Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.
If you haven't read Network World's article on "Gartner Predictions for 2012: More Cloud, Consumerization, Loss of IT Control," you should take a few minutes to check it out. The meat of this article is devoted to trends and predictions related to the usual suspects (cloud, mobile, security). But, what really struck me was the following observations on IT spend management:
"IT budgets and responsibilities are moving out of the control of IT departments and into the hands of others...That means, to be successful, IT organizations will have to excel at relationship management and be adept at coordinating more widely distributed activities...
As users take more control of the devices they will use, business managers are taking more control of the budgets IT organizations have watched shift over the last few years...
The IT organization of the future must coordinate those who have the money, those who deliver the services, those who secure the data, and those consumers who demand to set their own pace for use of IT..."
Gartner predicts that 35 percent of enterprise IT spending will be managed outside of the IT department's budget by 2015.
Every day, I see how "spending sprawl" can lead to significant IT overspending in the enterprise. Decentralization has historically led to leaving money on the table and a lack of discipline in the purchasing process. It's tough to leverage volume, obtain maximum discounts and manage complex terms and conditions if there is no one powerhouse leading the charge.
However, IT departments -- including the sourcing teams that support them -- should be prepared. It's important to identify the strategies that will allow your company to manage IT budgets in a way that best supports the business, but also brings consistent rigor to the purchasing and vendor management process.
For example, every IT purchase should be put through a consistent bid process. No purchase should be made without understanding how much the enterprise is spending with that current vendor. Vendor pricing should be benchmarked every time. Annual maintenance increases must be negotiated and justified. These are just a handful of "checkpoints" that will lead to effective spend management even in a semi-decentralized environment.
In the aforementioned article, Gartner goes so far as to say "IT departments need to adapt now or be swept aside." I believe a shift on how businesses buy and manage IT is certainly under way. How well they neutralize the potential for overspending will be a bellwether for just how adaptable IT can be.
-- Jeff Muscarella, EVP of IT, NPI