The IT Pendulum Swings

A CIO recently came to me and said "we are too lean internally - help me create a more strategic internal team". And guess what - he was about the 5th CIO I had talked to in the last year who shared similar plans. No wonder IT recruitment, broadly, continues to rise.

CIO Magazine talks about "millionaire  CIOs". Not a rarity anymore.

All this should mean IT budgets are growing nicely?

Hardly. Gradually, more CIOs are coming to 3 conclusions:

a) Vendors eat up 80 to 85% of their technology/telecom budgets. CIOs have "outsourced" too much.

b) Bigger vendors eat up 75% of their external spend.

c) Many big vendors have spent last few years fattening margins and made acquisitions many of which bring little payback to customers. And are just not spending enough on good R&D or innovating enough for the money.

In the meantime, in vendor world, most of the attention goes to each other and to investors. Like the attention that has gone to Microsoft-Yahoo-Icahn, with hardly a question about how CIOs will benefit from that $ 45 billion burning a hole in Microsoft's pockets.  Or continued praise for Oracle's margins from its acquisitions spree with hardly any questions on the significant slowdown in new products in the mean time. Oblivious to the shift in buyer spend and thinking patterns.

I know many small companies continue to be frustrated with CIOs for not giving them much of a chance. I wish I could say that mindset has changed. But it is significant that CIOs are reinvesting in themselves. And questioning value from many large vendors.

The pendulum is swinging - hopefully it will swing wide.