Tech Spend Minders: Why the Heck are CIOs Becoming Relevant Again? (Part 1)

It took years to put them in their place -- or so we thought -- but CIOs are once again surfacing as having greater influence on procurement and supply chain technology buying decisions than before. And this time, more and more procurement organizations I hear from are viewing their involvement as positive rather than negative. So much for the whack a mole (a boardwalk game from my childhood) -- or whack a geek -- model to squelching tech involvement, I suppose. I've got a few theories on why CIOs are daring to show their face in buy-side circles, but first let me offer up a little analysis on the situation and its irony in this post. In the first column in this two-part series I'll provide some backdrop and context. Then in the second, I'll provide some additional specifics and anecdotes about CIO involvement in recent buying processes and decisions. Let's begin.

Perhaps the most interesting piece of this whole CIO involvement mystery to me is the context surrounding the rising level of influence. Given what's actually transpired, you'd think the opposite situation would have resulted. Consider how delayed ERP upgrade cycles in recent quarters and resulting procurement-led technology investments have created a context where you'd think CIOs would be less involved than ever in functional area buying decisions. Or consider how the rise and ubiquity of Saas (software as a service) deployment and licensing models have also made technology executives less relevant not only from an implementation and integration perspective but also a budgeting one (since large up-front capital budgets are no longer required in many cases).

In this context, it's the small guy (i.e., the best of breed vendors) who is getting a second chance. How? Thanks to the fact that IT-led ERP rationalization based upon a total cost of ownership (TCO) systems premise are losing out to vendor fragmentation and functional area demands, decisions that non-IT executives are making predicated on hard dollar metrics (e.g., ROI, ROIC, RONA), rather than artificial IT ones, are winning out. Moreover, given the rise of outsourcing (e.g., indirect procurement and P2P technology), companies such as IBM are taking over the role of technology manager and are often turning to hosting partners rather than relying on internal client technology groups to take on systems responsibility. And I've not even mentioned how CFOs are often driving shared-services investment decisions which often put greater initial emphasis on process (and labor costs) over technology, for the better or the worse.

Given this environment, you'd think that CIOs would be building trenches around their server rooms and mining the space outside corner offices to protect themselves from budget and staffing cuts. You can almost see their last stand coming, as the prototypical CIO takes on a forced transformation from executive to a manager, giving up the executive lunchroom in favor of Taco Bell (or, if he's lucky, reverting back to his originally intended purpose of managing information rather than systems). But still, even in this role, he most likely loses the perks he previously enjoyed.

So given all of this context, why then, are CIOs actually becoming more relevant -- and dare I say useful -- in helping with Spend Management technology buying decisions? On a recent Purchasing webinar I was part of, we were able to sneak in a question to poll the audience on precisely this topic. The response shocked me. While I was expecting more of the audience to suggest that IT was less influential and helpful of late, they actually suggested the opposite. Which confirmed a number of anecdotal observations I've seen in deal cycles of late as well.

In short, I believe the reasons CIOs are becoming more influential are relatively simple: 1) they're looking to help the business because they have less to do around IT upgrades; 2) they're getting SaaS religion and are no longer defending the ERP code block or stumping for ERP like they used to; and 3) they're going back to basics and looking for more customers in the business to justify their organization's role given the changing budgetary environment.

Watch for Part 2 of this series where I'll offer some interesting additional specifics and anecdotes surrounding CIO involvement in recent buying processes and decisions.

Jason Busch

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