Line-of-business tech budgets may soon top IT department budgets: Gartner

Summary:All that is happening and will be happening in IT boils down to the 'CSMI Nexus' -- cloud, social, mobile, information.

Gartner has just issued it's latest set of information technology predictions for 2012 and beyond. Along with the more predictable forecasts that everything is going to cloud and mobile, with a lot of Big Data to go along with it, is this interesting nugget: IT departments may soon have smaller technology budgets than the business units they're supposed to be serving.

Gartner analysts are predicting that by the year 2015, 35% of enterprise IT expenditures for most organizations will be managed outside the IT department's budget. "Next generation digital enterprises are being driven by a new wave of business managers and individual employees who no longer need technology to be contextualized for them by an IT department," the report states. "These people are demanding control over the IT expenditure required to evolve the organization within the confines of their roles and responsibilities. CIOs will see some of their current budget simply reallocated to other areas of the business. In other cases, IT projects will be redefined as business projects with line-of-business managers in control."

Can it be, that non-IT types may have bigger technology budgets that IT departments? "We know that has been shifting subtlety over the years," says Daryl Plummer, managing VP and Gartner fellow in an audio interview posted at the Gartner prediction page. "Now, it is something has become a major issue as CMOs, or chief marketing officers, may end up having larger IT budgets than CIOs."

Plummer, who provided much of the grist for Gartner's latest predictions, says at issue is that IT still is not perceived as delivering value to the business. "What it means that IT has to change itself," he says. "It has to change itself to become more as a broker of services than just a provider of technology, or even as a technology service provider. Many IT providers think of themselves as service providers to the business, when in fact, 80% of IT budgets go to just keep the lights on... Eight out of 10 dollars spent on IT is 'dead money,' because it goes to just keeping the lights on."

That's why IT leaders need to increasing look at approaches and practices that will move resources away from costly maintenance, and toward more focused solutions that help grow the business, Plummer adds.  "Unfortunately, the business doesn't care about IT. The business will only care about what it can do it generate more business, and generate more revenue."  He says initiatives such as cloud computing, and outsourcing in general, will help IT leaders "move away from some of the things that are just about keeping the lights on, that don't have value for their company, so they can spend more time with that 20% that generates value. that generates competitive advantage for their business. That's how they can get back in the game."

The new driving force behind IT for the foreseeable future is what Plummer and his associates call the "CSMI Nexus" -- comprising cloud, social, mobile and information.  The CSMI Nexus forms "a phenomenon that is changing the world as we know it, and certainly changing the IT landscape," he says. "Cloud is the means of delivery. Social is the behavioral style, the interaction styles. Mobile is the access mechanism. Information is the analytical foundation on which you figure out what decisions to make. You have to build a philosophy around that. You have to say, here's how were going to deal with CSMI, and here are the ramifications of that."

Additional Gartner predictions include the following:

By 2015, low-cost cloud services will cannibalize up to 15 percent of top outsourcing players' revenue. "The projected $1 trillion IT services market is at the beginning of a phase of further disruption, similar to the one the low-cost airlines have brought in the transportation industry."

In 2013, the investment bubble will burst for consumer social networks, and for enterprise social software companies in 2014. "Vendors in the consumer social network space are competing with each other at a rate and pace that are unusually aggressive, even in the technology market. The net result is a large crop of vendors with overlapping features competing for a finite audience."

By 2016, at least 50 percent of enterprise email users will rely primarily on a browser, tablet or mobile client instead of a desktop client.

By 2015, mobile application development projects targeting smartphones and tablets will outnumber native PC projects by a ratio of 4-to-1. "Smartphones and tablets represent more than 90 percent of the new net growth in device adoption for the coming four years, and increasing application platform capability across all classes of mobile phones is spurring a new frontier of innovation, particularly where mobile capabilities can be integrated with location, presence and social information to enhance the usefulness."

By 2016, 40 percent of enterprises will make proof of independent security testing a precondition for using any type of cloud service. "'Inspectors' certifications' will eventually become a viable alternative or complement to third-party testing."

At year-end 2016, more than 50 percent of Global 1000 companies will have stored customer-sensitive data in the public cloud. "It is estimated that more than 20 percent of organizations have already begun to selectively store their customer-sensitive data in a hybrid architecture that is a combined deployment of their on-premises solution with a private and/or public cloud provider in 2011."

Through 2015, more than 85 percent of Fortune 500 organizations will fail to effectively exploit big data for competitive advantage. "Collecting and analyzing the data is not enough — it must be presented in a timely fashion so that decisions are made as a direct consequence that have a material impact on the productivity, profitability or efficiency of the organization."

Topics: Social Enterprise, CXO, IT Priorities, Mobility

About

Joe McKendrick is an author and independent analyst who tracks the impact of information technology on management and markets. Joe is co-author, along with 16 leading industry leaders and thinkers, of the SOA Manifesto, which outlines the values and guiding principles of service orientation. He speaks frequently on cloud, SOA, data, and... Full Bio

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