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The allocation of the IT budget among these three categories is influenced by market environment as well as business strategy and priorities in specific industries and sectors. Overall, CIOs report the majority of their technology budgets are allocated to support business operations (57 percent), compared with only 26 percent to fund incremental business change and 16 percent to bolster innovation.
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But because today’s innovation investment can become tomorrow’s operational expense, it’s critical to understand in advance the long-term total cost of ownership of investments in innovation. Innovation investments can allow CIOs to contribute directly to top-line growth. They require timely and efficient execution, and minimizing expense typically takes a back seat to delivering increased business value. Technology initiatives that modernize or automate enterprise systems can ultimately drive top-line revenue growth by transforming business capabilities, processes, and performance. The shift of applications and infrastructure to the cloud can free up budget dollars for investment in change and innovation initiatives aimed at influencing top-line growth. As maintenance and upkeep became increasingly complex, they allocated a significant percentage of the IT budget to maintaining this equipment to support business operations. Organizations historically invested in back-end systems and infrastructure. This includes looking beyond the traditional distinction between operational and capital expenses to track and report investments across business operations, incremental business change, and business innovation.īusiness operations. In their quest to make the best use of IT budgets in support of business strategy, many CIOs are embracing a fundamental shift in the IT operating model and cost structures.