CIOs are looking at business value or benefits realisation, rather than the most significant or fastest cost reductions, according to research by Gartner.
Big G’s survey of CIOs found that after a focus on business optimisation, lowest operational risk and then price and performance benchmarks are the primary IT cost-optimisation focuses.
Gartner research vice president Stewart Buchanan said that the survey findings highlight how cost optimisation has become a business-focused, continuous discipline that drives spending and cost reduction while maximising business value,.
“It’s not enough to simply reduce IT spending; CIOs must reinvest in growth and transformation to deliver more value. Those who fail to engage in optimisation risk having savings decisions imposed on them by an advisory organisation with less understanding of IT or digital technology opportunities.”
Larger and more successful organisations plan to give the business greater budgetary control over the savings it achieves. This way, business controls how it spends these savings on digital solutions development.
“Giving the money back to business leaders to reinvest in IT demonstrates faith in the maturity of business decision making and the strength of IT’s business relationships,” said Buchanan.
The survey found that there are two and a half times as many IT organisations gaining financial control than there are losing it.
Respondents were asked about who manages the selection and approval of cost-optimisation ideas. Those with visibility of both the IT shared services budget and all digital spending across the organisation reported that, on average, nearly half of their digital technology spending is paid for by the business. A quarter is paid for out of the IT budget, with chargeback to the business.
“As you would expect, CIOs have the most influence over the selection and approval of cost-optimisation opportunities within IT shared services,” said Buchanan.
“Interestingly, CIOs who focus on digital business opportunities have greater responsibility for cost optimisation than those who don’t. This suggests that CIOs are starting to exert influence over selecting and approving digital business ideas to optimise business costs.”
