Technology spending is becoming more complex. There’s also a trend toward business units deciding which technology they need, and choosing the vendors they want. Where does this leave the CIO and the IT organization?
Still in the driver’s seat, according to new research by Forrester. But the management of existing tech and new project spending dynamics are shifting. CIOs need to know what these shifts are and distinguish the realities from the myths that are being perpetuated.
Below, we detail two big myths about tech budgets faced by CIOs in today’s digital enterprises. Debunking these with solid data helps chart a clear path for visionary CIOs that want to best plan how to spend on existing operations, while investing in future growth.
Myth No. 1: Marketing Is Taking Control of Tech Spending
There is a belief that tech spending control is changing hands. The myth goes that control is moving out of the IT group and into other business groups, particularly marketing. This is not universally the case, as Forrester research shows. While business units may take a stronger role in deciding what technology they need, areas such as vendor selection, implementation and integration of the new tech into the business, and ongoing maintenance of both the technology and the vendor relationship remain very much the province of the CIO.
A growing number of CMOs agree with this. A 2013 Forrester survey shows 51% of CMOs say that shared ownership and responsibility of marketing tech projects is the way to go.
Myth No. 2: Firms Should Spend Half the Tech Budget on New Projects
The notion that half of a business’ tech budget should be spent on new projects is only representative of a subgroup of industries. In truth, new project spending varies depending on the business and its plans. More importantly, tech spending patterns reveal that to maintain and operate the organization, systems and equipment (MOOSE) has been consistently 70% to 75% of tech budgets across industries and over time. This makes sense, as revenues are made from the existing business.
Plus, new tech projects today become the established tech MOOSE of tomorrow. Forrester projects that tech maintenance spending will push even higher, closer to 80% of the tech budget over the next couple of years.
Achieving the correct balance between new project and MOOSE spending is key for the business. As a tech leader, you are best positioned to find that balance through strong collaboration with business unit leaders.
Interested in learning more?
You can view an on-demand webinar with the report's author, Forrester VP and Principal Analyst, Andrew Bartels here. Register now!