Procuring IT - Why is it so Complex?
IT Procurement creates a unique set of challenges and is often associated with high costs, complexity and a relatively high rate of failure. The IT procurement TCO is a lot more complex than other categories and the general operation of the industry has less similarities than other markets and industries in the indirect procurement space. The following covers areas which make IT Procurement so complex to procure, the list is not exhaustive but does cover some interesting topics to ponder.?
Rapid pace of Change
The rate at which technology changes is exponential. Cutting edge today, is likely to be old news within 12-24 months, a simple solution is to contract for shorter periods, however the cost of implementing new technologies usually prohibits that simple mitigation. Not looking at IT holistically and trying to future proof can be a continuous cycle. Many IT purchases are done in an iterative fashion, a bit like renovating your house room by room, by the time you get to original room you started at, this is now outdated and ready for a refresh. It is highly unlikely that an org has the luxury of replacing it’s whole infrastructure and application landscape in a single swoop, nor would many have the stomach for such an onerous project, however looking at ways to minimise the constant repurchasing cycle should be considered.?
Complex License Conditions
Unlike most industries which have several normal ways of operating, certain areas of IT are backed off by complex licensing conditions. Such conditions can be radically different, from different IT sectors to different vendors even down to the product portfolio for the same vendor. IT vendors are renowned for their audits (or as they like to say ‘ensuring that you are getting the most from the product’) which more often than not lead to large backdated bills or settlements, which generally speaking leave a bitter taste in your mouth. It is essential that IT Procurement specialists guide their organisations into ensuring the best compliance with such onerous terms and organisations need to ensure the IT Procurement specialist has enough time to do so.?
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Integration
Integrations are generally growing - most organisations want their systems integrated together in some format - that ideal real-time view of the world where all systems are synchronised and fed from a single source of data, utopia!? Data warehouses and lakes are starting to make this slightly less onerous. One thing it doesn’t make easier though is the cost, time and effort spent completing integrations. A way to make your integrations easier is to purchase some middleware, however this is going to add further cost to your overall TCO. Not only is cost, time and effort high to create the initial integration, but these integrations must also be maintained and tested each time one system is upgraded, to ensure that they still work in the expected way. Understanding the integrations options and also if integration is absolutely necessary is key to combat this complexity.?
TCO’s are tough
Total cost of ownership are generally difficult to create in IT, if you undertake them properly. Items such as; internal staffing costs / effort, software running costs, upgrade costs, maintenance costs, testing costs, testing costs following completion of upgrades, the infrastructure required to run the application, the management of the infrastructure, the current lifecyle of the infrastructure, implementation costs, decommissioning costs of previous systems, integrations costs and the list could continue to grow. How many of these do you consider when making decisions and at which point does the demarcation stop?
The themes considered here are brief, but each alone could have a whole article written describing the complexities and different variations. There are also many more on top of these which make procuring IT complex.
Utilising IT Procurement specialists will greatly mitigate most of these complexities, if you do not have access to an IT Procurement specialist then it is worth considering buying in the help and support.?