Fragmenting budgets and rapid pace of change creates perfect storm for IT decision makers

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As businesses look for new ways of engaging with customers in an increasingly competitive environment, technology – specifically technology that drives innovation - is becoming ever more central to key business decisions.

There has been an overall shift in the technology purchasing decision-making process in recent years.  While IT departments remain as the biggest funding source, although barely at 52 per cent, it is clear that technology funding is becoming increasingly centralised within organisations.  For example, IT spending from line-of-business is estimated to reach $191 billion in Western Europe in 2018, a 5.7 per cent increase over 2017, according to new findings by analyst house, IDC. 

What this means in practice, is that IT decision-makers are increasingly tasked with the difficult decision of choosing technology within business operations and finding the correct IT solutions for business needs.  This extra link in the chain combined with the ever-accelerating pace of technological development is creating a perfect storm. In fact, a recent survey of IT decision-makers found that more than half are struggling to keep up with the pace of new technology. Most (84 per cent), acknowledge that they are not currently running the most optimum IT systems and significantly, 28 per cent admit that their organisation has actually fallen behind the rate of technological change.

Although the problems that IT decision-makers face may not be a direct result of their departments no longer having full control of the purse strings when it comes to IT spend; it is the responsibility that this entails, combined with the competitive environment created by rapid technological advancements that ups the ante. This can lead to hasty and badly thought-out short-term decisions that create issues for businesses further down the line.

For example, 81 per cent of those surveyed in our study have been let down by IT they’ve adopted in the past, with almost half stating that this has happened on numerous occasions. The most common reason for this being lack of reliability, not getting the service required, and higher than anticipated costs.

When budgets are fragmented, yet there are ever more demands on the resources of the IT department, purchasing mistakes like these can have serious repercussions for the business.  With just over half of the overall IT funding in many businesses now coming from the IT department, there is likely to be even less contingency available once the basic requirements of the organisation have been met.

In such a climate, it is vital for IT decision makers to prioritise and this is where partners can really have an impact.  If we are going to help overstretched IT departments maximise the slim additional budgets they have available, it’s vital that we become trusted business partners, not just vendors.  This means making smart recommendations based on real insights into the features, benefits and even the limitations of our products and services.

It is also about training, with IT funding becoming a centralised business matter, there is a level of education that is required in order to mitigate the damaging effects that can occur as a result of IT funding centralisation.

So much choice, so little time

In our survey, 40 per cent of IT decision makers felt that there is too much choice from IT vendors, which they actually found restrictive.  If this level of confusion exists among professional IT practitioners then the level of understanding among those making decisions outside of their usual professional comfort zone is likely to be significantly lower.  When considered in the context that 52 per cent of those we surveyed said that costs were being driven up by technology that didn’t fulfil its promises, then the business case for both education, and perhaps more importantly, collaboration, becomes even more compelling.

Take digital transformation projects for example.  Funding digital initiatives can be a highly fragmented process because digital transformation is such a loose term and open to interpretation.  Depending on their perspectives in their organisations and professional specialties, different decision makers will prioritise different elements.  For example, the marketing department is likely to be focused on online engagement, while sales will be looking to increase online transactions and production managers wanting to electronically track and fulfil orders.  Meanwhile the IT department is likely still trying to accelerate innovation and transition to the cloud to support all this activity.

Were all these elements to be individually driven and funded by separate business units, operating in silos, then there would clearly be wasted effort and resources.  But equally, when the IT department has all the responsibility but none of the control, the need for clarity and prioritisation is obvious. Without clear strategic direction, lines of business will be tempted to make short-term tactical technology decisions, leaving IT to fix any long-term problems.  Worse still, the business might simply relegate IT to maintaining legacy systems without involving them in new application/new technology decisions.

Without collaboration, diverse sets of skills and talents across lines of business and IT departments will be lost and inefficiency will be the result. Collaboration is key as both IT and the lines of business need to work together to understand the nuances of marketplace changes and the impact on technology development and deployments.  This is vital if competitive advantage is to be gained and maintained.

Our survey showed that the pace of technological change means IT decision makers increasingly have too much choice and not enough time. This will only be exacerbated as technology needs grow across the enterprise and more departments become involved in the decision-making process.  With IDC predicting that Line-of-Business technology spending will overtake that of IT some time in 2019, the need for collaboration not only across the business, but also with IT suppliers who understand how technology drives business change, has never been more important.

Susan Bowen, VP & GM, EMEA, Cogeco Peer 1
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