The Modern IT Purchase — New Challenges, New Players

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.

This time of year, there are lots of predictions of the IT trends that will be dictating the enterprise landscape in the coming years. Forrester recently issued a report entitled "The Top 10 Technology Trends Enterprise Architects Should Watch: 2012 To 2014" which lists business intelligence, mobile applications and application platforms as the top three areas where IT executives expect to see the highest level of business value and development. Cloud computing, application integration and data governance also ranked high on the list. This research echoes much of the current insight offered by Gartner, McKinsey and other IT analysts and consultants.

For IT sourcing professionals, these predictions preview an interesting evolution in technology purchasing:

  1. Everything old is new again...sort of. The IT spotlight may be on exciting developments in areas like mobile apps and devices, but the truth is that a large percentage of IT spending in the coming years will be on traditional infrastructure-related upgrades ranging from networks and security to servers and storage -- the difference is that they are being delivered in new ways and by new suppliers. Companies will be challenged to prioritize the areas of their infrastructure that need to be updated, and the best delivery method for their long-term IT strategy.

  2. Complexity is the enemy. The IT purchase has never been a simple task -- it involves input from many areas of the business, sometimes including the boardroom. The pressure to deliver best-in-class IT continues to mount as mobile technologies, business intelligence and cloud computing have been identified as high business value technologies that will drive market performance and productivity.

    The problem is that most IT professionals have limited experience purchasing and deploying these and other trending technologies on a large scale. Some are working with incumbent vendors that are delivering offerings and pricing models that are in still in their infancy. Other companies are working with new vendors and lack knowledge of that specific vendor's behavior and track record. This unfamiliarity adds another layer of complexity to the purchasing process.

  3. Transparency is required. New offerings, new delivery options, and new vendors all share a characteristic that plagues the IT landscape: lack of pricing transparency. Most IT buyers struggle to understand if they're paying a competitive price for an IT purchase and whether their contract terms and conditions are fair and competitive. They simply don't have the benchmark data.

So, what does this mean? It means that companies should understand the powerful role that outside benchmarking and vendor-specific contracting expertise can bring to the table. It's unreasonable to expect that IT sourcing groups should be experts in purchasing technologies that support the latest trends in IT. The role of the third-party pricing expert is to provide data and vendor-specific intelligence that can validate whether you are paying fair market value for these hefty IT purchases -- and if not, help you get there. Tapping into spend management expertise is helping companies make more educated IT buying decisions that reduce costs and mitigate risk. It also gives them the confidence to make those decisions faster, which means the business benefits accrue faster -- and that may be the most important benefit of all.

- Jeff Muscarella, EVP of IT, NPI

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