Buying technology has traditionally been the realm of the CIO or IT director, but it seems that situation is changing, as technology becomes increasingly integral to the way businesses operate.
More people are knowledgeable about technology than a decade ago and these individuals are keen to be part of the decision-making process for its acquisition for their business.
Meanwhile, executives above the CIO are taking a more active role in technology decisions while people lower down the hierarchy also want to have a say about the technology they use to do their job. The CIO still plays an important part but things are changing.
Business managers are becoming more involved
Technology is no longer something that just a chosen few know about in organisations, and business processes increasingly involve technology in some shape or form. As a result, other business departments are taking part in buying decisions.
Speaking to silicon.com, Gartner VP and fellow Andy Kyte said the increased role of technology in business is a major factor in a shift in technology procurement.
“The key here is that we have ubiquitous and pervasive technology and what that means is there’s an awful lot of purchases that are made which include technology in them. That doesn’t necessarily mean the buyer thinks they’re buying technology – but an increasing number of decisions that involve technology are being taken outside the IT organisation,” Kyte told silicon.com.
Ovum analyst Mark Blowers said IT is now integral to a lot of organisations. “A few years ago perhaps IT could sign off and make the decisions because people said, ‘Oh, we don’t know much about it’ but I think that’s becoming less and less common now,” he added.
In the past, business managers would have asked the IT department for a technology implementation and waited for it to be delivered. In many cases, they are now much more closely involved in specifying systems so that they serve their business needs.
“[Business managers] are much, much more savvy and they’re not prepared to delegate anymore – and some of them want to take the lead. What we’re really seeing is that there are no more technology decisions – there are business decisions which require technology input,” Kyte said.
So an HR director wanting to outsource payroll or a sales director looking to implement software as a service (SaaS) CRM now sees these projects as business decisions rather than technology ones, even though they have a significant impact on internal tech infrastructure.
The integral nature of technology, combined with the pressure business managers are under to cut costs, beat competition and innovate, means…
…their relationship with IT has changed significantly.
And with many technology projects using the budgets of business units rather than IT, business managers are keener to make sure the implementation achieves their business objectives and provides sufficient return on investment.
“There is much more of an interest in technology and that becomes so important and intertwined with the whole organisation now, IT [shouldn’t be] a siloed cost anymore,” Ovum’s Blowers said.
“When we talk about who makes the decision, it’s still the CIO, but what we see is that more and more business people are involved in selecting technology. So it’s more an IT-business hand-in-hand process rather than what it was a couple of years ago when IT was deciding on its own by thinking about business needs,” VP of sourcing and vendor management at Forrester Research Lutz Peichert added.
However, Gartner’s Kyte said it shouldn’t always be assumed that heads of other departments will speak to IT before acquiring some kinds of technology. Due to the lack of implementation needed, SaaS can be expensed on corporate credit cards, so IT doesn’t have to be involved.
“Don’t presume that people who are buying software as a service are talking to IT as part of that. Our advice would be that they should, but very many purchasing decisions are made with software as a service which are explicitly secret from the IT organisation until the contract has been signed,” Kyte said.
“Instead of going through that whole process, they can go out to the cloud and start to buy at least some products and technologies as services under a very different model where they don’t have to make this massive capital investment – it’s a much more free market economics basis for them to make those technology acquisition decisions without making long-term major capital investments,” Gartner analyst Stewart Buchanan added.
Part of the reason why business managers might bypass IT is that the department is seen as being slow to respond to business demands. Rather than go through the selection process, SaaS allows people to experiment with software straight away.
Gartner’s Kyte stressed that this isn’t the fault of IT, which will be subject to different priorities that mean some business cases for technology implementation won’t be at the top of the list.
According to Kyte, many SaaS vendors use the ability of their services to be acquired without the involvement of their IT as a selling point and also target these other business functions in their marketing and sales activity.
Some tech decisions are going above the CIO
There is also evidence that some technology-buying decisions have moved above the CIO to the CEO, CFO and other board members in recent years.
“The overlying trend is that senior executives take a lot more interest than they did in the past. The IT director or CIO is important in the decision-making but more and more there is more active involvement from the CEO and financial director,” said Ovum’s Blowers.
