CIO Guidance: New IT Sourcing Governance Is Needed as Anti-Agile Vendor Practices Expand

CIO Guidance: New IT Sourcing Governance Is Needed as Anti-Agile Vendor Practices Expand

This IDC Perspective examines the perhaps nuanced practice of "anti" agile procurement that may be a challenge for CIOs and the resulting contracts that become inflexible during a period of rapid technological change. We offer advice on how to recognize and avoid (or renegotiate) anti-agile procurement contracts.Agile practices are being adopted across organizations in many functional areas, including procurement. Agile procurement particularly in IT has become a necessary component of an enterprise agility strategy and a reality or a goal for many. For many organizations, the strategy to improve organizational agility is being driven by competitors, market conditions, or shifting customer requirements and is often one of the top 3 reasons for the major platform transitions organizations are undertaking — the transition from on-premises to cloud-based application hosting. As with most major transitions, some suppliers gain economic share and advantage, while others lose ground. In fact, with the wide-scale transition to cloud, that is precisely what we are seeing — major shifts in IT spending between platforms, vendors, architectures, and so forth. Many vendors, especially those poised to lose ground, are offering economic incentives or contracting structures to entice buyers into signing multiyear contracts or creative bundling options to combine goods and services perhaps shifted from other suppliers. Some vendors are aggressively defending their legacy platforms despite the overwhelming trend to move to newer technologies.We refer to this approach as "anti-agile.""When technology evolves rapidly, a bureaucratic procurement cycle cuts the value in half. That's why agility in IT procurement is so important," says Dr. Ron Babin, adjunct research advisor with IDC's IT Executive Programs (IEP). "Long-term contracts, where buyers must commit to the current on-offer digital technology, constrain organizations' ability to move to newer technologies when they become available. Savvy IT leaders are investing the time to collaborate with sourcing professionals to ensure their organizations maintain flexible vendor alternatives."

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