Digital transformation requires significant investment, outside the traditional IT operating budget.
Many of the options for digital business transformation, such as acquisitions and ventures, require significant investment. So where does the money come from?
CEOs in Gartner’s 2017 CEO survey reported that the largest bulk of digital transformation funding comes from self-funding, rather than existing budgets, as they see the primary purpose of digital initiatives to win revenue rather than to save costs.
“This should give CIOs pause for thought, given conventional IT management works mostly on the basis of using operating budgets,” says Andy Rowsell-Jones, vice president and distinguished analyst at Gartner. “Digital transformation requires commitment, leadership, strategy, technology, innovation and importantly, money.”
Globally, interest rates on borrowing are at cyclical lows, and balance sheet cash reserves have been at cyclical highs. According to Rowsell-Jones, this year and next are likely to be the optimal timing points of overlap between the business cycle and the tide of digital business change.
“In two years’ time, the rising cost of capital could make strategic investment more expensive, and playing digital catch-up is harder,” he says.
Gartner clients can read more in the report 2017 CEO Survey: CIOs Must Scale Up Digital Business by Mark Raskino.
Gartner CIO Events
Learn more about CIO leadership and how to lead your enterprise through its digital journey.Explore Gartner Events
Building a Digital Business Technology Platform
What are the technology building blocks an enterprise needs to support digital business? This report details how CIOs and IT leaders...Read Free Research
Master Four Types of Strategy to Perfect Your Digital Transformation
One of the key questions facing CIOs when creating and executing a comprehensive strategy is, "How do we achieve our strategic objectives?"...Start Watching