Is IT’s Credibility Crisis the Reason CIOs are Turning to Procurement?
Methinks that Phil might have gotten a little inspiration for this post, at least as it pertains to procurement, by reading a recent Spend Matters series: Tech Spend Minders: Why the Heck are CIOs Becoming Relevant Again?. If you’re curious, you can read Part 1 and Part 2 of it by clicking the previous links. In this series, I suggested that CIOs appear to be getting more deeply involved in many Procurement-technology buying decisions. But they’re not just getting in the way this time and slowing things up (at least not usually); they’re trying to be genuinely valuable.
They’re also getting involved for another reason that marks a return to their original charter. In this regard, as I previously suggested, “CIO involvement with internal data, process and workflow is nothing new, although such involvement has been a novelty in many procurement buying decisions in recent years. But from an external data management perspective, this level of interest and activity is new, representing a new charter for IT leadership. In this new world, the concept of Chief Information Officer applies to all aspects of enterprise and extended enterprise data … It's clear that certain CIOs appear to be inserting themselves into the technology buying decision and management process for both internal spend and external supplier management when it comes to all aspects of procurement information.”
So, Phil, perhaps the next debate we have when we connect over a tipple will be to discuss why procurement outsourcing (including procurement technology), based on your own data, appears to have a slower growth trajectory at the moment relative to other outsourcing areas. Is it because CIOs are getting involved in a positive way in general unlike in other areas of the enterprise where they -- and their direct reports -- still “don’t get it,” as you suggest is the case much of the time? Or is it because they understand the critical role of a true Chief Information Officer in managing both internal and external spend and supplier information? I’m not sure, but I think it could make for a good debate.
- Jason Busch
This is definitely a drawn out beverage-fuelled discussion. Simply put, when there's a serious recession in the works, the job of the CIO is relatively simple - cut costs and squeeze your suppliers using whatever means are at your disposal. CIOs rarely get fired in this scenario, unless they somehow messed up the cost-cutting. Their real challenge is when we emerge from the recession; the spotlight is firmly on them to deliver value. They are, quite literally, drowning in options, and it's a major challenge to convince their peers they are capable of driving new business value into the organization. CFOs will be similarly challenged by the fact that they are going to have to prioritize investments versus cost-containment initiatives, exacerbated by the realization we're moving into a period of drawn-out economic uncertainty, and not the classic economic recovery-cycle. Their options are as tough, if not tougher in this economy. Outsourcing is one key component to help crystallize these options - driving out cost, while creating new avenues of possibility. The CIOs and CFOs who "get" sourcing will be in the driving seat.
Essentially, IT leaders are tackling the following issues right now than can positively / negatively impact the credibility of IT within their organization:
1. In these uncertain times, IT leadership is dealing with a vast array of conflicting demands
2. Almost all the issues related to IT have a high degree of ambiguity and uncertainty
3. CIOs are most vulnerable in these times as can be pulled asunder or can be cartooned as just "being about cost savings in IT and control"
4. Most people believe IT can make an increased contribution to the business... The survey attempts to explore the issues around increasing the IT contribution in these uncertain times
5. The CIO and the enterprise have much to be gained by providing clarity and direction to these issues
PF
What's funny, is just replace "CIO" with "CPO" in all what you've written - the story doesn't change. Procurement and IT lead AMAZINGLY similar lives ("no respect", always firefighting, trying to be more strategic, dealing with rogue 'users', wanting to tap supply market innovation, etc.).
Yet, they don't always serve each other well as internal suppliers and customers to each other. Trust me, we have the stakeholder surveys to prove it - going both ways. Or just ask yourself, is IT helping Procurement identify powerful new capabilities, or just forcing the ERP death march? Is Procurement doing the same going the other way and also working to help IT improve business outcomes beyond cost reduction?
They're also even worse at working together as internal solutions providers to jointly serve the business.
It's also too bad - because they can learn a lot from each other.
IT does some stuff Procurement is not as at strong at, such as formal resource planning associated with planned projects going into a project portfolio management process. Or automated compliance tools. Or help desk support. Or use of BPO. Or risk management.
And IT could learn a lot from Procurement too - which I won't go into - but everyone reading this blog knows.
The notion of "best practices benchmarking" is something not just best suited within a function, but often even more useful across functions too.