For every dollar spent by IT, business leaders spend another 40 cents on technology or technology services.
Some of the 20 CIOs that CEB hosted at a recent research meeting said that this is caused by corporate IT’s inability to keep up with the times (a view reflected in a McKinsey report on corporate IT), while others see the cause as changes to business partners’ roles to include more responsibilities for technology.
The CIOs spent little time discussing how to reduce the amount of business-led IT, however. Most of those in attendance noted that business partners would lead more of their own technology initiatives regardless of what corporate IT does; it’s too important to them and their objectives.
The discussion focused instead on what corporate IT can do to help the enterprise get value from business partners’ 40-cents-on-the-dollar technology spend. In particular, we looked at four obstacles that prevent the enterprise from getting full value for business-led IT.
The Four Obstacles
Obstacle #1 – The division of responsibilities hasn’t kept up with business partners’ expectations: The traditional division of responsibilities between corporate IT and the rest of the business sees corporate IT own most IT decisions. Business partners’ willingness to lead IT initiatives, however, increased significantly.
During the session, we discussed an example of the IT team at one consumer goods company who had evaluated all of its business capabilities based on the value of changing each capability and the risk of changing each capability.
Following that analysis, they realized that some capabilities–those focused on customer engagement and some types of analytics–are ideally suited for business-led experimentation. For technology investments that change these business capabilities, corporate IT allows considerably more freedom to business partners.
This gives both IT staff and business partners clear guidance into where business-led IT is likely to be valuable and low risk.
Obstacle #2 – Business partners under-appreciate the risks: Not surprisingly, one of the more active conversations of the day focused on risk. Business partners, for all their willingness to lead IT decision-making, are not yet always well-equipped to manage information risks on their own.
The discussion in the room started with the importance of making it easier for business partners to engage with IT on issues of risk or “reducing the burden of engagement” to help them engage. This idea was illustrated by a case profile from one high-tech company (for CEB CIO members) that provides lightweight risk assessment services for business-led IT.
One of the most reflective moments in the day came when the CIOs in the room, collectively, struggled to list more than one or two small efforts they’ve taken to reduce the burden of bringing information risk concerns to corporate IT. The room agreed that this needed to be a priority for organizations.
Obstacle # 3 – Funding and budgeting models are designed for corporate IT ownership: One of the things we heard most often from CIOs in our research interviews was that business partners will buy systems and then ask corporate IT to run them.
As business-led IT grows, this will likely drive corporate IT’s budget towards more maintenance spending, despite continued efforts to drive down operational costs.
One CIO posed the question “Maybe we need to shift away from trying to grow IT’s spend on innovation and give that money back to our business partners. Can we run corporate IT with half the team, focus on advising business partners and running what they invest in, instead of building solutions for them?”
Obstacle #4 – The attitudes of IT employees toward business-led IT: Despite the challenges of the three business-partner-related obstacles above, the majority of CIO concern was focused on the resistance of their own teams to business-led IT.
Ninety-four percent of IT staff are resistant, in some way, to having business partners take greater leadership of technology decision-making. Any one of those employees is able to kill or terminally delay a good idea that comes from outside of IT.
Our members debated how to change the climate within IT to be more open to ideas from outside the function and how to be more open to risk. In particular, there was considerable interest, but little agreement, about how to help IT staff become more willing to try innovative approaches to business challenges when those approaches might fail.