Flat IT Spending in 2017? Only if Alignment Between IT and Sourcing Improves

By Don Addington

President, NPI|Don Addington, President, NPI

December 07, 2016

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It’s that time of year again – when next year’s IT predictions start to feel more…real. There is no shortage of analyst reports and market evaluations to ponder right now, but there is one that recently caught my eye.

According to the Computerworld Tech Forecast 2017, IT spending and hiring is expected to remain flat in the coming year for a majority of organizations. In the past, these kinds of prognostications have stemmed from unfavorable economics – but that’s not what’s driving the train in 2017.

Based on this study, the drivers for flat hiring and spending are actually good news. As most enterprises continue on their digital transformation journey, resources and missions seem to have finally reached a state of alignment – “Business and IT are finally on the same page, with planned technology projects and overall strategic business goals closely aligned for the upcoming year.”

Alignment is a powerful thing – so powerful that it can help to abate IT spending increases at a time when nearly 85 percent of companies report they are actively undergoing digital transformation across their businesses (and making progress). One goal of digital transformation in the enterprise is to enable self-service IT – and the early adopters view this as a way to reduce costs.

To keep spending flat, enterprises will have to align more than their IT and business vision.

One of the top contributors to IT overspending is the lack of alignment between IT and sourcing organizations. While IT may be well versed on the specific technology and the business requirements, sourcing is ultimately responsible for securing a best-in-class deal with the vendor. Vendors are well-practiced at using this division of knowledge to their advantage.

Again, there’s good news as we look ahead to 2017. With business and IT functions finally in (or approaching) a state of alignment, the focus is on IT and sourcing to accomplish the same. This is driving transformation in how IT and sourcing teams work together to achieve best-in-class deals with their key technology and telecom vendors.

And the pressure is on. Executive stakeholders are watching as IT sourcing performance continues to have a larger impact on overall business performance. The cost differential between alignment and misalignment can be millions per year. The question is will it be millions in savings or millions in overspend?