IT is more and more a key component of all business initiatives and is becoming an important part of those budgets, according to Gartner, Inc. CIOs must work with business executives and the CFO to ensure that the critical contribution of IT is incorporated early in the strategic planning and budget planning processes.
“In the past, the use of IT to support the business came almost as an afterthought, long after the business strategy and strategic initiatives for the coming period had been designed and sanctioned by top management,” said Cassio Dreyfuss, research vice president at Gartner.
“Over time, IT has graduated from being a support tool to being a business enabling and a business creation tool. Under that much broader and inclusive perspective, it makes more sense to talk about IT-related expenditures in each and every business initiative and respective budget. In this way, the CIO is challenged to adopt a higher profile and actively engage in opportunities to influence IT decisions in business budgets,” Dreyfuss added.
The appropriate IT budget decisions follow different processes for each organization, depending on its work style, which, in turn, depends on external variables (mostly its business environment) and internal variables (mostly the style of how its people and areas work together and make decisions). However different decisions may be, the CIO has unique contributions to IT budget decisions for organizations of all styles — but CIOs must understand the business challenges and work styles of each of them to effectively influence IT budget decisions.
“The road toward a digital future requires transformational action from IT through disruptive innovation while continuing to run “business as usual” at the expected level of excellence,” said Mr. Dreyfuss. “IT must therefore operate at high-performance levels at two very different modes.”
Gartner strongly supports the creation of this “bimodal” IT organization. One, the “enterprise-strength IT,” is responsible for delivering efficient IT services with high levels of excellence and reliability; the other, the “opportunistic IT,” is ready to take advantage of new business opportunities, with the creation of new business models and seizing elusive business moments. An “enterprise-strength IT” supports an evolutionary business environment whereas an “opportunistic IT” supports an agile business environment.
The IT organization is in a position to get broadly and intensely involved with budget decisions. It brings key perspectives to the discussion:
Information architecture: Knowledge of the information that is used in the organization, who uses what information, when, how and with what objective.
Business process networks: Knowledge of the processes in the organization, wall to wall, their rules and dynamics, who performs them, when, how and with what objective.
Operations infrastructure: Mastery of how to run all those processes and deliver all that information, their cycles, their integration requirements and all their interfaces with people.
Technology scenario: Comprehensive and educated perspective on the technology scenario and its evolution, and the features, opportunities, challenges, risks and the economics of IT tools.
“These characteristics legitimize CIOs and their teams as advisors to all budgets in all functions within the enterprise,” said Michael Smith, vice president and distinguished analyst at Gartner. “In addition, IT leaders will advise business leaders on how to secure, integrate and manage the quality of the information that fuels digital business. These capabilities are what CIOs and their teams will have budgeting responsibility for as traditional enterprises make the transformation to digital businesses.”
The IT organization has in its DNA the ability to solve problems through project-oriented approaches and collaborative working processes. This is invaluable for any organization, and essential in uncertain and dynamic business environments. IT is therefore ideally placed to collaboratively elaborate — and technically influence — the budgets of all business initiatives.