Companies spend trillions of dollars on technology each year (more than $3.5 Trillion by analyst estimates). Depending on the industry, CIO spends range from 1% to 5% of revenue, higher in industries like financial services and lower in sectors like manufacturing & resources. If you include technology spend outside the CIO organization, this number is likely to be much higher. The business groups are investing in big data, data visualization, analytics, niche cloud applications, BPM and more at a furious pace. Disruptive technologies are emerging every day and companies are more eager than ever to bring them into their environment to deliver transformation they promise.
However, in dozens of conversations I have with clients across industries, I see that the leverage of technology has not kept pace with their potential business value across industries. This challenge of value left on the table is a recurring one and represents a significant competitive risk for organizations.
How much a CIO spends
Depending on the industry, CIO spends range from 1% to 5% of revenue, higher in industries like financial services and lower in sectors like manufacturing & resources. If you include technology spend outside the CIO organization, this number is likely to be much higher. The business groups are investing in big data, data visualization, analytics, niche cloud applications, BPM and more at a furious pace.
Despite all these investments, in dozens of conversations I have with clients across industries, I see that the leverage of technology has not kept pace with their potential business value. This challenge of value left on the table is a recurring one and represents a significant competitive risk for organizations that cannot afford to leave it unaddressed.
Let us understand some key reasons.
First, technology’s power is a lot more transformative today — it is more core to business or it is the business. Imagine your competitor leveraging its data investments to create cross-sell/up-sell opportunities for their sales team in a near real-time manner, while your company despite having made all the investments is not as sophisticated at it. You don’t want to be there!
Second, technology purchase and consumption is ‘democratized’ — almost every function is making investments in technology. While this brings more transformative power to business groups, the governance on value realized from technology investments is often not consistently high.
Third, technology spend as a percentage of revenues is a lot higher now than even 5 years ago and it will continue growing. In an environment where companies are making big investments even to maintain status quo, no company can afford to not assess the return from an important and growing spend.