There is a tectonic shift happening in IT. Or to be more specific, there is an irreversible change occurring in who drives and controls IT spend. According to Gartner, today around 83% of all IT spend is controlled by the CIO or his/her reports. Within three years, the picture will be very different, at least half of all IT spend will happen at individual business unit level.
To put it another way, by 2020 the CIO will at best control just 50% of the total IT spend across the organisation.
This is being driven by something often referred to as a Business or Digital Transformation. In fact, there are many names for it, but the drivers are the same, empowering business units to self-determine their IT needs in order to foster the agility, competitive advantage and profitability to succeed.
This shift in IT spending power to individual business units is driving the Disruption Gap.
The Disruption Gap
In the past, when the business needed technology to support new initiatives or to improve productivity or profitability, it turned to IT to help scope, source and manage the project. Because the business was reliant on IT, there was a strong alignment between the two.
Today, thanks to the explosion in cloud and mobile apps, infrastructure-as-a-service offerings and lower entry point pricing for enterprise systems, business units are increasingly going it alone when it comes to defining, sourcing and managing new IT initiatives. This will prove to be extremely beneficial for individual business units. However, it could also prove disastrous in terms of clever and careful IT provisioning and spend.
The trend towards self-determination is creating a gulf between the central IT function – the CIO – and the rest of the business. And this gulf is the Disruption Gap.
Why is the Disruption Gap bad for business?
A key evolution in the role of the CIO has been to help the CFO plan for the organisation’s future spend. The CIO isn’t just about ‘getting stuff done’, they are planning ahead and determining what investments are likely to be required and what they will cost. At the same time, they are responsible for ensuring the organisation is spending wisely and driving real business value from their current investments.
The Disruption Gap makes both of these responsibilities simultaneously more difficult and more critical than ever.
Put simply, the more people there are across the organisation creating IT spend, the more opportunity there is to over-spend, whether through duplication, missed opportunities for better pricing deals or even software that no one uses.
Today, Gartner estimates that around 90% of organisations waste as much as 30% of their software spend each year on shelfware, the wrong licenses or contracts and agreements they don’t need. And that’s with IT controlling 83% of the spend. Imagine what it will be like when 50% of IT spend rests not with a handful of budget holders, but potentially hundreds.
Managing IT spend via a paper trail won’t cut it. If the CIO is to continue fulfilling the role as the chief guardian of realising the full value of IT investments, the CIO needs one thing above any other: visibility.
With visibility comes influence
So how does the CIO get visibility? With true, multi-platform auto discovery that extends from mobile devices to desktops, from datacenters to the cloud. Wherever and however software and services are consumed, the CIO needs to know about it.
Using technologies like Software Asset Management, the CIO puts themselves in the unique positon of being the only person across the company with the big picture. With insight into all areas of the business, the CIO can redefine his/her role.
Nothing is going to change or reverse the trend of Digital Transformation. So the CIO shouldn’t waste time fighting it. Neither should they try to control other people’s spend.
Instead, as in many other areas of business, the CIO needs to become familiar and expert in the art of matrix management. And, as anyone involved in running successful matrix management structures knows, success comes not through control but influence.
Knowing more about what’s happening on the network and what is being spent on software and services puts the CIO in the perfect position to influence how the organisation and individual business units consume software, driving substantial cost savings, efficiency gains and preventing security risks. Armed with the insight provided by a good Software Asset Management solution, the CIO can become the chief broker of IT spend, the go-to person for business units looking to drive the best deals with vendors and the creator of virtual teams across multiple business units with common interests and goals.
Keeping the lights on
Of course, when I said the CIO is losing control, I’m over-simplifying to make a point.
In fact, the CIO will still control many aspects of IT, especially the unsexy-but-critical parts such as support, security and certain enterprise systems. But without the insight that comes with a Software Asset Management platform, the Disruption Gap means that CIOs and their teams are practically flying blind.
How can the ServiceNow team support apps that they didn’t even know were deployed on the network? How can the CFO sign-off checks to Microsoft for Azure platforms that he neither has confidence were justified or even if they ever existed? How can Procurement drive the best enterprise agreements with key vendors when they have no visibility of current usage levels across the business?
Whether the insight into software usage across multiple platforms and Business Units is presented in the form of management dashboards within the Software Asset Management platform itself, or used to feed systems such as ServiceNow, Remedy, Cherwell, TopDesk or any other ITAM or ITSM platform you care to name, the role of the SAM platform is clear.
It is the provider of insight. And the main consumer of this information should be the CIO. A good SAM platform has the potential to make the difference between life and death for the future role of the CIO in an organisation that is moving towards having not a single CIO, but hundreds.
Why the CFO cares
With the majority of CIOs reporting to CFOs it’s a fair question to ask why the chief money man cares and why they should endorse or sponsor any effort by the CIO to gain the insight described above. The answer is so simple that one word will suffice: money.
While the role of the CIO is changing with Digital Transformation, a key role of the CFO remains constant: to guard against over-spend and risk. To run a tight ship.
A CFO worth his or her salt knows that Digital Transformation is a must for the organisation, but they also know as sure as eggs is eggs that the likelihood of increased spend and risk goes through the roof as more Business Units and ‘mini CIOs’ take control of the bulk of the organisation’s IT spend.
Faced with Digital Transformation, a clever CFO will know that they need to empower their CIO to help fulfil the simultaneously simple-yet-complex task of safeguarding the organisation’s money.
Software Asset Management isn’t just for SAM
In turn, a CIO that sees a Software Asset Management platform as solely a point product to reduce the risk of compliance fines is living in the dark ages (in fact, Digital Transformation will drive even higher audit rates and it will increase the risks to the organisation as a whole, but that’s another story for another blog on another day).
The role of the Software Asset Management platform is evolving just as the role of the CIO is changing. Think of it, if it makes the somewhat unsavoury message easier to digest, as the Business Intelligence or Analytics solution for the software investments across your business.
And that, we believe, is key to empowering the CIO to bridge the Disruption Gap and define their future role in the Digital Business.
If you’re a CIO and you recognise the evolution described above, why not start planning your future role in the organisation today and download our first step towards becoming an ‘enlightened CIO’ with our eBook on why you can’t afford to have blind spots on the network?
Reference 1: Metrics and Planning Assumptions Required to Drive Business Unit IT Strategies. Published: 21 April 2016 Analyst(s): Kurt Potter, Stewart Buchanan
Reference 2: Cut Software Spending Safely With SAM. Published: 16 March 2016 ID: G00301780 Analyst(s): Hank Marquis, Gary Spivak, Victoria Barber
Matt Fisher, VP Marketing at Snow Software
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