Over the next few weeks we invite you to join our CIO Dinner Party Blog Series as we delve into the various roles that work together to maximize the return on investment of software spend, be it on-premises or in the cloud. This week we set the stage for our host – the Chief Information Officer (CIO).
CIO Magazine recently released its 16th annual State of the CIO report and as organizations evolve from transactional to transformational so must the CIO role. With this shift in business practices 87% of CIOs felt the role has become more challenging than in the past (down a percentage point from last year) as CIOs grapple with continuing to manage day to day IT tasks, such as vendor management and negotiations, but also must spearhead business innovation and technology strategy – such as moving certain pieces of the business to the cloud.
For CIOs just starting out on their journey you likely have more on your plate than ever before, but with this also comes increased visibility. Nearly half (46%) of CIOs now report into the CEO – the highest since 2004. At the same time CIOs are increasingly viewing themselves as strategic (31%) and transformational (50%), while those who deem themselves as functional has fallen to nearly 20%, from 27% last year.
Top priorities for all CIOs continue to be security, overall line of business needs, and, of course, software spend and budget. There is a lot at stake when it comes to understanding one’s software spend – and by a lot we mean the average company allocates approximately 5% of its revenue towards the IT budget, and software spend is typically around 20% of the IT budget. That means a manufacturer bringing in $2B in revenue is approaching an IT budget of $100M, with close to $20M being spent on software. Further – although the cloud is shifting this somewhat today – a majority of this budget (about 66%) is spent on operations, maintenance and support of existing applications and IT services. This does not leave much budget for growing and transforming the business.
As CIO how can you help move your organization forward – be it towards the cloud or other strategic initiatives – if your budget is tied up in the status quo? What if you could shift the committed operations budget to driving innovation?