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CIO IT budgets are stable, so why is everyone so interested in the CIO?

by Mark P. McDonald  |  January 26, 2011  |  2 Comments

According to CIOs responding to this year and past Gartner CIO surveys, CIO IT budgets remain flat and below their 2008 historical high.  It will be sometime before CIO it budgets return to real growth. This creates a seeing paradox as IT suppliers project continued growth in the corporate IT market segment. So if budgets are flat, how can vendors continue to grow?

Here are a few thoughts.

While CIO IT budgets account for the majority of corporate technology spending, they are not the only source of corporate spending.  So divisional, business-direct and individual employee spending can account for some of the growth,but not all of it.

These CIO IT budge figures concentrate on corporate and government agency spending and do not include purchases made by telecom or tech companies building out their cloud and Internet based services capacity.  The cloud may be conceptually thought of a s software but there is a lot of hardware behind its networked lining. Spending that is not in these figures but in IT company projections.

The definition of IT spending is expanding as consumer devices become computing devices and fall into the IT spending category. Just think of the multiple millions spent on tablets, smart phones, their applications and support services and suddenly ther is another multi-billion dollars industry.

So all of this would indicate declining interest in the CIO, but that is not what is going on. More people than ever are interested in the CIO, what they think and what they value.

The reason is simple, while CIO IT budgets overall remain flat the mix within those budgets is expected to change as CIOs but more services and he nature of their contractual purchases changes. This places more money ‘in play’ as old services go out for rebid on new service models and money shifts from in-house to external resources.

With as much as 70% of the CIO IT budget up for grabs, suddenly the CIO is the focus of attention, dinner invitations and golfing opportunities that will enable us to get to know each other better.

Before CIOs go buying bigger clothes, update their golf clubs or start screening calls here are a few things they may want to think about.

Today’s new strategic partnership is tomorrow’s legacy boat anchor particularly when it comes to cloud services which are a little like the Hotel California. You can checkout any time you like but you can never leave.

This is an environment undergoing such dramatic change that most CIOs will find their existing vendor management skills  or the skills in their Procurement organizations will not be sufficient to support sourcing decisions involve more than pricing, contract terms and vendor qualifications.  There is simply too much in flux for there to be a ‘fair and level’ playing field, making traditional comparisons along traditional criteria less effective.

Keep an eye on your people as its easy for them to see every new contract as lost opportunity for them and their future.  Its a sound idea to identify where your people, their talents and knowledge can create the most strategic value before you start thinking about new contracts or sourcing relationships.  Share those plans with people so they know what their future contribution looks like.

Additional Resources

Category: 2011  cio  

Tags: 2011-planning  value-of-it  vendors  

Mark McDonald, Ph.D., is a Vice President and Fellow Emeritus in Gartner for General Managers Program.

Thoughts on CIO IT budgets are stable, so why is everyone so interested in the CIO?

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  2. […] disconnected customers. You trade potential lifetime loyalty for the immediacy of pennies in profit.CIO IT budgets are stable, so why is everyone so interested in the CIO? by Mark McDonald on The Gart…Quote: According to CIOs responding to this year and past Gartner CIO surveys, CIO IT budgets remain […]

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