According to Gartner Research, by 2015, 35 percent of enterprise IT expenditures for most organizations will be managed outside the IT department’s budget and more than 50 percent of the Global 2000 will charge back most IT costs using IT service-based pricing, up from less than 10 percent today. With shadow IT playing a bigger role in IT procurement, organizations need to corral the user community to prevent over-spending or under-investing in mission-critical technologies that promote business advancement. This requires increasing transparency around IT finance and business management and deepening the understanding of what comprises the costs of IT products and services. And, with the consumerization of IT putting business users in the driver’s seat, organizations need to take a stepped-up approach to education and awareness of technology investments and connect costs to consumption.

How can you successfully corral the user community so the organization can get the biggest bang for its IT buck?

Stop saying “no.”  IT departments don’t have the best reputations for being accommodating. And, most business users know if there’s something they need, there’s a website that sells it. But, how does a line of business manager know if cloud services provided by Amazon are a better deal than what can be provided internally? Do they understand what’s included in the total solution and if there are additional costs? Rather than simply saying no to requests – whether that’s for application support or new hardware – provide access to information that supports informed conversations around the cost of IT products and services so managers can better understand the value of technology investments and connect it to business priorities.

Step into the shadow. Proactively competing with third-party alternative providers requires IT organizations to respond to users’ needs faster and with more flexibility. When they can’t, they need to ensure users are armed with information to make informed decisions that benefit the business. When users have visibility into costs and consumption, shadow investments can be a positive thing because users understand how to better evaluate products and vendors and get the technology they need when they need it at a favorable price point.

Be a partner. To engage the user community, IT organizations need to be proactive at generating demand, rather than trying to control it by better understanding and anticipating what is required for better business performance. Then, they can provide a solution-driven approach that ensures the business invests in technologies that align with the business strategy. Organizations that incorporate an IT financial and business management technology solution gain the benefit of centralized control along with the ability to help users make the best decisions based on accurate data.

The IT organization may no longer control all of the company’s technology investments, but they should be the driving force behind helping users make better decisions. Incorporating focused IT financial and business management solutions provide flexibility users want while enabling the CIO to retain control, foster informed-decisions and support a can-do environment.

Benchmarking is a popular way for IT organizations to justify their IT budgets and better focus their efforts to achieve a state of continuous improvement. But without following certain principles, business leaders will likely question the validity of the outcome.  During the webinar, speaker Frank Scavo, president of Computer Economics, addressed one of the first questions any benchmarking effort will come across: What do you measure against?

There are three core benchmarking options – data sets that an IT professional can measure his or her own organization’s IT expenditures against – and each has the following advantages and disadvantages:

Benchmarking against published industry metrics is easiest and quickest. These published industry metrics are easy to obtain from sources such as Computer Economics and other research firms, allowing an IT professional to then conduct its own benchmark or hire a consulting firm for the analysis. The disadvantage is just what you’d expect: Your performance measurement is limited to the published benchmarks. And while this is a real limitation, this approach is still sufficient for many organizations.

Benchmarking against industry peers is flexible but difficult. The big advantage here is customization and flexibility. Since an organization can select its own peer group, it can select exactly those firms that it feels should participate and the specific metrics that matter. However, getting other organizations on board – particularly if they are competitors – can be challenging.

Benchmarking against your own organization can provide deep insights. In large organizations, where each business unit largely maintains its own IT organization, IT professionals can benchmark business units against each other. The drawback lies in the insular nature of the task –  An organization only measuring itself against itself does not gain industry perspective.

These three approaches are not mutually exclusive – in fact, they can be viewed as individually appropriate across a large, multi-unit IT organization or can be used serially, starting with the relative ease of benchmarking against industry metrics and then progressing to peer groups and, finally, intra-organization benchmarking for ongoing efforts.

Beyond the industry-metrics approach or intra-organization benchmarking, organizations need to take a broad, strategic view of who their real peers are when embarking on a peer-benchmarking effort.

