Special Feature
Part of a ZDNet Special Feature: IT Budgeting 2015: Planning the Next Stage

IT must manage end-user-driven tech purchases with transparency

One report shows that 40 percent of enterprise tech spending is outside the CIO's control. In this new end-user-driven buying process, IT must move beyond just saying 'no'. Here's how.

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In 2014, worldwide IT spending is on pace to total 3.8 billion dollars, which is a 3.2 percent increase over 2013 spending, according to Gartner. Richard Gordon, managing vice president at Gartner, said that, "Globally, businesses are shaking off their malaise and returning to spending on IT to support the growth of their business. Consumers will be purchasing many new devices in 2014; however, there is a greater substitution toward lower cost and more basic devices than we have seen in prior years."

IT spending continues to be fueled by purchases of mobile device and cloud technology — and increasingly, more end user departments (instead of corporate IT) are making these 'buy' decisions in companies. How much are end users getting involved in technology purchases?

In a survey of 165 organizations representing more than £29 billion in IT spending in Europe and the US, advisory firm CEB reported that 40 percent of IT spending is outside of CIOs' control. According to the same survey, the ultimate irony is that CIOs in these European and US companies actually believe that they are in control of 80 percent of IT spending in their organizations.

Even in emerging economies like Brazil, IT spending by end users has approached ten percent of the nation's gross domestic product (GDP).

Technology solutions providers have taken notice

This year, IBM announced that it was transforming itself into an "IBM as a service" company constructed around pay-per-use services that are subscribed to in the cloud by customers. These include over 300 IT solutions produced by IBM and its third-party solution providers. Steve Robinson, general manager of IBM platform services, said that IBM was responding with a new cloud-based marketplace in part because it recognized that sales weren't going through IT as they once did. Business units and end users are trying software and making decisions separate from IT, and IBM needed a way to reach these decision makers.

SugarCRM chief technology officer Clint Oram seconded the opinion, noting that the software sales process was changing from one that had been directed at IT to one that must now be aimed at end users and business units. A recent Avanade survey of over 1,000 executives, business unit leaders and IT pros revealed that executive and business unit leaders feel they can make better and faster technology decisions when they bypass IT. Given this shift to more business end-user spending, what many organizations have failed to do is to change behaviors and tactics so they can get the most out of a revised IT buying strategy.

IT should help end-user decision makers do the following:

1. Don't forget about return on investment (ROI)

ROI calculations that factor into how a technology investment will pay for itself are often jettisoned when end user business departments buy technology. "The CEO in many cases would be hearing from these other executives and business unit leaders saying that technology is so important to my business and to make my teams productive I can't solely rely on IT," said Andrew Horne, managing director at CEB in London. Nevertheless, it's still important that business leaders have an upfront understanding of the revenue or cost reduction potential of a solution — and that they develop methods that allow them to verify that they are getting this value every year — or they'll never know if the investment was worth it. The hard reality that 80 percent of software remains unexploited or even sits 'on the shelf' still stands.

2. Get security and governance right

Technology security breaches and policy failures cost time and money — and can be very damaging to corporate branding and sales if word gets out. IT usually verifies governance, but if it doesn't know that technology has been acquired, the purchasing end user should either do this job or get IT involved.

3. Understand the solution's integration potential

Within three months of active technology use, the business unit usually discovers that it would be nice to bring other areas of the company into the technology so that more information can be shared. To do this, the technology must be able to easily plug into other systems. Checking out a solution for its integration potential with other company technology is a job best done by IT. Although an end user might perceive IT as a 'slowing' force for technology implementation, upfront checkouts on how well the new solution will work with other company systems can save major headaches and expenses later on.

IT must ensure that 'no' isn't the first word out of the 'glass house'

In the era of end-user technology decision making, there should actually be a new meaning for the 'glass house'. It should symbolize transparency. If more business departments understood the positive values that IT brings to technology buy decisions (like checking for integration and governance), there would be fewer fears of IT nay-saying and non-cooperation. In many cases, IT has made its own bed over the years by saying 'no' to many technology suggestions from the business that it felt it lacked the time to investigate.