Within the next three to five years, says Gartner, many CIOs of major organisations will have no budget over which they are directly responsible. By 2010, CIOs running the infrastructure at all kinds of businesses will have become familiar with such a dramatically changed role.
“The CIO is facing a real prospect of becoming a ‘zero-budget CIO’ by the end of the decade,” said John Mahoney, Gartner vice president and research director. “This does not reflect a decrease in stature, [rather] it reflects irreversible changes in the business environment which the CIO must meet head on.”
Mahoney, himself a former CIO, admitted during a press conference at the Gartner Spring Symposium in Florence, Italy, that the trend towards shrinking IT department budgets was nothing new – but that his team of researchers had found evidence indicating that the process had accelerated in recent months.
A survey carried out in March 2002 among an unspecified number of European CIOs found that 37% reported ‘significant’ levels of IT spending taking place outside of the IT budget. Gartner was unable to provide a precise definition of ‘significant’. But the analyst group said it believed that half of all IT spending would take place outside of the IT department by 2005.
Gartner cited one example of an early adopter of this new CIO model: UK oil giant BP, which is currently responsible for only 10% of its total IT budget of $900 million (€1.03 billion). The remaining 90% of the budget is outsourced.
However, the new CIO model will only extend so far. Gartner analysts dismissed as unworkable the idea of outsourcing the CIO role itself. “Some companies have tried that in the past,” said Charles Chang, Gartner executive programs vice-president, “and they all generally came to regret it.”
Gartner said that CIOs were facing “mounting pressure” from several directions. Less than 15% of business process outsourcing contracts – one of the fastest growing parts of the IT services sector – are now signed by CIOs, it said.
At the same time, the CIO has faced some loss of confidence as a result of an apparent inability to deliver business benefits in the wake of the ebusiness hype. Gartner said CIOs “urgently” needed to build credibility for themselves and their departments.
“The challenge for CIOs is to define and deliver a sustainable value proposition from the IT organization to the enterprise in an environment with increasing turbulence in technology, business and the economy,” said Mahoney.
“That value will centre more on leadership and service integration and less on creation of technology. That doesn’t mean the end of the CIO as a distinct role, but it does mean that major changes lie ahead.”