Is IT’s Credibility Crisis the Reason CIOs are Turning to Procurement?

Over on Horses for Sources, Phil Fersht recently added fuel to the argumentative fire that IT is becoming less and less relevant inside many organizations. In this post, he suggests that IT outsourcing, the primary reason behind the rebound in services businesses, is further marginalizing nearly all levels of IT in the organization. Here he notes that "much of the bottom-layer of IT has already been contracted out" and "it's now the middle layer of IT professionals which is under threat." Moreover, "CIOs are under pressure to prove the value of maintaining these heavy middle-layers, or move them out of the organization." Phil further suggests that those CIOs that survive "will need to train their staff to think out-of-the-box, to learn how to work more effectively with the business units, and to bring technologies into the organization that can truly impact the business and the corporate culture."

Methinks that Phil might have gotten a little inspiration for this post, at least as it pertains to procurement, by reading a recent Spend Matters series: Tech Spend Minders: Why the Heck are CIOs Becoming Relevant Again?. If you’re curious, you can read Part 1 and Part 2 of it by clicking the previous links. In this series, I suggested that CIOs appear to be getting more deeply involved in many Procurement-technology buying decisions. But they’re not just getting in the way this time and slowing things up (at least not usually); they’re trying to be genuinely valuable.

They’re also getting involved for another reason that marks a return to their original charter. In this regard, as I previously suggested, “CIO involvement with internal data, process and workflow is nothing new, although such involvement has been a novelty in many procurement buying decisions in recent years. But from an external data management perspective, this level of interest and activity is new, representing a new charter for IT leadership. In this new world, the concept of Chief Information Officer applies to all aspects of enterprise and extended enterprise data … It's clear that certain CIOs appear to be inserting themselves into the technology buying decision and management process for both internal spend and external supplier management when it comes to all aspects of procurement information.”

So, Phil, perhaps the next debate we have when we connect over a tipple will be to discuss why procurement outsourcing (including procurement technology), based on your own data, appears to have a slower growth trajectory at the moment relative to other outsourcing areas. Is it because CIOs are getting involved in a positive way in general unlike in other areas of the enterprise where they -- and their direct reports -- still “don’t get it,” as you suggest is the case much of the time? Or is it because they understand the critical role of a true Chief Information Officer in managing both internal and external spend and supplier information? I’m not sure, but I think it could make for a good debate.

Jason Busch

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