Cisco CEO Admits to Bypassing Your IT Sourcing Process

By Jon Winsett

CEO, NPI

August 15, 2014

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If you don’t think shadow IT is impacting your business, think again. Departmental users that are eager to bypass tedious sourcing processes are doing it at the expense of negotiation leverage – and vendors are admittedly taking advantage of this decentralized purchasing environment.

Skeptics need only to check out what Cisco Systems CEO John Chambers had to say this week on the company’s earnings call. From Tom Loftus at The Wall Street Journal’s CIO Journal blog:

“Cisco Systems Inc. CEO John Chambers sent CIOs a direct message during the company’s earnings call on Wednesday. Buried in the discussion of earnings, margins and emerging networking technology was his stark admission that the company’s sales model is changing in the era of the cloud, which makes it easier for people who don’t have technical training to buy software. “We’re selling to the business unit more than to the CIO now when we do our job right,” he said.

That makes sense for Cisco, because selling to the business unit broadens its market and allows it to bypass the budgeting process of the CIO, which can be bureaucratic and slow. But the change, which appears to be accelerating, creates challenges for the CIO.”

CIOs and sourcing teams: be warned. The sourcing process has officially become ground zero for overspending. If you don’t already have a strategy in place, you need to get started.

Here are some tips on how you can rein in rogue IT spending. Remember, it’s more important than ever before to benchmark pricing and terms for EVERY new software purchase or renewal.