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CFOs starting to see the business benefits of IT: Gartner

Hamish Barwick | Nov. 26, 2012
The view of IT as ‘just another expense’ that seems to be widely held among chief financial officers is changing, according to Gartner. The research firm found that CFOs are now starting to understand that IT can help the wider business and are investing in technology.

Nunno said that the increasing CFO involvement with the IT department was happening for a variety of reasons.

"Many of them are beginning to understand the potential of IT and want to leverage it within finance as well as in business intelligence [BI] for the rest of the company," she said.

In addition, CFOs were looking to services such as cloud computing to potentially reduce costs. Unfortunately, Nunno said this could lead to CIOs receiving more IT budget cuts.

However, she added that CIOs do not expect to reduce their IT budgets over the next five years.

"While certain forces such as cloud computing will drive costs down, human behaviour shows that the cheaper we make something, the more people will buy of it," she said.

"So the less expensive it is, the more likely CIOs will buy it in mass quantities."

While the unit cost of IT may go down in the future, Nunno pointed out that demand for IT is increasing as senior executives want to utilise services such as big data.

"What CFOs need to understand is that there are very few organisations where the cost of IT will go down unless they are decentralised," she said.

IT budgets

According to the survey, ICT spending is still broken down into a variety of different categories.

"When we look at the mix of spending we find that the vast majority of IT shops are spending over 80 per cent on running the business or keeping the lights on," Nunno said.

"A small percentage is being spent on transformation and strategic change in the organisation. When many CFOs see this data, they ask why they can't shift IT spending to 50 per cent or more on transformation projects."

However, CFOs needed to understand that when CIOs undertake transformational IT programs, many of the investments require an operational budget.

"For any particular investment, it's important that the CFO knows that even if it is transformational today, sooner or later that budget will shift into maintenance," she said.

"This means that over time, the [IT] operations budget will significantly increase."

 

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