Many companies define the peer group too narrowly. For example, while the pool of peer manufacturers of a specific device might be quite small, the peer group of other, more-varied device manufacturers in the industry may be larger – and still a rational, comparable peer group. Resisting the urge to be too narrow reduces the chance of a peer-group effort failing before it gets started because of competitive concerns.

Does geography matter? Many times, the answer is – Less than you think. When labor costs are excluded, IT spending levels for a given industry may be fairly normalized across national borders.

But ultimately, whether your organization embarks on peer-group benchmarking, an in-depth, internal benchmark exercise within your own organization or simply takes its first steps by comparing internal practices to published industry metrics, one thing is clear – Benchmarking delivers clear ROI and a roadmap to continuous budget-allocation and service improvement.

Held March 17-19 in Huntington Beach, CA, the peer-to-peer dialogue focused on how to win in a digital world. CIOs, on average, report that their enterprises realize only 43 percent of technology’s business potential – leaving a lot of opportunity on the table.

Conference attendees agreed that as the digital revolution accelerates CIOs need to adopt new behaviors, hunt for innovations and articulate the value of IT to the business.  How can you create the capabilities needed to meet growth and efficiency demands? Take a look at what was shared during the three-day conference:

CIOs Need to Work to Achieve a Digital Edge – Exploiting digital technology is how organizations will get ahead. Based on the evolving capabilities of mobility, analytics, social computing, communications and cloud technologies, digital investments will continue to rise. But not all digital technology is created equal. Value is measured in terms of price for performance, but linking technology investments to business outcomes remains elusive.

To achieve a digital edge, organizations need to consider what changes need to be made, where they need to digitize, the resources they need to execute efficiently and the business outcomes that have the highest potential for delivering digital value. CIOs should also establish feedback loops to ensure investments align with business strategy and that outcomes realized deliver value to both the customer and the organization.

Plan to Take on Financial Transparency – A black-box approach shrouding IT in the secrecy of spreadsheets prevents organizations from hunting for opportunities that deliver innovation and advanced business goals. Committing to increased IT financial transparency helps organizations better manage IT costs, consumption and demand and drive more value from IT budgets.

The underscoring theme of Gartner Managing Vice President Barbara Gomolski’s closing keynote address was that, without financial transparency, organizations cannot effectively prioritize IT investments and align IT with the enterprise strategy. Ms. Gomolski urged CIOs to make IT financial transparency their number one priority in 2013. By taking on IT financial transparency, CIOs can demonstrate the relationship between IT investments and value and ensure operational spending aligns with business requirements.

Develop or Fine-tune the Digital leadership Strategy – Building the talent to hunt and harvest new digital capabilities is essential as organizations seek a digital edge. Gartner’s Group Vice President and Head of Research in Gartner Executive Programs Mark McDonald, co-chair of this year’s CIO Leadership Forum, indicated in his keynote address that digital talent in the enterprise must evolve because CIOs are finding themselves leading in areas outside traditional IT.

As champion for the organization’s digital business, CIOs need to restructure and realign the IT talent and expertise around the business, taking an outside in approach. Unlike the traditional model, where IT operated in an autonomous environment, it’s now critical that IT objectives are aligned with the business strategy and that technology investments affect positive change in the top line and bottom line. Getting it right requires expanding IT’s role and adapting the organization, skills and resources to respond to new business requirements.

Strengthen the Relationship with the CMO – In a riveting keynote presentation, Gartner Managing Vice President and Distinguished Analyst Yvonne Genovese stressed the need for tighter partnership between the CIO and CMO to increase the effectiveness of technology budgets. The average share of annual corporate revenue organizations spend on marketing is 10.2 percent, she noted, with approximately 50 percent of that being spent on digital technologies outside of IT.

As investments in social technologies such as Facebook, Twitter, Google+ increase, along with mobile marketing and digital commerce, there’s huge opportunity for CIOs to reduce shadow IT spending and collaborate for better practices and use of technology.

Uncover Opportunities Created by Big Data – With patterned-based strategies IT’s role is expanding; it’s more than about keeping the lights on but uncovering new opportunities to leverage digital innovation for competitive advantage. And, success is as much attributed to what is done as to what is not done. Harnessing big data can provide organizations with predictive analytic possibilities that drive more informed decisions and ensure budget dollars are allocated to investments that deliver the greatest value.

