What issues could you encounter if IT is funded directly by the business?

Question

Answer

What I've seen happen—particularly when you are in a cost cutting mode—is that if you have business units funding IT, it tends to be an easy line item for them to cut back on. Cutting back what they're going to give to IT is far easier for them than cutting their own staff. Then it's very difficult to get some of those critical infrastructure renewals, etc., approved. Whereas when that's part of a centralized budget, if you're given a cost cutting target, you'll be focused on how you achieve that.

But you can then make those better decisions for the company, as opposed to being an easy target for the business user to cut back. If they have control of the funding for just IT’s projects, then they have to balance those projects against other things they're doing. And that's an easier discussion.That's why a 50/50 funding model tends to have better results in the long term.

Answer

It depends how much the CIO can lead the visioning for the strategy. Because if we're not part corporate strategist at the same time as technologists, we're nowhere, in a lot of cases. Particularly when the reporting is through the CFO, you have to be able to speak business at the same level. And there are many CIOs that I know who are not only MBAs and PhDs, they also have really good business acumen. They have learned the industry savvy they need to be able to answer the question, &#34;What's it going to cost you if you don't do it.&#34; And the answer is always the same: competitive advantage, period.

Answer

First issue is a notion that IT isn’t part of the business… everything else has trade offs that can be worked with.

Answer

Ideally, IT should have its own budget, it should take the business needs and align technology to meet or exceed them, but IT knows best on what to spend the money on. If there is an increase in the budget it's best for IT to decide on what to spend them on, maybe there are technologies that it want to implement but never had the budget in the past or wants to put them in innovation, training etc. If there is a decrease, it should be in percentage how much the overall budget is cut so then the IT leadership can find savings and decide what is a must-have and what' a nice to have.

What issues could you encounter if IT is funded directly by the business?

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