Zero One: I Pray You, Remember the CIO
While there’s no question the pendulum has shifted toward line-of-business executives when it comes to tech buying decisions, a new Forrester report debunks a couple of tech-buying myths. Chief among them, don’t count the CIO out just yet.
“CIOs will control over half of total U.S. new project spending in 2018,” wrote Forrester analyst Andrew Bartels in a report, “C-Suite Tech Purchasing Patterns.”
For CIOs, new project spending covers first-year cloud subscriptions, mobile apps, custom software, staff involved in implementation, infrastructure upgrades, security, and – particularly relevant to the channel – consulting and integration services, Forrester says.
Most new projects support business goals, which has led to the LOB’s rise in influence over tech purchases. Nevertheless, many LOBs bring in the CIO at various times in the buying cycle. For instance, CFOs, COOs and heads of customer service tend to collaborate closely with the CIO from the get-go, while CHROs and heads of sales tend to ask CIOs for help vetting vendors and implementing solutions.
“The business/CIO partnership scenario continues to be common, projected to be at 31 percent of all new project spending in 2018,” Bartels said. “But the scenarios where tech management starts and then brings in business will shrink to 25 percent in 2018, and CIO-only new project spending will drop even more, reaching 17 percent in 2018.”
New projects aside, the CIO’s purchasing power is even more impressive when factoring in tech spending on maintaining and operating the organization, systems and equipment, which Forrester calls MOOSE. This includes spending on software maintenance fees, outsourcing agreements, telecommunications services, operations and maintenance staff, servers, storage, network equipment and PCs. Two-thirds of all tech spending falls under MOOSE, Forrester says, and CIOs own it all.
Another myth: The CMO is the biggest, baddest buyer of tech and will displace the CIO. The roots of this thinking stem from a Gartner report forecasting that the CMO’s tech budget will surpass the CIO’s this year. Moreover, the marketing tech landscape has been expanding like wildfire, from around 1,000 solutions three years ago to 5,000 this year. (For more, see Mining the Martech Gold Rush.)
But Forrester says CMOs will grab only 4 percent, or $18 billion, of U.S. new project spending in 2018. They’ll be outspent by CIOs, COOs, CFOs and CHROs. To be fair, Forrester says CMO spending on new projects will have a compound annual growth rate of 14 percent – the highest among their peers. CMOs also tend not to involve the CIO on tech projects, although this is changing.
“CMOs are starting to see the value in working more closely with CIOs,” Bartels said. “In a survey of CMOs that Forrester conducted with Heidrick & Struggles, 49 percent of the CMOs surveyed listed their partnerships with CIOs as critical, second only to their partnerships with heads of sales.”
Based in Silicon Valley, Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is eager to hear how digital transformation is impacting your business. You can reach him at email@example.com.