Future Outlook for IT: Governance and Vendor Management are Key

From implementing personalized marketing campaigns to Big Data analytics and cloud computing, multiple functional areas within a company are increasingly relying upon outsourced technology to drive growth and business value. In fact, according to Gartner, only one-third of the 2013 marketing technology budget for 383 vendors of hardware, software, IT professional services, and electronic components will go to capitalized software and infrastructure.  Two-thirds will go to services provided by external marketing technology vendors.

It is not just about outsourcing, but about a service delivery model that leverages all forms of sourcing based on what will provide the best value to the business (insourcing, outsourcing, shared services). IT leaders must master the capability to manage and govern multiple IT service providers, cloud-based and other delivery models into a coherent operating model supporting a company’s business functions.

For today’s CIO, this means their role has changed from technology expert to orchestrator for decision-making.  As CIOs prepare for the new era of IT, they must learn the new technology requirements that will run on a more simplified IT architecture.  They need to ensure their governance strategy and vendor management organization is aligned to their business goals and will oversee all efforts of the supply chain so that they receive the most value from their IT.  These two separate yet important disciplines require that:

• Companies need to develop the people, process, and controls to manage the new method of IT service delivery.  Those who do not may encounter misalignment or operational failure if one or more IT providers fail to execute.
• IT organizations must embrace outsourcing where appropriate and leverage their internal team for strategic roles that are essential to the business.  Delayed response to this need can prevent a company from gaining value from IT as costs to maintain IT infrastructure escalates.  This means fewer resources to invest in innovation, such as Big Data, analytics, and mobile computing.
• Companies need to take a holistic view of IT governance and vendor management in order to maintain alignment within the IT function.  Governance needs to fit into the broader IT program while vendor management is the core competency of the IT function.  With both in mind, it is the role of CIOs and IT departments to create, monitor, and nurture vendor relationships so that the company has the right mix of IT outsourcing and insourcing opportunities.

By clearly defining the IT process with an effective governance framework and vendor management office, CIOs and IT executives can ensure that there is IT alignment, enabling the business to realize value in IT.

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