Should CIOs be IT suppliers or buyers?

Expert buyers of IT know how to shape, source and exploit IT investments. IT departments were once key players in all three areas, but for many this is now down to one: sourcing. And as companies' supply chain management matures, this could turn into none.

Expert buyers of IT know how to shape, source and exploit IT investments. IT departments were once key players in all three areas, but for many this is now down to one: sourcing. And as companies' supply chain management matures, this could turn into none.

Twenty years ago, when I transferred from customer service to IT, we in-house IT specialists were integral to the business we worked for. We collaborated as equals with colleagues in other departments to shape the company's processes and technologies. We helped get the IT delivered and create value.

The executives knew how they were exploiting IT in their strategies and operating plans and treated us as fully fledged members of the corporate team.

CIO as an IT supplier

Much has changed over the years. Most IT departments are now quasi-suppliers of IT. They measure performance using supply-side metrics, refer to their colleagues as customers, "charge" them for services and have relationship managers to bridge the gap that has opened up between themselves and "the business".

If they have an IT strategy, it is unlikely to be the same as the executives' strategy for IT.

Of the three "expert IT buyer" accountabilities, shaping and exploiting IT investment correctly rests with line managers, but most line managers freely admit that their capabilities in these areas are low.

The IT department remains accountable for IT sourcing, but many IT people are frustrated by the low level of influence they have over business decisions.

The more the IT department positions itself as a quasi-supplier, the less it will be allowed to manage the company's core interests as a user of IT. The inherent conflict of interest becomes increasingly obvious.

Someone else needs to take accountability for IT sourcing, most obviously the company's supply chain people. Some CIOs will see this as an opportunity to become a fully-fledged supplier or to focus on more value-adding capabilities others may see it as threat.

The decision for CIOs

Each CIO faces a strategic choice. Would you rather be a supplier competing with other, external suppliers, or the company's chief expert in shaping and exploiting IT investment? You will not be allowed to be both.

Therefore, would the transfer of IT sourcing to the supply chain department be a good tactic, or a bad one?

Let me lead the witness. Many line managers know that they struggle with IT exploitation and investment, yet these are the value-creating aspects of IT management.

Also, the CIO is not the only one facing this choice. The CEO has it too: if the CIO wants to be a supplier, then who is the company's chief "expert buyer" of IT?

This has typically been the CEO, but in future it may be the head of supply chain management. None of these options is ideal and each puts a different twist on the business' strategy for IT, but someone has to do it.

● Chris Potts is a director at IT consultancy firm Dominic Barrow




Read more on IT strategy

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close