IT Funding From Outside the IT Budget

Chief Information Officers in the Asia Pacific and Japan region reported increases in conventional IT budgets for 2014 of 0.9 percent, but estimated that only 65 percent of IT is funded from within the conventional IT budget, according to the annual global survey of CIOs by Gartner. 

APJ IT leaders reported increases in IT budgets for 2014 that exceeded the global average, 0.9 percent compared with 0.2 percent globally.

“APJ businesses expect IT to support growth and are increasing IT budgets accordingly,” said Gartner vice president Andy Rowsell-Jones. “Although not a large increase, this growth in IT budget at least allows APJ IT leaders to prepare the ground to capture the digital opportunities appearing in 2014.”

More notable, given the growth of the conventional IT budget, is the proportion of IT spending funded from outside of IT. In contrast to the global average, where 73 percent of IT funding is estimated to be funneled through the conventional IT budget, only 65 percent is estimated in APJ, leaving 35 percent of IT spend to be funded by marketing and other buying centers of IT services, such as sales, operations and R&D.

“This high level of unconventional funding from outside IT, while aiding growth, may contribute to integration issues in the short term and governance in the long term,” said  Rowsell-Jones. 

Filling the digital leadership vacuum
Most businesses have established IT leadership, strategy and governance, but have a vacuum in digital leadership, says Gartner report.

Only 11 percent of APJ businesses have appointed a chief digital officer. Although this is higher than the global average of 6 percent, Gartner believes that to exploit digital opportunities and ensure that the core of IT services is ready, there must be clear digital leadership and all business executives must become digitally savvy.

“Whether your enterprise has a CDO or not, we recommend that CIOs contribute to and, if necessary, lead the discussion about the implications of the ‘digital dragon’ on the enterprise. We expect the CDO role to become more common over the next five years. We expect its scope to grow, too.”

Across the globe, 42 percent of CDOs are currently focused on digital marketing, but this number is falling as more CDOs become true advisors on digital business strategy to the CEO and board of directors, and so they move into the arena of business strategy.

Focus areas for Asia Pacific and Japan
The top technology spending priorities of APJ CIOs for 2014 reveal two complementary goals: exploiting new technologies and trends, and renovating the core of IT. 

Cloud was nominated as the top area for new technology spending by CIOs in APJ. Nearly one-third of APJ businesses are enthusiastic adopters of public cloud, indicating significant investments in the drive for greater agility. This places them ahead of their global peers: 31 percent of APJ CIOs say they have invested significantly in cloud compared with 25 percent globally.

CAMPO