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Vetting IT purchases—with the involvement of IT, the CEO, and end-business decision makers—can go a long way toward helping your company avoid needless expenditures.
Companies waste money on technology at the same time that they reap benefits from it. Sometimes these wasted dollars come in the form of unnecessary software and hardware purchases or misappropriations of IT staff and other resources. However, technology waste also begins at the strategic level—when projects (and the solutions for them) are defined without proper vetting.
Just how does this happen?
One common scenario occurs when an end-user department begins talking with technology vendors about a solution for a departmental need. If they have a separate budget to invest in the technology, they may bypass IT and others who could provide valuable input prior to purchase.
SEE: Shadow IT policy
In defense of these end-business decision makers, they have first-hand understanding of the needs of the business (and how technology can assist them). They also have long histories of dealing with IT as a kind of "glasshouse" gatekeeper that prevents them from moving quickly into helpful new technologies. Many of these end users view IT as a naysayer or even a showstopper to good ideas.
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In these situations, it is advantageous to organizations if the CEO or COO plays a role in how technology is assessed, funded, and purchased.
Making it work
The model process begins by letting end-user departments drive IT investment. They do this by identifying the technology needs in the business-and then letting IT weigh in to determine how easy it will be to integrate the new technology with the company's existing technology base. IT also looks at whether the technology can easily be supported operationally and whether it is compliant with corporate governance and security standards. If a company is large enough to have a purchasing department that gets involved in IT purchases, additional work should be done to determine the financial and operational fitness of the vendor and its partner network, along with negotiating the best deal.
Once defined, this process should be documented and clearly explained to vendors and to technology decision makers throughout the company. The CEO and/or COO should make it clear that there are no end-arounds in this process to procure technology—such as using slush fund budgeting that enables a pool of money to be used for some unspecified purpose.
Before committing to a technology purchase, the company should also make wide use of tech "try-and-buy" trials that allow end users to road-test a technology in a proof of concept (POC) with no further obligation if they don't like what they see. These POCs are best conducted if IT is involved—and if there are open communications channels on results that go all the way up to the CEO or COO.
Finally, many organizations waste money on technology because they buy it more than once. This happens when multiple organizations within a single enterprise all have separate IT budgets, fail to coordinate with each other, and don't even know that others in the enterprise have already bought these systems—which could have been shared. For this reason, it is important to record and track all IT assets in a single and global enterprise asset tracking system that IT administers. This management system helps assure that asset licenses are kept current, that assets are retired within appropriate retirement cycles, that assets conform to compliance standards, and that assets are not unwittingly purchased in duplicate or triplicate.
None of these IT budgetary controls and vetting practices can be instituted without the initial and ongoing involvement of CEOs and COOs. Research firms like Gartner tell us that global IT spending, although it shows an average and flat 1% increase between 2015 and 2016, will still top out around $2.7 trillion globally in 2016. That's still a lot of money that needs to be spent only once—and in the right way.
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