Dell Technologies CEO Michael Dell says organizations that continue to allocate IT budgets based on a single-digit percentage of their overall revenue are headed for obsolescence in the digital business age.
Appearing at the Dell Technologies World 2018 conference, Dell says as organizations realize they need to become software companies to compete effectively, line of business executives at organizations as diverse as J.P. Morgan Chase and Comcast are realizing they are competing against web-scale companies that realize IT is now at the core of every business process.
“Nobody asks Google what percentage of revenue they are spending on IT,” says Dell. “That would be the stupidest question ever.”
The rise of Internet of Things (IoT) applications and 5G networks is only going to expand the scope of the digital business transformation, adds Dell.
Dell says a generational transition is now playing out as CEOs wrestle with the rise of digital business. A new generation of CEOs realizes that barriers to entry for competitors are falling thanks to the rise of competitors employing digital businesses processes that don’t think of IT in terms of allocating a percentage of revenue to determine the limit of the IT budget. In fact, Dell notes that large swaths of IT spending are now being driven directly by line of business executives rather than IT leaders.
The good news, says Dell, is that many of the CEOs participating in organizations such as the Business Council are starting to ask more informed questions about the role IT plays in business. A few years ago, IT would not even have been on the agenda, says Dell.
“It’s change or die,” says Dell. “Be quick or dead.”
Digital business on the one hand is an abstract concept. But as digital business processes continue to evolve, it’s clear the role IT plays in organizations that make that transition will be forever changed utterly.