This was one of the world’s best annual conferences for CIOs and senior IT leaders. As one Gartner analyst put it, “the very best and brightest Gartner client organizations were represented at the CIO Leadership Forum.”  If you have the opportunity to attend 2014’s Gartner CIO Leadership Forum, take advantage of it – we’ll see you there!

Business investments in technology that support corporate goals and priorities are crucial, and, like all important business decisions, should be backed by fact-based data. For IT investments, that means detailed insight into how technology is used and consumed. The focus needs to go beyond, “How much does IT cost?” and instead ask: “How much value does a particular IT technology investment deliver?” Answering that question requires mature IT financial business management (ITFBM) solutions.

Increased financial rigor for IT management helps organizations understand which IT investments deliver the most value. This requires understanding total IT portfolio costs so organizations can perform accurate comparability analysis and understand the options for technology delivery.

Corporate planning systems do not provide the level of detail needed for accurate IT budgeting and forecasting. They can also keep IT teams and business units mired in Excel spreadsheets, creating an inefficient and difficult to manage process that makes it challenging to consolidate information and perform timely and accurate reporting and analysis.

Increasingly, organizations are looking to ITFBM solutions. IT financial business management as a discipline has matured over the last decade, as more organizations seek robust strategic technology planning and demand management.

With a focused ITFBM solution, organizations can break down silos and promote transparency of IT costs and expenses between CIOs and the business units. This allows organizations to use systems of record data for strategic advantage, understand total IT portfolio costs and how they correlate to business-facing IT services enabling investments that deliver the greatest technology value to the business.

ITFBM applications software drives continual improvement, supports more efficient IT deployment and healthier bottom lines. Working with a partner experienced in ITFBM solutions helps organizations communicate the value of IT as a strategic partner – not a cost center – and better align IT with the needs of the business.

CIOs that advance maturity of ITFBM solutions in their organization can elevate the relationship between IT and the rest of the enterprise – ensuring technology investments deliver on strategies that drive new revenue and help differentiate the business from its competitors.

IT portfolio rationalization is the process of assessing the business value, technical fit and strategic suitability of existing IT operations and planned expenditures for innovation. Done correctly, IT portfolio rationalization allows organizations to utilize the residual business value of their existing portfolio, to support a focus on high-value growth opportunities or shifts mandated by evolving business priorities. As Gartner analyst Ken McGee reminded us in his recent webinar titled “Emerging Technologies and Top 10 Recommendations for Your CEO,” “For the twelfth year in a row, the CIO budget will not increase above three percent year over year. In fact, this year [2013] the average weighted increase will be a negative .5 percent.”

 So how can we do the most to affect top-line growth with the budget we have? Broadly speaking, IT portfolio rationalization can be defined much the way rationality is defined in other actions: Doing things that make sense. In enterprise IT, hallmarks of a rationalized IT portfolio and budget include: checks and balances so requests can be measured against established business priorities and accounting that appropriately and granularly allocates utilization costs to organizational units.

For an increasing number of organizations seeking to control rising IT costs, the quest for IT portfolio rationalization becomes most challenging when addressing the second question: How do we know what services, equipment and planned expenditures are optimal for our organization?

IT governance and portfolio rationalization requires a rigorous, proven methodology and deep data transparency that opens up IT spend visibility and optimization across the enterprise. Instead of “What do we spend?,” the rationalization process opens up questions of: Which business units consume specific services or assets? Could they be served more efficiently through other technologies or means? Is our spending reinforcing the priorities of the business? And what does current data tell us about our future needs so we can plan appropriately?

IT portfolio rationalization is the rigorous, best-practices-driven and professional process of documenting IT asset and service consumption against business needs; analyzing that data against current budgets and alternative delivery methods; and projecting how to continually improve service to the enterprise while increasing cost-efficiency and effectiveness over time. And, with growing number of applications and increased complexity, it is devilishly hard to choose a build (vs. buy) option using home-grown methodologies.

