Technology Consumption Management is at the core of Amalgam Insights’ research, advisory, and consulting efforts to bridge the CIO and CFO offices. In today’s world, we have instant access to cloud-based scale, massive processing power, artificial intelligence and machine learning APIs, automated data modelling and integration, mobility and IoT devices, and collaborative platforms. The question is no longer whether technology can support our business goals, but how we identify, purchase, and adopt the technologies that we need.
Traditionally, the goals of IT were to provide “Better, Cheaper, and Faster” technology. However, with the emergence of the cloud, subscription and varible pricing, and consumerized demands for technology, this cliche no longer applies. Amalgam Insights would argue that world-class technological resources are now available on-demand at relatively low costs for proof-of-concept projects. In this world, the traditional measures of “Cheaper” and “Faster” are only marginally relevant for competent IT sourcers. In addition, the idea of “Better” has largely transformed from measures of storage, processing power, and speed to purpose-built technology experiences to support business outcomes.
Digital Transformation is an important and foundational paradigm shift for IT Management.
IT and enterprise technology have been run as “destination” departments over the last generation. IT was the source of all technology and defined what could and could not be used in the enterprise with a focus on governance and ability to manage. In effect, IT was the monolithic ivory tower that businesses needed to use to evolve into data-driven and digital businesses.
However, IT’s role is fundamentally shifting to a “bridge” role as consumers are now digital natives. We have fundamentally shifted as a culture to use Google, Facebook, and Amazon as parts of our lives and to expect digital solutions ranging from Uber to Blue Apron to Kickstarter to Etsy to Patreon to connect consumers with providers. Similarly, IT is shifting in that it no longer needs to build and support all of the technology infrastructure needed to keep a business up and running. IT’s new job is to be the bridge builder both in identifying the right solutions to purchase and to ensure that the relevant audience can actually use the technology through integration, design, usability, training, and viral peer-to-peer recommendations.
To make Technology Consumption work, IT still needs to understand how technologies work and to conduct adequate due diligence. However, the end goal is less focused on technology management and more focused on the challenges of vendor management and effective customer-aligned product launches. With the evolution of cloud, mobility, and machine learning, the mythical goal of “running IT as a business” is starting to truly become a realistic goal. However, to make Technology Consumption truly work, businesses must be aware of three key issues.
1)Avoid commoditizing IT Vendor Management
2) Treat IT asset and service launches as product launches
3) Align IT Consumption to business goals and outcomes
First, vendor management is not simply a matter of commoditized cost-cutting. Bargain hunting only works in context of a tightly-defined set of parameters that reflect the company’s growth targets, compliance and governance requirements, and user demands for responsive and effective products. IT vendor and service management requires a synthesis of technical know-how and corporate procurement. Simply pushing IT sourcing to a procurement department will result in discounting without results.
For instance, without understanding, a general procurement officer may negotiate a 50% discount on frame relay and MPLS network elements within a telecom contract. This is only one of many potential products and clauses within a telecom contract and it looks impressive in isolation. But in reality, the costs for this much bandwidth could be 90% – 99% lower than the original contract stated. So, in reality, the procurement officer has agreed to paying 5x – 50x MORE than they should because of a lack of knowledge of how to buy modern technology. These examples exist across telecom, network, mobility, cloud infrastructure as a service, software as a service, API usage, and even with on-premises data centers at this point, leading to the need for subject-matter specific IT consumption management expertise.
Discounts without context are a lazy way to manage IT procurement.
Second, for IT investments to be effective, companies must treat new technology purchases as product launches. Just as new products require a communications, marketing, and support plan, each new IT service requires similar support. Corporate communications is not typically a core competency in IT departments, meaning that IT needs to reach out to marketing and product departments to get help on best practices. Otherwise, IT risks poor technology consumption even after choosing the right vendor at the right price with the right technical capabilities aligned perfectly to the company’s needs.
Just because businesses plan and contract for a certain level of IT consumption management doesn’t mean that it will actually happen. The days of “Build it and they will come” are few and far between. The good news is that in IT, the customer base is typically captive and consists of current employees, partners, and customers who have clearly defined goals and intentions. Nobody needs to guess, for instance, why a pricing analyst would be interested in the total cost of production for a particular product or service. Work with Marketing, Corporate Communications, and Learning & Development colleagues on launching key IT services, both to maximize usage and to get credit for IT’s contribution to the business’ success.
Third, and most importantly, businesses must define top-line & bottom-line outcomes associated with new technology consumption. Simply stating “We’re growing, so we need X more technology” seems like a very basic decision that locks in predictability. But without context, this type of logic without adequate review may end up trapping a company into a cost structure where a large provider such as Amazon, Dell, HPE, IBM, Microsoft, Oracle, or SAP ends up becoming a “too-big-to-fail” solution that defines the business service. Technology needs to support business services, not define them. This is a lesson IT departments learned from first generation ERP: there is no reason to repeat the mistakes of the past.
IT has transformed from a supply-side department to a demand-driven department. Companies have much greater visibility and flexibility to IT resources than ever before, leading to the ability to align technical metrics and capabilities directly to business metrics such as revenue, profit, production, and efficiency. Rather than treat IT as a “pool” of resources, Amalgam Insights believes in purposeful IT for productive IT consumption. This doesn’t mean avoiding the digital revolution of Big Data, Artificial Intelligence, the Internet of Things, and Blockchain, but to assign incremental business improvements or goals associated with production-ready technologies.
Technology Consumption Management requires a combination of executive leadership and responsible stewardship. For more information on the challenges of demand-driven technology consumption, check out Amalgam Insights’ on-demand webinar: