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IT leaders' new role: restrain over-the-top spending on digital doodads

Organizations will spend millions on digital platforms. IT leaders need to step in and ask basic questions before businesses throw gobs of money at shiny new things with no clear value.

The next wave of technology spending isn't going directly to IT departments. On average, a recent survey of 820 executives at large enterprises by TaTa Consultancy Services finds, organizations plan to spend an average of $113 million each on digital initiatives.  Seventy percent say digital initiatives -- which include customer engagement, big data analytics, cloud and mobile -- are important to their organizations this year.

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Photo: ZDNet

Marketing, customer service and R&D will get the lion's share of this spending. But IT will be playing a supporting role all across these digital efforts, and there's no doubt everyone will be turning to IT for answers and guidance. Now is the time for IT departments to apply years of learning and experience to help the rest of the organization get the most out of their technology spending. 

Mike Gruia, CEO of UMT360, knows a lot about enterprise portfolio management -- that's his business. This is the key tool the CIO has at his or her disposal in the digitization drive many organizations are pursuing, he says. Failing to understand the true cost of ownership of technologies and how they fit into the enterprise strategy leads to the same problems that have stymied enterprises years: throwing gobs of money at shiny new things that have unclear value.

In a recent white paper (available through the CIO website), Gruia says there are three important questions IT leaders need to ask as they help their organizations embark on the digital journey:

1) What investments will we consider for the future? IT leaders need to sit down with other business leaders to map out where the technology direction they will be taking. "CIOs are conservative by nature, and with good reason. Above all, they must keep the lights on," Gruia relates. As a result, IT leaders can serve as a buffer or as a restraint to deter wild, bust-the-budget technology spending. "CIOs are involved in the most difficult discussions concerning investments in business digitization so IT chiefs have the difficult task of somehow quantifying the business implications and risks of the new technologies such as mobile computing, social media, cloud computing or big data."

2) What does our IT portfolio look like? "Most CIOs recognize how critical it is to identify and prioritize what’s important then align those priorities with the overall business direction," says Gruia. The emphasis needs to be on "aligning the allocation of resources with company’s priorities," as well as what applications and infrastructure are available to support efforts going forward.

3) Why does the enterprise need IT leadership for its digital transformation? A good question that needs to be addressed. Traditional, hierarchal leadership -- with its obsession with risk mitigation, resource optimization and linear, incremental improvements -- only gets in the way of digital transformation, Gruia points out. As IT leaders have learned over the years with enterprise-focused initiatives such as service oriented architecture and business process management, "digital transformation is not a project, but rather a portfolio of programs." Such efforts will require multiple sponsors and enterprise governance.  IT leaders can help serve as the agents that will keep things on track and strengthened with enterprise architectural aproaches.