Which gets us to the third question CIOs should be asking themselves in 2013: What are the enterprise-wide steps we can take to ensure and enforce a rationalized IT portfolio and increased IT governance maturity?

A good starting point of aligning systems with strategy is better, faster access to more detailed information about IT’s portfolio of products and services. Getting down to the details of understanding if a division is running multiple instances of the same application or how common utilities are shared can help organizations understand where there are opportunities to increase the effectiveness of the IT portfolio. An IT financial and business management (ITFBM) solution provides fact-based data into technology products and services, enabling organizations to analyze and restructure their portfolios and determine the most effective path to IT portfolio rationalization.

It is a process that, properly executed, communicates the value of IT and mitigates risk; aligns IT operations and assets with business priorities; and delivers the potential for both short-term tactical savings and long-term added value to the entire organization. And it should be on every CIO’s priority list for 2013.

Despite technological advances, the tools and processes around cost recovery and reporting for IT technology consumption and utilization have remained essentially static over the years. Organizations may have evolved from paper files to spreadsheets and corporate budgeting and planning solutions, but none of these provide the level of detail needed for true financial transparency. However, a new IT financial and business management (ITFBM) solution brings greater control and visibility to IT finance and business management and helps organizations advance the maturity curve around IT financial discipline.

Organizations taking a best-practices approach to ITFBM can allow for more than just running the business. With greater visibility and control, organizations can ensure appropriate resources are allocated to revenue-generating activities and that investments align with business goals. Advancing along the maturity curve of ITFBM requires a focused technology solution combined with best-in-class expertise, helping organizations increase rigor around financial discipline and the delivery of technology.

With a mature ITFBM solution, the enterprise IT organization has access to accurate data and a roadmap to reach a state of alignment with the rest of the business – the “Holy Grail” for today’s CIO. Senior management, business divisions and even individual departments all gain deep transparency into the cost of their IT consumption. And, detailed ROI for IT expenditure is no longer a matter of mystery, but one of objective and accurate reporting.

Delivering on the promise of robust ITFBM requires a total-solution approach rather than a focus on just the software purchase. Given the need for a best-practices approach across multiple industries and environments, software-as-a-service (SaaS) implementation and a partner who provides comprehensive support is the most efficient way for an enterprise to capture that expertise without an expensive increase in staffing. Together, those two elements — a deep bench of specialized, consultative business-process expertise and SaaS implementation to improve flexibility while reducing roll-out costs – define a mature, value-added ITFBM solution.

Moving up the fiscal-maturity curve isn’t an option for today’s IT organization – it’s an imperative. Given the potentially game-changing effects (and straight-to-the-bottom-line savings) of optimized IT spending, a move up the curve – to business-aligned IT expenditures and deep cost transparency – can deliver competitive advantage.

In many organizations, it’s the CIO who is often the first responder in the face of a business emergency. After they make sure employees are safe, the next course of action is ensuring business continuity and stability of systems.

Any IT leader who has lived through a disaster knows the importance of having a comprehensive business continuity plan to ensure their systems get up and running as quickly and smoothly as possible to support and sustain normal business operations. Part of that plan includes selecting business partners who put the same emphasis on disaster recovery and business continuity preparation. This is particularly important as core enterprise services leave the local data center and take up residence in the cloud.

Any interruption in service or loss of data can have huge financial implications in nearly every business. When Hurricane Sandy struck, many of our clients were in the midst of their month-end IT financial and business management reporting production cycles. As a result of ComSci’s disaster recovery capabilities, these processes continued uninterrupted and remained on schedule.

More than simply having a prepared partner, using strategic partners like ComSci, as part of the enterprise IT solution, can introduce added resiliency into IT infrastructure. Single points of failure have given way to a mesh of dispersed services connected by reliable and redundant networks. ComSci’s own continuity-of-business and disaster-recovery plans follow or exceed industry best practices, with fail over protection so that businesses continue to have high availability of their data and operational functions. Additionally, ComSci’s systems are routinely tested for optimal functionality and revised periodically to accommodate for new systems, networks, devices and applications.

