CIOs left in the dark about technology spend outside of IT

IT departments are significantly underestimating the budgets allocated to technology in others parts of the organisation, as more business leaders bypass the CIO and IT staff to execute their own projects.

CIOs estimate that the IT spend from other business partners represents another 20% on top of the official IT budget. However, the real figure is closer to 40%, according to the latest findings from member-based advisory firm CEB, which surveyed 165 organisations representing more than £29 billion in IT spending.

Business leaders are keen to test out technologies for themselves – whether that be cloud services, CRM applications, document sharing tools, or even just giving out iPads to their teams to increase productivity.

IT departments need to look at how they can support these business-led efforts and provide the flexibility that employees and business leaders need, while managing them in a way that is both secure and cost-efficient for the business.

The Marketing, HR, Operations and Finance functions are most likely to dedicate their own budgets to technology. For example, 6% to 9% of the overall HR budget is now dedicated to IT as businesses exploit the growing number of cloud-based HR systems and look to talent analytics to better understand both existing staff and new recruits.

Andrew Horne, managing director at CEB, said: “While the idea of ‘shadow spending’ has in the past been seen as a risk or threat, on the contrary it is often a sign of healthy innovation and presents a valuable opportunity for IT to work more closely with business partners to develop new capabilities.
“Failing to recognise the extent to which tech-driven projects are happening outside of the IT department can be a real worry, yet trying to maintain total control is equally a step in the wrong direction.

“By getting this balance right, CIOs can help the business to be more flexible, identify potential cost savings and ultimately implement change and innovation more easily.”

The study also found that total IT budgets for the year ahead are set to increase by 3%, driven almost entirely driven by rises in operating expenditure, while capital expenditure remains flat at 0.3%.

Spend on mobile applications is also set to accelerate in 2014, with almost two thirds (65%) of employees dissatisfied with the mobile capabilities available to them for work purposes. The number of CIOs dedicating over 4% of their budgets to this area has more than tripled from 2012, due to the growing focus on flexible working.