Spend Matters welcomes another guest post from Jon Winsett of NPI, a spend management consultancy focused on eliminating overspending on IT, telecom and shipping.
Virtually every enterprise anticipates new investments in social, mobile, analytics and cloud (SMAC) initiatives this year. Why? To get closer to customers and capture more market share. That’s great news for all parties involved, but there’s a catch.
Many of these companies will be surprised to learn that their IT budgets will not go as far as they anticipated. This may erode the ability for businesses to achieve the goals that are driving new SMAC investments.
Here are four reasons why:
- You’re paying too much to maintain your existing infrastructure. The cost to support and maintain existing IT systems is eroding companies’ ability to fund new investments in social, mobile, analytics and cloud IT initiatives (SMAC). Out of the $3.8 trillion expected in worldwide IT spending in 2013, NPI estimates there will be $760 billion in unnecessary overspending in non-value creation areas such as maintenance and support, over-subscription, license program misalignment, and sub-optimal contract negotiation and management.
- Your CMO went rogue. Advancements in SMAC technologies are breaking down the barriers between businesses and customers. As a result, marketing departments are aggressively seeking to elevate their brand and message. Some are doing so more zealously than others, based on anecdotes of CMOs negotiating directly with vendors or waiting to bring in IT and sourcing experts at the last minute. With that in mind, companies need to make sure they have rigorous sourcing processes in place to ensure all necessary stakeholders are involved in an IT purchase from start to finish.
- You underestimated the impact of mobile devices on software licensing. As I’ve mentioned many times in previous posts, vendors are changing their licensing models to monetize the consumerization of IT and BYOD. Those tablets and smart phones may now need a license to access certain software applications.
- You assume that all users are equal. The result of having many uses for social, mobile, analytics and cloud is that there are many different types of users. Companies should work with their vendors to create usage profiles. A “power user” license may cost significantly more than a “light user.”