IT financial and business management (ITFBM) solutions play a key role in today’s best-practices approach to managing the expenses and consumption of IT products and services. However, the right ITFBM partner does more than offer technology – they add value to the enterprise by serving as an extended partner, bringing IT financial and business management best-practices, processes, methodologies, expertise and intimate domain-knowledge. And, in the face of crisis, they are prepared to see you through and help you weather the storm.

To help people affected by Hurricane Sandy and other disasters, consider donating to the Red Cross.

CIOs will grow their role as agents for innovation. In most organizations, technology is playing a larger role in business success. With technology spending increasing in 2013, CIOs will look to dedicate technology budgets to innovation, not just running the business.  As change agents, CIOs will need to partner with other business leaders to understand business priorities and where they can balance IT investments and add value. Whether that’s investing in cloud services, getting insight into where budgets can be reduced in other areas of the business or increasing transparency of IT financials across the organization, the focus will be on ensuring technology investments align with goals for corporate advancement.

The discussion of infrastructure commoditization will be elevated. There will be a lot of attention in 2013 on harnessing big data to increase operational efficiencies, enhance infrastructure and operations performance and reduce RTB (run-the-business) costs. Commoditized infrastructure resources will take center stage as organizations seek to satisfy their applications and database infrastructure needs. This will enable organizations to significantly reduce the time to put systems in place for running applications, data capture, and deploying advanced data analytics engines for both.

Financial rigor and business acumen around technology deployment will increase in 2013.  Should your organization increase investment in cloud services? Is there opportunity for lower application portfolio total cost of ownership? Will IT budgets support innovation and business transformation? Answering these questions and making IT investments in a fiscally responsible way requires visibility into accurate current and forecasted technology spending. Tools and technology that increase transparency around the cost and consumption of IT products and services and enhance the ability to perform comparability analyses help organizations optimize technology investments both in the form of optimizing cost for performance and for innovation. With accurate insight and greater discipline around technology deployment, CIOs can guide their organizations to better leverage new and transformative technologies.

If there’s a common theme to all of our 2013 predictions, it’s this: enlightened C-level management has come to see IT not as a resource drain, but as a real center for corporate innovation and potentially game-changing competitive advantage for the enterprise. Accompanying that realization are greater demands on the CIO – to optimize costs for performance, rationalize the IT portfolio, lead the way to transform IT, and innovate to grow and compete. 2013 is going to be a year of change. Are you ready for it?

In many cases, employees are willing to absorb the cost of the devices and data plans. Shifting these costs to employees can result in some savings to the organization, however, once the device is hooked into the corporate network, without careful monitoring, measuring and management, the cost of convenience could be inviting businesses to “bring your own disaster.”

Many organizations are now facing a blended environment – managing corporate-owned devices as well as providing support and services for employees who bring their Android, iPhone or other devices to work. The same Cisco survey noted that 84 percent of respondents said their company provides some tech support for employee-owned mobile devices and 36 percent said their company offers complete support for personal devices.

In addition to management and support challenges, the IT organization needs to look at the additional costs associated with BYOD such as help desk, application control, security, etc. and consider the total cost of ownership. This becomes a necessity because as the line between personal and professional use continues to blur, employees are not just using their device to run business applications, but for greater corporate benefit.

For example, many Apple store employees demonstrate features of the latest iPad on the sales floor using their own tablet. Pharmaceutical sales reps are using their personal devices for product detailing. And, with personal devices as a viable business tool, organizations need to have a means to measure costs and gain insight into expenditures to ensure they take advantage of economies of scale, best-practices and cost control or cost optimization opportunities.

In a BYOD world, hidden costs and challenges include:

*More security issues – The BYOD trend raises both physical and data security issues. This requires organizations to evaluate firewalls, intrusion detection, and other solutions to mitigate theft or loss of company data and look at the costs for enforcing security and compliance at scale. For organizations that previously standardized on Blackberry devices, allowing employees to bring iPhones and Androids into the workplace may also require investment in additional mobile management solutions, enabling support for an array of platforms.

