How IT Sourcing Pros Can Do Better on Emerging Technology

Is your sourcing and vendor management team seen as a hindrance not a help when it comes to emerging technologies? Sourcing pros must enable innovation, by providing new flexibility, Forrester Research advises.

By Chris Andrews
Wed, January 26, 2011

CIO — As the latest technologies are incorporated into the business process, organizations will naturally become more comfortable when working with third-party technology vendors. This means the ability to identify, select, and manage the right technology vendor can make the difference between the success and failure of a new business initiative. But, while many sourcing and vendor management (SVM) professionals are starting to play an increasingly important role in this emerging technology evaluation process, many of Forrester's sourcing clients explain that their involvement is not always clearly defined, resulting in a more reactive and makeshift role than they would like.

Why? In part, it's due to the historical nature of the challenges SVM professionals face. For example, emerging technologies are not traditionally considered the responsibility of sourcing professionals, making them a less likely player for key insight. Additionally, the high standards sourcing applies to larger contracts often raises red flags, which does not translate very easily to new technologies. The unintended consequence? SVM professionals often slow the adoption process and are viewed as barriers to innovation, rather than supporters and enablers.

Despite these challenges, at Forrester, we're still hearing that sourcing's role is becoming more relevant and more valued in the evaluation process. In order to better understand the changing role sourcing plays when evaluating emerging technology, we asked 113 SVM professionals about their current focus and outlook on emerging technologies—including which technologies would impact their business over the next five years, and whether they were actively involved in sourcing these technologies in 2010 to 2011. The result? Key differences exist between the expectations for various technologies, and the actual role of sourcing. For example:

SaaS and business analytics are expected to have significant business impact. This result is in line with the rapid growth of these technologies: SaaS is infiltrating most enterprises with a dramatic affect on software and services contracts, while the evolution of business analytics still holds the promise of significant business impact. But, when it comes to actively sourcing these technologies—we saw a great difference. While 58% of respondents are involved in sourcing SaaS today, only 47% are currently sourcing business analytics.

SVM professionals can play a more active role in mobility and UC. We weren't too surprised to learn that the more cutting-edge technologies are also the ones currently lacking SVM's involvement. These technologies include videoconferecing tools, tablet PCs, and social technologies, which will all have a big impact on the business, but are not currently influenced by the sourcing team. But this gap between the expected value and current role of sourcing may highlight a long-term opportunity: as IT and the business select which new buzz technologies to adopt, they will need help clarifying contractual terms and distinguishing vendor offerings. That's where SVM professionals should chime in, to improve the relevance in the emerging technology process.

What about SVM professionals who have a clearly established role in the new technology adoption process? Even in these instances, the level of contribution often varies significantly. We found that:

When involved, SVM focuses on contractual terms, and vendor viability. By negotiating prices, establishing exit clauses, ensuring compliance standards, and investigating vendors' financial stability, SVM professionals are helping mitigate the risks inherent in new technology evaluations.

Security, scalability, and integration requirements are likely IT specialist domain. Although SVM professionals will work with IT to define contractual terms, the vast majority are willing to defer to the expertise of IT specialists in these areas.

In the end, it's important for SVM professionals to clearly define and take ownership of their responsibilities in the evaluation process. Otherwise, establishing sourcing's value within the business will become an increasingly difficult task. This means sourcing professionals need to proactively show IT and the business examples of how sourcing has helped in the past—and use those examples to clarify future roles. And amongst other things, SVM must be prepared to enable innovation, by providing new levels of flexibility. Rather than slowing the adoption process, consider raising concerns and allowing business users to decide if the risks are acceptable and reasonable.

Chris Andrews is Senior Analyst at Forrester Research (FORR), serving sourcing and vendor management professionals. His research focuses on how organizations can identify, integrate, and manage innovation and emerging technologies.

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