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IT execs remain wary about shared IT budget control

IT shops in conservative enterprises used to directing the IT budget may start to feel the growing power of digital marketing in budgeting decisions.

NEW YORK -- The day is coming when individuals who are not in IT will hold sway over large portions of the corporate IT budget. But some senior IT executives in the most conservative industries doubt that will happen any time soon, at least at their companies.

Business applications are indeed driving infrastructure changes, though some industries see faster change than others. Down the road, IT managers in all kinds of enterprises will have to work with marketing executives to determine how to spend the tech budget.

At TechTarget's Modern Infrastructure Decisions (Mi) conference held here earlier this month, IT managers in some traditional enterprises expressed doubt that their department's influence was on the wane. In fact, many are crafting plans for next-generation data centers.

The IT managers were asked about a study released in early 2012 by Gartner, the Stamford, Conn.-based consulting firm. The research concluded that by 2017, the chief marketing officer (CMO) will spend more on IT than the chief information officer (CIO). Gartner analyst Laura McLellan, who wrote the study, said the shift is underway and a similar study produced in November echoed the original premise. Marketing departments are adopting technology at warp speed.

IT managers said it will depend on which business the business is in.

"We have a big IT department that is all virtualized. We have a small marketing department," said Robert Winterton, a technology specialist at Consolidated Edison Inc. in New York.

"I'm skeptical but I see where [the study is] coming from," said an IT executive at a company that issues municipal bonds, who declined to be identified. He added that he thought marketing will play some kind of active role, but how much will depend on the organization.

Marketing's influence over IT spending occurs more frequently in companies where the CIO is not aligned with the business priorities.

"We still need networks, storage and servers," he said. "But now business needs are more of a driver."

McLellan noted the great differences today that occur by vertical industry, and the financial services industry is among the most conservative. The reasons are regulatory, historical and cultural, McLellan said.

"[Financial organizations] are IT-centric because IT for banks is the business," he said. "But it's back-room IT, not front-office IT."

Financial, insurance and utilities are years behind where they need to be, but it's only a question of when they will shift to a digital business model, not if, she said. The shifts will occur faster than McLellan originally thought -- before her predicted date of 2017, she said.

At this point, it is crucial for CIOs to align with CEOs and CMOs, as all must work together to define what these new digital business models will look like. They can come together where there is common ground, in areas such as business analytics.

How much change occurs depends on how much risk the organization is willing to stomach. Some risk-adverse companies have set up subsidiaries that can offer an innovative culture, McLellan said. These units have their own budgets, management team and can staff up accordingly. They are not beholden to the culture of their parent.

Modernizing the infrastructure

While many IT managers at Mi said they have yet to adopt advanced cloud computing technologies, they are furthering their goals to consolidate, economize and modernize. One IT manager in the financial industry said he has evaluated private versus public cloud computing technologies and has decided that keeping his applications in house is best for his enterprise.

His immediate goal is to create a tiered distribution of resources. The company is heavily virtualized but the IT manager wants to create a means of charge back, plus offer different service models that vary according to application and usage.

IT executives agreed that they expect the data center to undergo a huge transformation during the next five years, but it will still follow a natural progression.

"Years ago there was a server for everything and with server virtualization, there are fewer," said Nick Papadopoulos, a vice president at Assured Guaranty, a financial services company in New York. "Five years down the road we won't want to do a hardware refresh."

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