"Zero budget CIOs" expected soon

CIOs need to regain control of their companies’ IT budgets or else they risk becoming sidelined, according to a report from Gartner Group. The analyst house is warning of organisations with incoherent IT strategies and “zero budget CIOs” unable to influence implementation.

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By  Neil Denslow Published  April 15, 2002

CIOs need to regain control of their companies’ IT budgets or else they risk becoming sidelined, according to a report from Gartner Group. The analyst house is warning of organisations with incoherent IT strategies and “zero budget CIOs” unable to influence implementation.

In a European survey, Gartner found that 37% of companies reported spending outside of their IT budget. The analyst house predicts that by 2005, 50% of IT spending will take place outside of the IT department. This can make good business sense, but Gartner warns that CIOs need to achieve the same recognition as other executive leaders or businesses will lose control of their IT strategies.

John Mahoney, vice president and research director at Gartner, says, “the CIO is facing a real prospect of becoming a ‘zero budget CIO’ by the end of the decade. This does not reflect a decrease in stature, it reflects irreversible changes in the business environment which the CIO must meet head on.”

Gartner says businesses are increasingly focusing on core capabilities and changing how they acquire capabilities and resources, which may leave CIOs on the sidelines. For instance, less than 15% of business process outsourcing contracts, one of the fastest growing parts of the services sector, are signed by CIOs. At the same time, businesses are losing confidence in IT’s abilities to deliver real business benefits after the e-business hype. As such, Gartner says CIOs urgently need to rebuild credibility for themselves and their departments.

“The challenge for CIOs is to define and deliver a sustainable value proposition from the IT organisation to the enterprise in an environment with increasing turbulence in technology, business and the economy. That value will centre more on leadership and service integration and less on creation of technology. That doesn’t mean the end of the CIO as a distinct role, but it does mean that major changes lie ahead,” Mahoney adds.

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