The economic downturn of the past few years has also meant finance directors have taken a greater interest in technology decisions than they may have done before, as they…
…keep a much closer eye on the money being invested and the efficiencies they create.
“It’s no longer a question of technology for technology’s sake, if it ever was, and in the current economic climate it is very much technology for business’ sake and money for everyone’s sake. So, yes, we’re starting to see financial controllers getting more involved,” Gartner’s Buchanan said.
Ovum’s Blowers said the purchasing environment has changed. “Gone are the days where the CIO can go off and just say here’s your multimillion-pound budget and tick it off. Most senior executives take an active interest in it now and would want to sign off on it and I think previously perhaps that wasn’t so much the case,” Blowers added.
Although this trend was partly fuelled by the recession, Blowers feels senior board members will be loath to give up their new-found influence over tech decisions.
Whether the purchasing decision is made by the CIO or someone more senior often depends on the scale of the project being proposed in terms of cost, how many people it will affect and what the return on investment is likely to be.
“If this decision is going to have a major impact on a business unit, the business unit manager is going to have a very big say in the decision. If the decision is going to have a big impact on the corporation as a whole, the CEO and CFO are going to be the ultimate arbiters of whether the decision gets made,” Gartner’s Kyte said.
If, for example, an investment bank is looking at replacing its core banking system, a project costing hundreds of millions of pounds, with huge disruption and risk, the board is going to take the decision. However, if the same organisation is looking to replace its email system, which would be less costly and lead to less disruption, the CIO will make the decision.
The CIO role remains crucial
The CIO is still a critical figure in buying technology for businesses but increasingly, part of the job is to co-operate with other areas of their organisation to make sure technology purchases add value and achieve the business aims they’re intended to.
“The role of the CIO is increasingly to develop strong relationships with all the business managers and to understand the business outcomes that they’re seeking. And where the CIO has effective relationships with business executives, the CIO will always be engaged in the decision-making process,” Gartner’s Kyte said.
Ovum’s Mark Blowers said the CIO will continue to make the strategic decisions about architecture and provide higher level direction on what processes to outsource and how the organisation should use cloud computing.
The continuing influence of the CIO was borne out by recent research by Forrester Research…
…that found 68 per cent of IT decision-makers believe decisions about technology purchases still lie with the CIO.
“CEO-level people are more involved in this kind of discussion [than before] but when talking about making the decision to buy technology, to select which technology, and when talking about IT services, which vendor, this is still in the hands of the CIO and his direct reports,” Forrester’s Peichert said.
The impact of technology consumerisation and Generation Y
There is also evidence that people below the level of CIO are becoming more influential with the technology being acquired for the workplace. This development is partly due to technology consumerisation but also the tech-savviness of the newest generation of workers.
The greater understanding of technology that has grown alongside its wider use in everyday life means people are increasingly interested in the tech they use at work and are less likely to accept the tools they are given by the IT department if they deem them to be below standard.
According to Peichert, people are realising they don’t need to rely on the IT department to deliver technology and can instead go thought procurement or expense cheaper technology purchases.
However, Peichert said the way the IT department is viewed by other parts of the business will determine the extent to which this happens.
If IT is regarded as a utility that just runs infrastructure, business people are more likely to work with procurement to acquire technology or buy devices of their own accord. If IT is seen as active in exploiting new technology for the business to be more productive, employees will be less tempted to go it alone.
One of the drivers in self-procurement is the generation of new workers now coming into the workplace – Generation Y – who are tech-savvy and use IT to be more productive rather than cause problems. “They literally buy it because they think it’s the right way to be more productive for the company,” Peichert said.
The Forrester Research analyst added that some businesses are becoming more open to this kind of approach, as they see benefits for the company in terms of productivity but also in attracting Gen Y workers.
“The tradition of providing a workplace will probably go away in the sense of ‘We dictate what type of hardware you are actually using’. So there are companies who already provide a per-head budget to buy any kind of tablet PC or whatever, and IT is responsible for ensuring security and everything that goes along with security guidelines for the company and ensuring access to corporate data that is relevant to the particular [person