IT Sourcing: Enterprise Innovation Ally?

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom and shipping.

Yesterday, I had the pleasure of sitting down with CIO magazine to discuss the findings of the publication’s “2013 State of the CIO Survey.” This annual survey provides insights into not only which IT initiatives are at the forefront of enterprise minds, but also how CIOs view their role and interactions with other company stakeholders.

Throughout our conversation, there were three findings that piqued my interest because of the potential impact they may have on IT sourcing:

  • CIO’s aspire to be business strategists – but only 25% have reached this level of organizational impact.  The CIO survey identifies 10 tasks that business strategist CIOs no longer have to focus on - including cost control and vendor negotiation - thereby freeing up time and intellectual capital to identify how the company can leverage technology to be better than the competition, and get closer to the customer. To allow the CIO to focus on these highest-value activities, companies have to invest in strategic IT sourcing efforts that rely less on CIO involvement but not at the expense of vendor management and IT contracting expertise. The question of “how confident am I in IT sourcing’s capabilities?” is one every CIO is (or will soon be) asking.
  • CIOs want to shift spending from core systems to systems that engage customers and business partners – but, how? In a poll of IT priorities, nearly 40% of CIOs responded about the desire to shift spending from core systems like accounting or ERP to applications that help them engage with customers or business partners. In other words, CIOs are hungry for ways to fund new IT initiatives rather than spend the bulk of their budget keeping existing IT investments up and running. This presents an unprecedented opportunity for IT sourcing. By helping CIOs reduce the costs of their current technology investments, they can be instrumental in finding the resources to fund IT innovation.
  • CIO tenure is getting longer. At an average of 5 years, 9 months, CIO tenure is up (in 2010, the average CIO stuck around for 4 years, 8 months). I have to say I found this to be surprising. I’ve known many CIOs who spend closer to two to three years at any given company before moving on, and that’s been a problem for IT purchasing. The problem is that different CIOs care about sourcing differently. Some are heavily invested in strategic sourcing, while others view it as purely functional. Longer CIO tenure can lead to a more enduring and consistent culture within IT, which is great news for strategic sourcing improvements.

IT sourcing has a unique opportunity in 2013 to become more strategic and impactful to the business. The demands on CIOs to become more innovation-driven has made them more curious about how they can fund new IT projects, spend less time on functional activities and deliver greater impact to the business. Is IT sourcing the answer?

- Jon Winsett, CEO, NPI

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