Gartner Predicts The Future And CIOs Tremble At The Cost Explosion That Awaits.

In January of this year, the Oracle of Toronto, John-David Lovelock, revised Gartner's forecast of Global IT Spend for 2021 and 2022. A whopping increase of 11% to $4.1 Trillion. Gartner has also predicted that IT Spend will increase by $1.9 Trillion more by 2025, due largely to explosion in IOT cost. That a 62% growth rate over the course of just five years.

“COVID-19 has shifted many industries' "Techquilibrium’ ,” said Mr. Lovelock. “Greater levels of digitalization of internal processes, supply chain, customer and partner interactions, and service delivery is coming in 2021, enabling IT to transition from supporting the business to being the business. The biggest change this year will be how IT is financed, not necessarily how much IT is financed.”

Let’s be clear about one thing. Any application that helps IT organizations visualize how their budgets are being spent is a good thing. The vast array of solution sets out there that manage inventories, monitor utilization, measure contractual commitments, allocate the expense, and process the invoice are particularly important to the task of effectively managing the IT estate.

Let’s be clear about another thing. It is not enough to have these tools at one’s disposal. You must have “ownership” of more than just the application(s) itself. You must have process centralization; you must have solid business processes around the application. You must have subject matter expertise. You must have all these things to enable data quality and to manage cost.

IT Directors and CIOs who don’t embrace the full array of IT spend management solutions in the next two years are going to be struggling to keep their jobs in 2025.

For all the terrific benefits that can come from these SaaS applications that help CIOs and their IT Directorate understand Inventory and costs and commitments, they will atrophy without building a solid ecosystem around them. It is acutely the wrong moment to get behind the curve.

To my thinking that is the greatest challenge in the IT Financial Management space. It’s not the application themselves. They are scalable enough. It’s really about the ability and capacity of its users to build operations and processes around the solution. How those ecosystems get built is a particularly important issue. Not simply for the enterprise seeking to shave some cost, but also for the firms working in the IT Spend Management Space as well.

No one needs a black eye from customers unable to adapt and adopt ITFM solutions, but more importantly, absent a real shift in how IT shops operate, our friends in this space are going to have pony up the dollars to do Business Process Outsourcing themselves or find partners who can take on the burden. In this respect, the IT Financial Management space is at a significant crossroads.

The newest entrants into the marketplace are focused solely on Asset Management. They proactively provision and discover instances of a particular asset type and measure utilization with the idea of finding unused instances and optimizing to reduce invoice cost. These solutions cover Software, SaaS Solutions, Cloud, and Wireless Devices and they will cover IOT spend as well. What these Asset Management tools don’t do is touch the invoices for these categories. But all the growth in real cost are in these same areas. So unless you have dedicated and disciplined teams working to make those optimization recommendation a budgetary reality every single day, the promised savings will be illusory.

Expense Management solutions are the old guard and have focuses on the reconciliation of Inventories and Invoices. Thes tools have thus far been confined largely to Telecom and Wireless service. They ignore many kinds of assets embraced by the "New Guard" and don’t perform any of the automated functions these new tools do.

It’s my belief that all these solutions are valuable contributors to managing IT Expenditures. I think they are similar enough in their tasking that they really ought to be considered as a single industry. But really none of them are ready for the Freight Train of IT expenses rumbling towards them in the next four years.

I recently launched a LinkedIn group that seeks to brings these 400+ firms into closer proximity of each other. I think it is in everyone’s vital interest that we mutually support the development of a robust ecosystem that effectively manages both inventory and invoices. You can have invoice processing and inventory management in distinct systems, but these functions must come together operationally to drive out cost. There is a huge need for interoperability. That’s a precursor for creating process centralization and the subject matter expertise fluent in Inventory Management, Lifecycle, and Budgets to manage these operations. That’s the Ecosystem that our mutual clients are clamoring for and has yet to emerge in most enterprises.

From my perspective (25 years as an IT Expense Management consultant) an emergent ecosystem surrounding these solutions is a critical development issue. A LinkedIn Group would seem an essential step to assisting the IT Financial Management Industry in finding its symbiotic strength and structure and where all firms in the space can have an equal voice in this market’s development. Now really is the time for the industry to go "Game on".

Whether the industry chooses to maintain the six, seven, even ten lanes it operates in today is not something I am particularly concerned about. The market is going to do what markets do. What ought to concern the CEOs of these companies and the Venture Capital presently behind them is whether the coming explosion in IT costs will reshape what enterprises will most certainly require of the ITFM industry and whether these application vendors can stand up the back office support that’s equal to the task.

I invite you to join the conversation.

About The LinkedIn Group

"Global IT Financial Management Solutions: Leadership Forum" is a catch-all name. If you have a better idea. you should feel free to speak up.

We welcome great content. Sanctioned Articles and Media Releases/Announcements/ White Papers are all fine. Just remember that there will be far more competitors in this group than customers. Personal viewpoints are welcome as well. Opinions belong to the poster and do not necessary reflect the company the work for.

The idea behind this group is networking within the IT Finance Management Space and amongst the 1,000+ firms that help clients manage IT Assets and Cost. This group focuses on companies that provide services and solutions that manage IT assets and/or IT expenses. This is not a group for the end user community.

Let's forge an intentional community of industry leaders who are able to recognize obvious commonality and inter-relatedness across the various spaces we occupy. These same leaders must surely also recognize that there is a substantial IT Spend Management Ecosystem developing which needs to find its symbiotic strengths and structures in order to flourish.

No one can forecast how this is going to take place. Is it convergence? Interoperability? Consolidation? The "Gartners" of the world picking Winners and Losers? The only thing that is definite is that nothing is going to happen without networking among leadership. Thus the need for this "Forum".