In the future, everyone's a sourcing and vendor management pro

In the future, everyone's a sourcing and vendor management pro

Summary: In a prosumer world, sourcing and vendor management must now "infuse" its discipline into the entire organization, according to Forrester analyst Stephanie Moore.

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LAS VEGAS -- As IT organizations move toward a business technology structure, sourcing and vendor management professionals will be one of the linchpins to success -- but their role must change dramatically to do so, according to Forrester analyst Stephanie Moore.

Speaking here at the 2011 Forrester IT Forum, Moore says a lot of buying will be going on in the future -- but vendor management must now "infuse" its discipline into the entire organization.

Why? Because in an age of "prosumerization," it won't just be the SVM team procuring solutions anymore.

First, some fast facts:

  • 49% of SaaS purchases are driven by the business group
  • 65% said they buy technology without the help of IT.
  • 38% of Millennials prefer tech at home to tech at work
  • 34% of Millennials download applications to do their jobs because the company doesn't provide them

But it's not just Generation Y, either. Moore recalled when she, hit the file size limit on her e-mail inbox. Under deadline heat and ignoring warnings from the IT department, her inbox shut down -- so she turned to her personal free Gmail account to do her work.

The problems stem from rising business demand and too-high operating costs, which hold IT back, she said.

"It gives everybody a license to use Gmail," she said. "To self-provision."

The good news? Plenty of business-ready solutions are available.

The bad? Signing up will quickly cause everything to get out of control, she said.

"Who will manage all these vendor relationships?" she asked. "Integrate them into corporate IT architecture safely? Ensure vendors are reliable, stable, trustworthy? The vendor management organization and the business have to work together."

The new approach to vendor management requires thought, she said.

"Consult and orchestrate, versus do," she said. "Guide the business, as opposed to prescribe."

There's an unfortunate view of the vendor management organization as "a roadblock -- inhibitor of progress," she said. "They need to be viewed as consultant, aide, someone who makes their life easier."

Take the Sony-Epsilon hack. "It's because the marketing organization that signed contract with Epsilon never thought to do standard security audit," she said.

Or the Amazon-EC2 outage. Who gets blame? "Anyone that didn't prepare for eventuality of outage at Amazon is to blame," because they didn't plan for a failover, she said.

"Sourcing and vendor management needs to make sure that folks buying into the cloud know what the risks are," she added.

Plus, there are integration risks:

"What's really plug-and-play today?" she asked. "On average, it takes more than 12 months to integrate enterprise-class cloud services like Salesforce." And it's not always cheaper, either.

At the core, the SVM team should lead the sourcing lifecycle. For intermediate groups, it should act as an educator and consultant. And for the empowered fringe, it should serve as a backstop when necessary.

Moore outlined three main disciplines of sourcing and vendor management:

  • Risk mitigation. "Is the vendor stable? Financially viable? Is it truly plug-and-play, or am I going to have to hire IBM to integrate it for $2 million?"
  • Contracting and compliance. "People need to begin to ask, what am I agreeing to?"
  • Value management. "It's important for me as a consumer to be aware of other solutions on the market."

"Self-provisioning means that your user, your business, has to do its own research," she said. "Peers and colleagues are the most frequently consulted for sourcing information. With all the social media networks available to us now, we should all ask our friends and colleagues about their experiences."

More from the 2011 Forrester IT Forum on ZDNet:

Topics: Enterprise Software, CXO

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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