Published: January 15th, 2014
Executives want to trim the IT budget but the rest of the company always wants more spending. Here’s how a skillful CIO can respond.
I’m fascinated by the paradox that IS department budgets are cut during annual budget-setting exercises precisely when the demand for IT service for mobile apps, social media engagement, better security and improved data quality is going up.
Executives want the IS budget to go down because it has become such a large percentage of total expenses. But during the rest of the year all business departments want more service than the budget-constrained IS department can possibly deliver.
The result are small, informal, rogue IS groups that spring up in various business departments which contract for IT services, such as SaaS or cloud, without the involvement of the IS department.
Informal IS groups also typically develop quasi-systems using tools such as Microsoft SharePoint, Excel, VBA and Access, Tableau or Spotfire, Cognos or Business Objects.
Everyone is happy until the fateful day when the business department loses the camouflaged IT guru who was looking after the quasi-systems. Then a panicky phone call is placed by the business department manager to the CIO: “Please take over and support our informal systems. The ability of my department to function depends on it.”
The CIO is immediately caught in a vice. Agreeing to take on this mess means being bludgeoned for high support costs that no one will appreciate or see value in during next year’s round of budgeting. Declining to get involved means being smeared among the business managers as being unresponsive to business requirements.
A skillful CIO learns how to avoid this dysfunctional vice by defining a process for engagement between the IS department and the various business departments. Business departments will defend expenditures for business systems projects and support costs in their budgets, not the IS department. The CIO will constantly remind executives that every investment in new systems comes with a long tail of support and maintenance costs. Business departments are encouraged to view informal quasi-systems as individual productivity tools or as prototypes for future formal systems and not as mission-critical applications.
I’ve observed CIO’s caught in this ridiculous vice. It’s not a pleasant experience for the CIO or for the IS department. How do you think the CIO can best work collaboratively with the business departments and avoid this dysfunctional vice?