CIO enterprise IT spending focuses on business value, not cost cutting

Business trends suggest executives are less concerned about cutting costs and more interested in value-boosting digital technologies.
Written by Charlie Osborne, Contributing Writer

Chief information officers (CIOs) are more likely to consider IT budget budgets in relation to solutions which enhance business value rather than reduce costs, according to new research.

On Tuesday, Gartner released the results of a survey into today's priorities for CIOs.

According to the survey's respondents, business value or benefits realization "rather than the biggest or fastest cost reductions" are the most important aspects considered today by executives.

The need to realize business value and ensure ROI also trumps lowered cybersecurity risks, performance benchmarks, and low operational risk when cost optimization ideas are considered.


"CIOs have the most influence over the selection and approval of cost optimization opportunities within IT shared services," said Stewart Buchanan, research vice president at Gartner. "Interestingly, CIOs who focus on digital business opportunities have greater responsibility for cost optimization than those who don't."

"This suggests that CIOs are starting to exert influence over selecting and approving digital business ideas to optimize business costs," the executive added.

The recession forced many companies out of business and many others to perform severe pruning and restructuring to stay afloat. The economic landscape is stronger than before, and while a balancing between revenue, growth, and expansion has to be maintained, investment is key to maintaining business value into the future.

The survey suggests that 2.5 times as many IT organizations have gained financial control rather than losing it in recent years, and as IT budgeting has become more business-focused, nearly half of digital technology spending is paid for by the business, with a quarter coming out of the IT budget on chargebacks.

"The survey findings highlight how cost optimization has become a business-focused, continuous discipline that drives spending and cost reduction, while maximizing business value," says Buchanan. "It's not enough to simply reduce IT spending; CIOs must reinvest in growth and transformation to deliver more value."

In related news, the research agency recently predicted that digital twin technologies are soon to take center stage in the enterprise space.

Digital twins are virtual replicas of physical assets made possible through Internet of Things (IoT) data collection. Gartner says that 48 percent of companies are already enjoying the benefits of IoT are using, or plan to use, digital twin solutions by the end of 2018.

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