by William Maurer, Research Vice President, Gartner
Resource-challenged midsize enterprise CIOs should focus on the following three outcomes to improve their sourcing and procurement strategies.
In typical midsize enterprises (MSEs), CIOs frequently manage a wide range of sourcing and purchasing decisions. These decisions span the information and business technology organisation to include hardware, software, personnel and outsourcing, such as public and private cloud, infrastructure, platform and software solutions. However, without an effective sourcing strategy, it is impossible to generate high-quality sourcing decisions consistently.
Further complicating the issue are IT necessities, such as funding a service desk. Funds might need to come from a variety of budgets in order to staff, train and supply employees with the correct software. The realities of being a CIO at an MSE mean a lack of dedicated sourcing, procurement and relationship management resources.
The goal should be to match projects with business goals. Last year’s Gartner survey found that 53 per cent of MSE CIOs are tasked with building business strategy and planning. In addition, 67 per cent are tasked with optimising enterprise operations. As a result, these CIOs must carefully implement a pragmatic approach that aligns sourcing with business priorities.
It is critical to understand the business value, type, size and complexity of each sourcing solution in order to determine whether and how it is funded. It is important to make this determination early in the process and align spending with intent and value to the business, as it may significantly impact both IT and business operations.
CIOs must align their sourcing strategy with three primary, achievable outcomes when faced with a purchasing decision: efficiency, enhancement and transformation.
With small (and shrinking) IT budgets at MSEs, most efficiency solutions are those that control costs and provide incremental efficiency improvements. This should be the focus for projects that seek to eliminate low-value but labour-intensive tasks, or those that focus on consolidation. For example, procurement of commodity hardware or commercial off-the-shelf software, systems and implementations, and supplemental staffing.
Sixty-seven per cent of MSE CIOs are tasked with optimising enterprise operations, so they must be able to identify opportunities to adopt enhancement solutions. Money spent on enhancement solutions should improve enterprise operations using IT budgets. Enhancement solutions work well for process improvement initiatives that are directly related to the business requirements or those that compare the current state to the future state.
Transformational solutions are those that seek to increase revenue, profit, market share or entry into new markets, those led by the C-suite, and those that are collaborative in nature. Although 40 per cent of MSE CIOs are in charge of driving innovation in their organisations and 42 per cent are in charge of digital transformation, only 7 per cent indicate actively experimenting with leading-edge technology. It’s vital that MSE CIOs look to transformational solutions as part of their sourcing strategies, as these are the ones that significantly change the dynamics of the business. This means regularly bringing new, potentially transformative technologies to the attention of the C-suite. These solutions are the ones that will differentiate how the enterprise represents itself in the marketplace.
Though the outcomes may overlap, CIOs should not lose sight of the main purpose of the project.
To learn more, please visit www.Gartner.com