Who Moved My Buyer?

Increasingly, IT projects aren't being delivered by the traditional IT department but by internal business units who are sidestepping the CIO and buying cloud services independently. How can IT ensure it remains relevant, meets business users' needs, and keep risk at bay?

For decades, the IT department has held the power - and the purse strings - when it comes to technology purchases within the enterprise. It's approached this role with a strong focus on operational discipline and governance: working in projects, with contracts and fixed capex and opex budgets. However, a new breed of buyers is emerging; business units and end users are taking IT-related decisions ... and control is shifting from the centre to the edge.

Disruptive force

Business units represent the primary disruptive force. This shift in behaviour is driven by the convergence of a number of trends. First, IT is becoming more strategic to the business due to its potential to harness competitive advantage. In all industries, information - and speed of information - are strategic assets: for example, banks want the fastest and best-performing trading platforms, retail organisations need online stores that more engaging and easier for customers to navigate than those of their competitors. Today's business leaders are also far more tech-savvy than they were a decade ago, thanks to the consumerisation of IT and the greater levels of involvement individuals have in purchasing and interacting with their own personal devices such as tablets and smartphones.

In many cases, business units are taking over aspects of the IT decision-making and buying processes because they believe IT isn't delivering what they need, when they need it. For example:

• the marketing manager who wants to launch a new online marketing campaign before the end of the month to take advantage of a holiday weekend ... only to be told by IT that it will take them three months to build the platform
• the HR manager who's expected to go through the onerous process of compiling a capex request for an application he's going to need for only six months
• the project manager who just wants his newly-formed virtual team to be sharing work and collaborating as soon as possible − where the tools are stored doesn't matter to him

Add into the mix the availability of cloud services and the inevitable outcome is that business leaders are going ahead and buying their own services without the knowledge and blessing of the IT department. In fact, it's estimated that 60-65% of cloud transactions today are driven by business unit heads and not by the IT department. Now that business unit leaders are able to buy IT on a consumptive basis, they also don't need large IT budgets. Why try to convince the CFO to approve a five-million dollar budget for new hardware for your next project when you can buy just the amount of computing power you need using your corporate credit card?

Adding to the woes of the CIO is the fact that a third IT buying centre - the end-user - is starting to emerge. Today, employees have a great deal more say about the devices that they use for business purposes and which programmes and applications they run on them. If they think the corporate instant messaging system isn't up to scratch, they'll simply turn on Skype. If IT doesn't offer them storage options for large files, they'll make use of alternatives such as SkyDrive.

User-centric micro-applications

The growing popularity of micro-applications is also impacting the role of the end user in buying decisions. Today's device and application manufacturers are focusing their attention on end users, not the CIO. For example, today your employees can go to online application stores and find an array of micro-applications that provide them with access to SAP. A sales manager might decide to download and use one of these instead of the corporate version as it presents his pipeline in a format he prefers. A supply-chain specialist might download and use another that makes it easier for him to track orders or gives him a better graphical representation of the metrics to which he's managing his suppliers.

While the end user buying centre is still a relatively small one today, its influence and impact on enterprise IT is set to grow significantly in the next few years.

Unsanctioned buying of IT services rankles the IT department, often with good reason. It's impossible to achieve a robust architecture and IT roadmap if you have little idea of what assets business units and individuals have and what they're being used for. When central control of purchasing falls away, there's no end-to-end visibility of IT service delivery. This can lead to erratic service levels, an inability to leverage collective purchasing discounts and inconsistent IT policies. Security is high on IT leaders' list of concerns - they fear the governance, risk and compliance issues than unrestricted buying can bring.

Not only does informal buying cause friction internally for businesses, it also impacts service providers as it upsets the traditional sales processes. In many cases, IT teams are demanding that their providers work only through them in an attempt to regain control, putting providers in the uncomfortable position of needing to turn away opportunities that originate from non-traditional channels. IT salespeople also aren't accustomed to selling to business people ... to successfully sell to business people you need to understand business issues, not just the technology. As buying centres continue to shift, many providers recognise that their salespeople will need to become more business-savvy.

Unsanctioned buying of IT services rankles the IT department, often with good reason. It's impossible to achieve a robust architecture and IT roadmap if you have little idea of what assets business units and individuals have and what they're being used for. When central control of purchasing falls away, there's no end-to-end visibility of IT service delivery. This can lead to erratic service levels, an inability to leverage collective purchasing discounts and inconsistent IT policies. Security is high on IT leaders' list of concerns - they fear the governance, risk and compliance issues than unrestricted buying can bring.

Not only does informal buying cause friction internally for businesses, it also impacts service providers as it upsets the traditional sales processes. In many cases, IT teams are demanding that their providers work only through them in an attempt to regain control, putting providers in the uncomfortable position of needing to turn away opportunities that originate from non-traditional channels. IT salespeople also aren't accustomed to selling to business people ... to successfully sell to business people you need to understand business issues, not just the technology. As buying centres continue to shift, many providers recognise that their salespeople will need to become more business-savvy.

Towards an integrated model

What's the way forward for IT leaders who are being challenged by informal IT purchasing decisions? Dimension Data advises its clients to adopt a more inclusive approach. That's not to say that CIOs should relinquish control entirely; rather, it's about allowing business unit leaders to become more involved in the overarching IT strategy and decision-making. This approach calls for learning on both sides: IT needs to better understand the business's requirements, and departmental heads must learn to respect IT's concerns relating to governance and security.

The CIO can also consider allowing business units to procure their own cloud services provided that they engage only with providers that the CIO has credited as being trustworthy, secure and financially viable. Dimension Data recently assisted the CIO of one of its financial services clients to manage a scenario in which business unit heads were procuring IT services from cloud providers whose overall viability and security controls were dubious at best. We worked with the CIO develop to develop a framework that included an inventory of preferred suppliers, checklists and a buying-decision matrix that he could share with his business unit heads − this enabled them to make independent, consumption-based purchases but within the boundaries of security, sound governance and compliance.

By adopting a more inclusive, hybrid approach IT will be less involved in the procuring, building and managing of the infrastructure, but will be very hands-on in terms of managing service level agreements with a set of new providers that it has endorsed.