Business managers and chief financial officers are playing a growing role in IT procurement, with an increasing number of companies redirecting discretionary IT spending controls to business units. So who is holding the purse strings?
Gartner analysts in the US predict that this could force IT departments to meet major project milestones set by business managers before they get funding to pay for additional work.
Huntsman Chemical Company Australia IS manager Wes Kosior agreed that the trend is emerging where "each IT project competes with non-IT projects, and the normal business criteria is used to evaluate priorities".
Kosior has input to four IT budgets within his organisation, but directly manages around $3 million.
He is responsible for the development of an "expense budget based on agreed activities and a capital budget that is put into a pool of all projects for evaluation".
While in some organisations IT has total control over spending, Kosior said most of the IT spend at Huntsman is centralised. He said the involvement of other business units in allocating IT spend is to provide input into business requirements or service requirements such as HR, commerce and finance.
The downside, Kosior said, is that redirection of discretionary spending to business units will remove standardisation, create duplication and support issues.
"Fortunately, this hasn't happened at my organisation," he added.
In the future, Kosior predicted steering committees made up of business and service managers will be responsible for IT spend.
He disagreed with earlier findings by Gartner that a major trigger for the shift in IT spending control comes from a lack of confidence by senior executives and business unit leaders in CIOs and IT departments in recent years.
"It's not the lack of confidence but the need to be involved and provide business direction," he said.
"Poor project implementation can give IT a bad name, and insistence on proper control is good business practice."
He said business units will need to "talk to each other and make sure that they are not at odds with the strategic direction of the business before they can ask for the project funding, which will be scrutinised by a diverse group".