Business Units are demanding more control over IT Spending
There has been a lot of buzz in the recent months about the need for transparency of IT spend because of the increase demand and spend in technology by Business Units. Gartner has even published a few interesting research notes for CIOs and CFOs on the subject.
According to Gartner, by 2020, large enterprises will see Business Unit IT spending increase to 50% of IT spend from 17% today. The pursuit of digital transformation is what is driving this trend of technology demand in the enterprise.
The stats give interesting insights, IT budgets are remaining constant or decreasing but the overall IT spend worldwide is still growing. Gartner attributes this growing gap to the rise in business unit IT spending.
Why are organizations allowing this transition to happen to Business Unit IT spending? They could easily default back to the more formal and centralized method of provisioning technology. If cost was the only consideration, they probably would easily and definitely suppress this transition. But cost is not everything, there is value in technology for the business.
The short answer? Digital transformation is dictating the need. The Long answer? Read on to find out more. (And be sure to Signup to our Blog to get articles like these in your inbox.)
Is it possible to manage two distinct governance models for IT spending?
First off, yes it is possible with the right platform and expertise. You also need to implement a strategy that permits all information and monitoring activities to be done in one place. Transparency becomes key when implementing the strategy. Not only from the CIO and CFO perspectives but also from all of the Business Units.
- Use one Platform to Manage all requests: Centralize the procure-2-pay process with a centralize service catalog. Empower end-users and business managers alike, to place requests, change services and even disconnect services as needed. It’s easy when you have one place to go to find what you need. It can also manage all demands regardless of who is placing the order. This actually refers back to one of Gartner’s recommendation: “Create managed channels for all technology demand, regardless of whose budget pays for supply.”
- Chargeback spending to the Business Units: By using a centralized hub to track all requests, it is easy to access economies of scale for the entire enterprise and to chargeback usage to Business Units.
- Create a self-validation loop: This is often the strategy that is overlooked when enterprises embark on the journey of full transparency. Procurement processes are the usual suspect associated with costs, so organizations prioritize the rationalization of new purchases to decrease expenses. We totally forget the entire lifecycle of technology, it needs to be maintained, supported, has an end-of-life, gets replaced or is no longer used because the owner of the initiative left. These activities have costs associated that impacts an organization’s bottom line. When employees and business unit managers are given visibility over the cost of the technology they use and asked to validate if they still require to use it, companies have seen great cost savings.
- Bridge the Gap between ITSM and ITAM: Transparency challenges stem from the existing gap that currently exist between ITAM and ITSM. (More info on ITAM & ITSM) These programs were not created to effectively manage cloud applications, mobile, wireline, UC and IoT assets in a decentralized model of IT supply and demand. The Enterprise Digital Footprint framework of management for the IT organization provides the foundation to bridge the gaps between ITAM and ITSM. It does not replace it, but it is the missing link to giving organizations the platform needed to create a culture of full transparency across all Business units.
- Keep track of the ROI: The proof is in the pudding. If you cannot quantify the results of your initiatives, what’s the point? Whatever the strategy you decide to implement in your organization, make sure it can track the ROI of all efforts put into the program for transparency. The automation of processes should save your organization time, which in turn saves you hard dollars. Track it, report on it and make sure that it is the basis for your next decisions. Who knows, you might have saved enough to fund the next big business transformation initiative that increases revenues by 100%.
Wouldn’t it be the best of both worlds if Business Unit IT purchases could be tracked centrally in the same platform as formal IT spend? It is possible with Cimpl, we are leading the revolution in telecom, IT and cloud expenses management so organizations can save money, save time and accurately manage their inventory. Find out what benefits you can gain from our services.
Have you decided to embark on the journey to Full Transparency? Where did you start, how did you get buy in? What is the value you have received?
- Our Advice on IT Cost Transparency
- 3 Indicators You Need to Track for Your Telecom Management ROI
- 4 Important Things to Know About the Current State of IT
Source: Gartner | Full Transparency for Enterprise Technology Spending Is a Fundamental Strategy for CIOs and CFOs
- Enterprise IT spending
- Enterprise IT Spend
- IT Cost transparency Initiatives
- Control over It pend
- Full Transparency
- Business Unit IT purchases