10 years to build all of this,” giving IBM a big advantage when their offerings gain traction and adoption. IBM has a lot of experience in winning market share and numerous resources to throw behind the effort, and 2014 looks like it will be a big year for IBM’s cloud business.
IBM is focused on continued growth in software and services, this is where CIOs will be focusing their budgets in the next few years and these decisions will not be left to the CMOs. They can not be, CMOs are just not qualified for the task.
Recent research from IDG supports this notion as well. The fact is that corporate IT still controls 71 percent of IT budgets in the U.S., and that number will hold steady over the next three years, according to IDG’s State of the CIO research. That research reflects the latest insights from more than 700 top IT executives.
Here are some key insights from the research supporting the state of CIOs budget control:
1. Approximately 7 percent of IT organizations use a decentralized organizational structure, versus 65 percent centralized and 27 percent federated. If the CIO’s budget control were truly shifting toward the CMO and other C-Suite members we would be seeing more decentralized IT departments and decision making scenarios. This is not the case.
2. A key indication of rising CIO influence in the IT decision making process stems from the fact that 44 percent of CIOs and senior IT pros report directly to their CEOs. That number has increased by 5 percentage points over last year’s results. Clearly, as technology moves to the center of business and is responsible for driving greater innovation and competitive advantage, the CIO remains the best choice to be in charge of IT spending.
3. Approximately 33 percent of IT leaders are spending more of their time as business strategists than technologists. This includes engaging in activities that drive business innovation, identify opportunities for competitive advantage and track market trends or customer needs.
Contributor: James Finnan of myCIOview