Buying IT products and services is far too important to be left
solely to the IT procurement department, analyst Gartner has
said.
Speaking at the firm's Outsourcing and IT Services Summit 2008
in London, analyst Andy Kyte said that some businesses spend as
much as 90% of their IT budgets on third-party suppliers but fail
to get good value for money.
Kyte said IT procurement departments often act as if the only
stakeholder they work for is the finance department, and this is
the reason why many deals do not add any value and even lead to
projects failing.
But IT procurement is the responsibility of all the people who
require IT said Kyte. "There is an obsession with cutting costs in
IT procurement, but IT is about ensuring a better quality service
to users."
He said the governance of IT procurement needs to change and the
department needs to answer to multiple masters rather than just the
CFO.
"Finance is not the only stakeholder but IT procurement often
appears that it is only working for the finance department," Kyte
said.
He said IT procurement departments are praised if they get a
cut-price deal, and as a result they behave like a policeman and
try to keep costs down rather than provide a service for the whole
company that tries to improve how it works.
"I see it all the time: IT procurement reducing costs but the
business is not working as suppliers do not care," he said.
The IT procurement department should be a genuine service to the
CIO and all IT managers and project managers, he said.
Kyte said a procurement team should be made up of people with a
good understanding of different technology sectors, who keep up
with trends. "IT procurement is a knowledge discipline and not
about processes. The department should be made up of category
managers with an understanding of the markets, the technology and
the pricing models."
What IT directors say
The London Stock Exchange is heavily dependent of technology and
has to keep pace in a market where technological innovation happens
fast. CIO David Lester said the IT department is the best place to
get the best value. "IT should be completely responsible for
negotiating contract terms including price because they have the
expertise," he said.
Richard Swann, IT head at the Institute of Directors, said that
unless a procurement worker is an IT specialist there will always
be problems. "This is particularly true in software where there are
so many different versions of products," he said.