Posted by: Anilpatrick
ASP, CAPEX, CIO evolution, cloud computing, OPEX
I recently overheard a very interesting debate between some consultant types and a couple of CIOs. While I’d rather not divulge the entire conversation as such, its gist was:
(1) It’s becoming increasingly clear that cloud computing is pushing the reins of IT investment decisions away from CIOs to that of the CFO.
(2) The CIO should transform himself fast enough, considering the new scenario. Else, he should prepare himself to become another administrative officer – just a pen pusher with not too many powers or decisions to take.
While there were many arguments being offered as to why the CIO needs to evolve, there were a couple of reasons which made sense. So here goes.
The CIO-CFO divide has traditionally centered on the most contentious issue in an IT budget – CAPEX. While many CIOs usually manage to find their ways around this bone of contention with innovative ways to stagger CAPEX across the years, the CFO still finds many loopholes that can be used to win these debates. And, cloud computing is adding to the CFO’s arsenal since it allows the transition of projects like enterprise wide applications from being CAPEX items to OPEX.
Vendors have been resourceful (as usual), and it’s quite common to find them pitching directly to the CFO (or the COO) these days. These meetings are only going to increase in the days to come.
Feeling skeptical about this statement? Just take a look at the agenda or the guest list of recent vendor sponsored events. You will find a slowly increasing presence of CFOs at these events (especially in junkets where they try to sell snake oil under the cloud computing moniker). Yes, these occurences are still not common enough to qualify as a trend, but these are possible threats to CIO fiefdoms.
CIOs need to evolve fast enough to counter this change. The interesting part’s that such changes are not new to them. Veterans will still remember how they made the transition from their initial “EDP manager” days (circa late 80s). It amazing how today’s IT leaders have successfully made the transition along corporate ranks from the humble EDP manager to become a head of the IT department (or GM of IT), and then a CTO, before donning the CIO mantle. Therefore, this transition should also be not too difficult for the CIO. But yes, it’ll involve substantial innovation.
And how should CIOs make this next evolution? I don’t have the answers, but would love to hear from you. So do let me know, by dropping a line to apatrick at techtarget dot com.
As I leave, I would like to pay tribute to Nicholas Carr who saw this coming, way back in 2005. It was quite a bold observation, considering the ASP model’s gruesome demise in 2000. Carr’s article “The end of corporate computing” is a must read, in case you haven’t already done the honors.