IDC: IT No Longer Responsible for Most Tech Spending

IT accounts for less than half of corporate spending on technology.

IDC has put paid to the idea that technology is for technologists – or at least that technologists should decide what technology to buy and when to pay for it.

Sixty-one percent of enterprise technology projects are funded directly by business units rather than through IT budgets, according to a survey of 1,200 line-of-business executives that was conducted in September and published Oct. 3 by research firm IDC.

Not only do business units pay for the bulk of enterprise IT – not a refresh-round of laptops or iPhones or a new copier, that is – the amount they pay for IT projects will continue to rise, faster than that of the IT department itself.

Marketing departments are the biggest spendthrifts, with a significant percentage of all business-unit tech spending and a five-year compound-annual-growth rate of 9 percent on tech spending.

The reason for the shift from models in which nearly all tech purchases came from IT budgets and filtered through senior IT managers, to one in which business-unit managers choose technology for themselves, is pretty simple: The cloud makes it easy to buy sophisticated technology services without waiting in line on IT project lists or convincing infrastructure-obsessed IT managers to spend their budgets on apps or data that could immediately benefit one business unit without being relevant to IT at all.

“Technology has long been central to improving business processes, enabling greater speed, efficiency, and reliability, according to Meredith Whalen, the IDC senior vice president who is lead author on the report. “With such high stakes, the business is increasingly taking a front seat in technology initiatives.”

IT departments had to rush to catch up with business units after the debut of Salesforce.com and other line-of-business Software-as-a-Service (SaaS) offerings, but have largely succeeded, according to a survey of VMworld attendees released Sept. 12.

The survey, conducted in person at VMworld Expo 2013 in Pasadena, Calif. by cloud provider Metacloud, showed 73 percent of large organizations had migrated some portion of their enterprise apps or infrastructure to the cloud, and 51 percent planned to increase that amount.

It also showed lingering caution among IT managers, however. Fewer than half of respondents – 47 percent – said they were not worried about “shadow IT”: projects launched, paid for and managed by departments other than IT.

Twenty-six percent said shadow IT was a major problem at their companies; 67 percent said easy accessibility of cloud-based services was a major reason for the growth of shadow IT.

Shadow IT projects have traditionally been a bugaboo for IT and datacenter managers due to the impact that rogue technology might have on existing infrastructure, as well as the likelihood that IT would eventually have to take over management and maintenance of the un-sanctioned systems.

Business units may not have done much to resolve that discomfort within IT, but they haven’t brought the company down in flames, either.

On average, eight percent of business-unit employees are technical staffers hired to run or maintain the tech bought by their own business units, and to maintain a good working relationship with IT.

In fact, 85 percent of respondents said that, compared to three years ago, “IT is becoming a more valuable partner to my functional area [or business unit].”

“The link between technology and business results… is shifting the buying center away from IT and towards the business,” according to IDC report co-author Eileen Smith.

IT may not like having so much tech-buying in the hands of end users, but the perennial struggle to align the priorities of IT and those of the business units is due more to the difficulty in understanding the difficulties and cost-justifications of a business unit that deals primarily with customers or competitors rather than those of a technology department whose focus is entirely internal, Smith said.

That doesn’t mean IT departments have entirely overcome the stigma that led to “Mordac, The Preventer of Information Services,” but it may mean the responsibility for preventing information services has at least been spread out a little more.

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