*Additional policy requirements– Without defined and enforceable policies, the BYOD trend can actually result in higher costs. Are employees responsible for the purchase of their own device? Does the organization subsidize the cost of the device or data plan? What happens when an employee leaves or is terminated? Do organizations have visibility to ensure devices are de-provisioned from the network in a timely manner?

*Other cost concerns – Does the organization have insight to control per-user costs? Are there opportunities to reduce costs through a volume discount rate on data plans? For companies offering an “expense-back” option, is coverage limited to particular usage? For example, does the company only reimburse for voice plans and not text messaging? When employees travel globally, are there controls in place to ensure roaming charges aren’t excessive? What happens when employees exceed the stipend amount?

As the BYOD trend becomes more pervasive, organizations need greater visibility into what is personal and what is corporate and have a means to measure and control costs. An IT financial and business management solution can help organizations get a handle on the hidden costs of BYOD to support more appropriate financial decisions and ensure the cost of convenience isn’t detrimental to the bottom line.

What are you doing to ensure you’re not bringing your own disaster?

With more businesses relying on technology for competitive advantage, organizations cannot afford to remain with legacy budget processes and practices. Trends such as the consumerization of IT (BYOD), cloud computing and more marketing-initiated IT spending have also set the stage for more robust IT financial management. These trends have resulted in business unit management taking greater responsibility and control of their own technology budgets, which has contributed to the emergence of shadow IT budgets, along with additional challenges for IT and corporate business leadership.

The bring-your-own-device trend and web services make it possible for non-IT personnel to provision their own technology, but they lack the specialized expertise to determine appropriate security, standards, support and services. According to the InformationWeek survey, 43 percent of respondents don’t have an IT governance board, or if one does exist, it has little influence on IT spending. While business units may be able to bring in devices, the IT department needs to handle the critical internal infrastructure, security, data integration and help desk services.

The InformationWeek survey also notes that centralized IT isn’t dying – eight out of 10 of the 351 respondents centralize most IT spending. But partial visibility into spending isn’t enough. Corporate budgeting and planning systems can help with cost containment, but they cannot provide the level of detail a focused IT financial and business management solution offers.

With old-school IT budget processes, businesses cannot manage change such as when an unexpected expense arises nor can they accurately forecast for future technology consumption. IT budgets are typically planned six to nine months in advance, yet tend to change significantly based on business and/or IT requirements even before being implemented. Only one-fourth of survey respondents have a formal process to deal with such changes, while one-third rely on the CEO to mitigate the resulting IT budget crises and provide insightful direction. The result is disconnection between IT forecast and actual spend, resulting in variances and worse, an inability to prioritize technology investments.

With 47 percent of respondents indicating they expect to get an increase in IT spending in 2013, it is time to put much greater rigor and financial discipline in their approach to technology deployment. A majority of respondents note that IT budget requests, approvals and tracking are too cumbersome with their current process. The result is an inability to set future direction for critical spending.

Conversely, with a state-of-the-art IT financial and business management (ITFBM) solution, organizations can now implement more effective IT governance. Using a data-driven approach, IT organizations, in concert with corporate business management, can prioritize IT funding and have the flexibility to respond to unanticipated projects and expenses. An ITFBM solution helps CIOs assess the business of IT from different perspectives such as defining and understanding fixed verses variable IT products and services cost structures, benchmarking those costs/rates against peer groups, or comparing the cost of delivery against a third-party alternative like outsourcing or delivery via private, public or hybrid cloud infrastructure. It also increases overall transparency and creates a heightened sense of shared corporate responsibility with the CIO, IT leadership and line of business management, resulting in more accurate and dynamic technology budget process and practices.

Visible, accurate IT budgets that drive greater technology value and organization-wide technology ROI start with two things: deep, clear data about consumption and spending; and a flexible process for allocating the costs across business units based on consumption – the right ITFBM solution can deliver both. As IT plays a greater role in your company’s success, isn’t it time you got your budgeting practices unstuck?