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Tech Buyer Decentralization, Disparate Data Lead to Contract Chaos

Your CIO customers don't own technology buying decisions.

October 9, 2017

5 Min Read
Data

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Lina Sosa

By Lina M. Sosa, Vice President, Business Execution, Managed Maintenance

Over the past several years, the profile of the end-user technology buyer has shifted. No longer the sole purview of IT departments, technology purchasing decisions now sit squarely within line of business leaders’ duties. In fact, according to a recent CompTIA study on the new IT buyer, IT departments currently have exclusive control over technology decisions in just 19 percent of organizations. Another report says there as few as four and as many as 10 people involved in the decision-making process.

What does that mean to the channel?

Frankly, while decentralized procurement can benefit individual business units, it has the potential to create contract management headaches for both channel partners and IT departments.

Now, non-IT participation in the purchasing and implementation of technology isn’t new. The pendulum has swung both ways — many partners remember when most organizations had a decentralized or departmental approach to tech buying, shifting management to the IT department only once decisions were made. The move to centralization was largely cost-driven: IT departments could reduce costs by buying in volume for the entire organization rather than allowing each line of business to acquire its own solutions. The downside of centralization? Procurement became an IT-centric process, and lines of business were often excluded from selecting the technology they relied on to do their jobs.

The rise of cloud technology, while great for partners’ MRR growth, has facilitated the shift back toward decentralization by providing unlimited storage (as long as the credit card limit holds out) and eliminating the problem of disparate hardware across the organization. In today’s IT landscape, it simply makes sense for lines of business to play a larger role in selecting the solutions and services they require.

However, if the trend toward decentralization continues, contract management will become a major issue for manufacturers, distributors and channel partners as well as end users’ IT departments. Remember, before tech buying became centralized through IT procurement, you and your customers lacked a consolidated view of hardware and software deployments. Many enterprises and midmarket organizations suffered from missed upgrades, compliance violations and invoice confusion — problems that are inevitably associated with a siloed approach to IT.

The cloud model helps with upgrade cadences and resolves hardware concerns. But now, customers are forced to manage a dizzying portfolio of LoB-specific cloud agreements, not to mention tracking compliance with contract terms, payment and approval of invoices, and managing licenses and renewals. Selling and walking away does no one any good.

Decentralization also creates new challenges for manufacturers, distributors and channel partners because it substantially increases the number of touch points, contracts, invoices and relationships that partners have to manage. Case in point: In organizations with decentralized procurement, channel partners must look beyond their usual customer – the IT department – and forge relationships with line-of-business leaders. But that’s just the first step. Partners and manufacturers must also contend with …

… disparate data sets created by the multiplication of stakeholders and contracts across an organization. The result can very easily become an IT environment afflicted with data chaos — a scenario that introduces added costs, risks and inefficiencies to the sales and implementation process.

Establish Processes to Prevent Data Chaos

As lines of business play a greater role in the procurement of technology, strategies for mitigating data chaos will become increasingly important. The entire channel must work together. Here are a few tips for partners to help themselves and their customers in the age of decentralized tech buying:

  • Establish roles within the buying cycle. IT must shoulder the ultimate responsibility for cloud services and solutions, even if lines of business are taking on procurement. It’s unreasonable to expect that lines of business will manage cloud contracts or other technology elements for eternity. After solutions have been implemented, IT should take over the management of contracts, licenses and renewals as well as the relationships with technology providers.

  • Develop relationships with end-user employees beyond the IT department. As the buying power shifts to line-of-business leaders, channel partners must look outside the bounds of their current buyer personas. Fail to do so and the “shadow channel” might just take that business, says Forrester. In some cases, this expansion will mean developing and navigating relationships with multiple lines of business within the same end-user organization, while continuing to nurture relationships with key players in the IT department. If that sounds like more work, it is.

  • Establish a “single version of the truth.” To minimize data chaos, channel partners need to build or buy technology that unifies disparate service and product data into a single view. In addition to reducing costs, a single view of data enables IT teams at end-user organizations to more effectively track and manage renewals and contracts. In essence, channel partners can empower customers with visibility to their entire cloud portfolios, minimizing the risk of contract non-compliance, invoice snafus and missed renewals.

Ultimately, exclusive control by IT departments over the procurement and management of technology isn’t useful. As cloud grows – and grows – that pendulum is likely not swinging back. But a shift to the opposite end of the spectrum, with non-IT lines of businesses exercising total control over technology, isn’t viable either. Work with customers as they decentralize technology procurement to find a middle road. Yes, that demands a strategy for collaboration and communication among lines of business and their IT departments, as well as channel partners. But the alternative is chaos.

Lina M. Sosa is the vice president of business execution for MMI. She is responsible for sales execution, account growth, day-to-day operations and customer satisfaction for all of MMI’s customers. In her role, Ms. Sosa directs the outsourcing sales and customer service efforts of MMI.

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