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.