Business is playing a bigger role in tech buying, but the CIO will still dominate

3 months ago admin Comments Off on Business is playing a bigger role in tech buying, but the CIO will still dominate

CIOs find themselves at a crossroads: tech buying in business and governments is clearly shifting from the sole or primary control of the CIO and the tech management organization and into the hands of business leaders. But how much is this happening? Anecdotal comments suggest that most tech purchases are now controlled by business executives.

However, in our newly-published research, “C-Suite Tech Purchasing Patterns,” Forrester finds that the business role in tech purchases is growing mostly in the front-end stages of identifying a business need for a technology solution and picking out potential vendor solutions. CIOs and their teams still play a major role in choosing the actual solution, implementing it, and making it sure it works correctly. Business executives will control all phases of the tech purchase process for only 6 percent of total all new U.S. tech purchases by 2018, up from 4 percent in 2013.

Tech buying in business and government is a complex process that generally involves many stakeholders, not just one buyer. Business leaders are more knowledgeable about technology and the cloud solutions that they can acquire on their own are more widely available. That does mean that business leaders are playing a bigger role in the front end of the tech buying process. But many cloud solutions still need to be integrated with existing systems and other cloud apps, and of course avoid creating security exposures. Those considerations keep CIOs involved in the tech buying process, as does their expertise in choosing the best solution at the right price. Meanwhile, the persistence of licensed software, the growing adoption of cloud as a replacement for licensed software, and challenges of implementing and optimizing solutions mean that CIOs and tech management teams still play a dominant role in overall tech purchases by businesses and governments.

Here are five key findings of Forrester’s analysis of data on actual tech purchases through 2018:

  1. Only about 30 percent of U.S. tech spending goes for new projects, where business involvement is going to be greatest. 70 percent goes for maintenance fees, outsourcing contracts, infrastructure expansions and refreshes, telecom services, and other operating and maintenance spending.
  2.  Of the new project spending, about 60 percent goes for new projects that directly support business operations, with the rest focused on CIO projects like security, cloud, employee collaboration and new IT infrastructures.
  3. Excluding these IT-focused projects, business leaders are playing the principal role in identifying the need for new technology solutions, with a quarter of all business-oriented new project spending controlled or led by business by 2018, up from 17 percent in 2012. Partnerships between CIOs and business leaders on new projects present almost a third of business-oriented new project spending.
  4. CMOs are the most likely C-level executives to have taken full control of their tech spending. We estimate that about 36 percent of all marketing technology-related new project spending will be fully controlled by CMOs by 2018, with another 19 percent of this spending initiated by CMOs but then involving the CMOs. However, the former proportion has stopped growing while the latter scenario has been rising as CMOs have realized the importance of working with CIOs to implement solutions that cover the full customer life cycle.
  5.  eCommerce heads and chief procurement officers (CPOs) also have high proportions of relevant new project spending that they fully control (23 percent and 15 percent, respectively), but higher proportions where they initiate projects but then involve the CIO (23 percent and 33 percent, respectively).

As a wider range of business executives are playing a larger role in tech buying, CIOs need to start thinking differently about C-level relationships to ensure investments made are best for the entire organization. Aligning the organization’s tech strategy with all business partners will help firms win in the age of the customer, and CIOs still bring the widespread expertise that other executives may not have when making key technology decisions.

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