Adapting to the New IT Buying Model

Traditionally, the IT department has been in charge of purchasing enterprise IT architecture and services. But according to a new white paper from Everest Group, the advent of next-generation technologies and pricing structures is making buying enterprise IT a much more democratic IT-moneyprocess, and CIOs must adapt or lose relevance.

IT Gets Personal
As detailed in “Who is Moving Enterprise IT’s Cheese?”, the “time-consuming, bureaucratic” traditional method of having all enterprise IT purchases centralized through the IT department does not adequately meet the pace or technology needs of modern business. Today, individual IT users are able to lease a cloud-based server and create their own personal environment, outside of the oversight of IT.

Furthermore, “pay per use” cloud payment models enable individual users to only purchase the exact amount of bandwidth they need, allowing both quicker deployment and the ability to treat cloud-based IT services as operational costs rather than capital expenditures.

Complex Times Create Complex Needs
A second factor driving change in how enterprise IT infrastructure and services are purchased is the increase in special requirements of business users. As a result of the interconnectedness stemming from the Internet, social media and mobile devices, occurring in conjunction with a global economic slowdown, businesses need to stay ahead of the innovation curve in order to meet real-time demands from customers, partners and employees and to establish competitive differentiation in a tight market. Thus business managers are primarily interested in maximizing the efficiency and time-to-market of IT purchases.

This “need for speed” is directly opposed to the mandate of the IT department to centralize and formalize all IT purchase decisions and maintain a standardized technology backbone. The complex contracting and deployment processes associated with traditional centralized IT purchases simply do not mesh with current end user needs.

The resulting informal revolt against the IT department’s control over technology purchasing, where users simply leverage cloud-based systems and services to bypass traditional mechanisms, gains at least tacit approval from higher-level executives more interested in the bottom line than in seeing every internal rule enforced.

How CIOs Should Respond
CIOs, and the IT departments they manage, may feel threatened by this paradigm shift in how IT architecture services and architecture are purchased. Everest Group acknowledges that the IT department stands to lose relevance, but can avoid this fate by properly responding and adapting to fundamental changes in how IT is bought and used. Specifically, CIOs need to:

Partner, Not Compete – CIOs should avoid competing with business users for control of IT purchases and instead partner with them to achieve maximum innovation. Study what business users need and how they buy it, and then offer a “credible alternative” to “rogue purchases.”

Aim for Topline Growth – While the IT department typically aims for standardization of all technology infrastructure and services, Everest Group recommends IT policies now be drafted with an aim of driving topline growth. Excessive focus on standardization in the current environment can result in lack of innovation and jeopardize efforts to leverage leading-edge technology while it is still genuinely “leading edge.”

Invest in Governance – The emergence of diverse, decentralized IT environments will produce what Everest terms a “colossal” need for governance, so CIOs need to make appropriate investments to ensure oversight still happens once solutions and services are purchased and deployed.