Non-IT Departments Now Control Technology Budgets, Study Shows

A new research shows technology budgets and decision-making migrating away from IT departments, and IT taking on new roles in the enterprise, according to a large-scale global survey on the changing role of IT.

The report, released by Avanade, indicates that forty-five percent of technology spending now happens outside of IT, because the vast majority of business leaders (86 percent) believe they can make better and faster decisions without the involvement of IT.

With these shifting budgets and loss of control, the global study of 1,003 business and IT leaders shows a new “services broker” model for IT taking hold.

In "services broker" model, IT staff consult with departments across the business to better understand their technology needs and objectives, and source internal or external IT services or partners to meet these demands.

The Avanade research also shows that more than one-third (37 percent) of companies’ IT departments act primarily as services brokers today.

The research shows that among companies whose IT departments are structured this way, 59 percent report they will expand the role of IT services brokers in the next 12 months.

Additionally, 69 percent of companies report their IT department is contributing more to accomplishing business objectives than they did three years ago.

Who controls the IT budget now?

Forty-five percent of budgets allocated in 2014 for technology is now controlled by business departments outside of IT. That means close to half of a company’s total technology purchase is made by business people who do not report to the CIO.

The vast majority of business leaders – 86 percent – believe they can make technology decisions for their department better and faster without the involvement of IT.

IT is increasingly playing the role of business advisor to both internal stakeholders and external partners.

In fact, 86 percent of respondents said they are comfortable with IT staff interacting directly with important clients and partners in a consultancy role.

And 69 percent of companies planning to expand the role IT plays as business advisors in the next year.

Skills upgrade for new IT

To make this shift, business leaders want IT to build skills in key areas that will help them source innovative technologies that solve business problems for employees, customers and partners in an increasingly digital world.

Respondents also report a need for more skills in cloud services (49 percent) and service and system integration (46 percent).

Companies planning roles for IT as business advisors and service brokers see positive results. They report that IT staff has the needs of the employees in mind – 63 percent say the IT department today has “an employee-centric culture.”

And 69 percent of these companies report their IT departments contribute more to accomplishing the objectives of the business than they did three years ago.

Even with these changes, time spent managing the same old legacy systems continues to distract the agenda for IT staff – 40 percent of IT staff’s time is spent managing and maintaining legacy systems.

This leads to a situation known as “two-speed IT” where IT staff must balance the support of legacy systems with the need to continuously innovate in order to stay ahead of the competition.

“There is a growing tug of war between IT and the business over technology decisions and budget. The next step is for IT to re-engineer its approach, learn new skills and grow its influence,” said Kevin Wo, Senior Vice President & ASEAN MD, Avanade.

“With Singapore’s move to be a cloud computing hub in the region, forward-looking companies can position their IT staff as business advisors and prioritise the cloud – for IT to contribute more to accomplishing objectives, and drive positive business results than ever before.”

The research also supports the findings of Accenture’s High Performers in IT: Defined by Digital report, which found that companies with high performing IT organizations invest in IT to deliver strategic capabilities to the business.

 

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