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CIOs losing influence in key IT purchasing decisions

CIOs losing influence in key IT purchasing decisions

By Ovum StraightTalk
19 June 2013, 09:09 a.m.

Maxine Holt, Practice Leader, Enterprise Solutions

While the CIO is still the biggest influencer in making key IT purchasing decisions, other stakeholders are now playing an increasingly important role.

This particularly the case in larger enterprises (5,000 or more employees) because all too frequently, discussions with IT take place at the solution architecture level, rather than at a functional business or visionary level.

These new influencers: CEOs, CFOs, and chief operating officers (COOs), take a different view of technology, and are increasingly looking beyond the traditional sources of advice in order to help them make the right choices. When making key purchasing decisions they place less reliance on deep specific technical knowledge, emphasizing instead a broad spread of knowledge about the business use of technology specific to the individual enterprise.

The CIO’s influence is diminishing, with CFO as well as COO on the rise

Ovum’s Technology Trends survey shows that when it comes to the roles that have influence in making IT purchase decisions, the biggest influencers are the CIO (with the IT department), closely followed by the CEO, CFO or finance director, and COO. Looking at the results in more detail, on a scale of 1 to 4, where 1 is not influential and 4 is highly influential, the CEO has the most overall influence, with 2.94 on purchasing influence but the highest sign-off authority rating of 3.02 (giving an overall score of 5.96). 

As might be expected, the CIO and IT department is the most influential in terms of the technology purchasing decision, with a rating of 3.06, but a lower budget sign-off authority rating of 2.84, giving an overall score of 5.9. Ovum is not surprised to see the CFO as key in these purchasing decisions, with a rating of 2.88 for influence and 2.95 rating for budget sign-off authority (overall total of 5.83).

Today, the CEO and CFO have more of an overall view of the architecture of the enterprise and how IT strategy fits in. As such, the impact of the CIO has diminished, and this has further elevated the CFO, in particular when it comes to IT purchasing decisions.

To satisfy the demands of CFOs we have seen the rise of organizations like Proformative, which recently launched Proformative Exchange, directed at CFOs and other related roles to help them understand the different kinds of IT purchase decisions that they may become involved in, and importantly, provide them with the opportunity to obtain advice from their peers in related and non-related industries. 

Product directories aplenty can be found across the Web, but these are usually at the solution architecture level, and are therefore more appropriate for the IT manager (and CIO) than the CFO or CEO. As one might expect, enquiries on the Proformative website show lots of finance-based discussions, and Proformative is looking to use these exchanges to provide a more focused view of technology support to CFOs. 

Our data at Ovum certainly reflects this change of direction, where increasing influence is being wielded by CFOs in technology purchase decisions.

The CIO needs to act as a broker between IT and the business

A CEO needs to create an environment where change can happen quickly, and the CFO supports this type of environment. Furthermore, we have seen the COO rise in influence in Ovum’s Technology Trends survey, moving from an overall score of 4.77 in 2011 to 5.27 in 2012, while the influence of all other C-level executives reduced between 2011 and 2012 data, and we expect that the COO is working extremely closely with the CEO, but mainly with an inward focus.

By acting as a “broker” between IT and the business, the CIO will become more business-focused, demonstrating “the art of the possible”, using technology to achieve the rapidly evolving aims and objectives of the business. To remain a key influence in the decision-making game for IT purchases, the CIO must also evolve.