No clue IT buyers and how to stop them

CMOs are going to be more influential than CIOs in making IT purchasing decisions in the next few years, you know?

You might just have heard that prediction once or twice in recent months.

If you haven't had it direct from the horse's mouth via Gartner, chances are someone from a marketing, sales automation or CRM firm has dropped it into the conversation to justify some nuance of corporate strategy moving forward.

From Gartner's PoV, it's been a nice piece of messaging that's gained a traction in the wider marketplace that means the prediction now borders (through no fault of its own) on cliche.

I was rather surprised therefore that it didn't pop up at this week's Gartner Outsourcing and Strategic Partnerships Summit in London.

But the growing influence of the business buyer of IT was on the agenda - and not in the most complimentary of terms.

Not a clue

Step forward the No Clue Buyer! The man or woman from the line of business side of the organisation who decides they've had enough of the central IT team making the buying decisions and steps up to the mark, regardless of whether they're qualified to do so or not.

Gartner analyst Frank Ridder put it bluntly:

"We see the arrival of the No Clue Buyer, people purchasing what they want without any clue as to the risk to the organisation. Sourcing and procurement are therefore moving into one of six clear futures in response to changing business needs."

Gartner's latest CIO survey threw up some interesting numbers in relation to the question of whether organisations believe they have the technical capabilities to respond to changing business need.

Some 60% of European CIOs and 63% of their US counterparts reckon that they do - which on the face of it seems a healthy number for the glass half full brigade.

For those of us who see the glass as half empty, those numbers actually mean 40% and 3&% do not have the necessary skills - which translates into a considerably less-than-healthy amount of spend that's being bandied around in a not suitably informed manner.

The end result is unhappiness on the business side of the organistaion about the performance of both IT and sourcing and the knee jerk reaction that business decides its response will be to take back budget from IT and spend it itself with the help of a few IT strategists to point it in the right direction.

Hence we get to Gartner's predictions that by 2015, 40% of IT budget will not be controlled by IT while Rudder confesses that internal cogitation within the research firm has seen predictions that this could rise to 90% by 2020.

Blockage strategies

Faced with this future, IT decides to fight back in a non-constructive fashion by introducing what Rudder calls "high blockage strategies" such as amplifying security policies, standardising procurement guidelines to prevent people from just doing what they choose and defining enterprise-wide risk management frameworks.

The real winners here? The sell side. Rudder noted:

"Suppliers love all this. In the past, discussions became difficult. Buyers wanted more for less. Now the trend is good for the suppliers because they can by-pass IT and sourcing and have different conversations."

But for the buy side, the challenge arises from the lack of essential competencies among the business. Rudder argued:

"They lack competency in managing suppliers because they haven't done it before. The competency risk are high if they're buying services and integration without IT's involvement. Contract management and demand management are the same.

"If you sit centrally in IT and manage demand, you can cut efficient deals with suppliers. If it's done business unit by business unit with each one doing what they want because they can, then it becomes inefficient.

"Business buyers often don't evaluate sourcing risk. They often have a good view of risk management in general, but not of sourcing risk specifically."

In fact while it might appear that good deals in unit cost terms can be done by letting individuals make their own purchases, the corporate cost envelope might well increase as a result of losing the benefits of centralised contracts with volume commitments.

Six futures

So what to do? Gartner of course has a diagram for this very situation, although as Rudder notes slightly mournfully it hasn't managed to get it down to a quadrant!

Essentially Gartner pitches the notion of an enabling layer and an executing layer with three elements in each, each element being a new future role for the current IT sourcing professionals.

In the executing layer, there is the option to be:

• The Broker: The business buys through an external sourcing broker who have the intelligence to ask the right questions of the right companies. You need to chose the right partner here - or partners as different units may want to outsource purchasing to different firms.
• The Tactician: Sourcing becomes a tactical buyer for the business and acts directly at the demand of the business. So purchasing stays within the organisation, but the organisation in turn doesn't make strategic savings.
• The Strategist: Sourcing becomes the strategic buyer for the business, driving through the sourcing ecosystems based on the future structure and needs of the business.

In the enabling layer, there is the chance to be:

• The Spectator: The business bypasses sourcing completely and buys directly. This is the least desirable option, just observing what's being purchased. You have a chance to highlight problems if you spot them, but that's it. This adds lots of risk as a result of being a passive role.
• The Facilitator:  Sourcing provides a framework but the business units buy by themselves. The Facilitator's role is to make sure there is no additional risk to the organisation.
• The Advisor: Sourcing is the advisor to the business, but business purchases by itself after asking what a good strategy is and who to talk to etc.

Given those archetypes, Gartner has some guidance on what sourcing professionals need to put in place to deliver on these roles - and what organisations should do to embrace or avoid them.

• For The Spectator, the only recommendation is one of avoidance. Just don't go there!
• For The Broker, the best strategy is to develop a network of trusted partners. Estalish and work within some clear broker guidelines as well as define some simple rules and policies that you can give to external companies.
• For The Facilitor, it's all about developing simple, short management checklists. You need to develop 'must answer' questions around sourcing risks that others can use and Request For Proposal templates that address key sourcing risk factors.
• For The Tactician, make sure you govern well with the demand side. Everyone needs to understand that you have have the right IP to ensure your company can purchase successfully.
• For The Advisor, do your trend work. Look out in to the market and analyse the trends that could be good for your organisation. You need to be the person who knows what the world looks like. You need to think about more than just IT.
• And for all the would-be Strategists, you need to be constantly refreshing the ying and yang of supply and demand in a trust position that enables a focus on business value creation.

Verdict

Personally this convinces me more than the CMO power-grab one-liner that has too rapidly become a 'buzzword bingo' tick in all too many corporate pitches.

Clearly a more empowered, line of business buyer is emerging and IT and sourcing need to learn to accomodate that.

Gartner's six futures for sourcing is not perfect, but it's a good starting point for discussion about how to achieve this new way of working.