This month marks NPI’s 20th anniversary! It’s mind-boggling to think about how much has changed in the last two decades. In 2003, there were no iPhones or Netflix, MySpace was the hot new thing, Google was barely five years old, and Yahoo and AOL were the top two most popular websites in the U.S.
For those of us in enterprise IT, the landscape looked even more different. Here’s what was happening in 2003:
- Only 2% of companies were using cloud computing
- Just 12% of companies were using mobile devices
- A mere 14% of companies had a CIO on staff
- Salesforce was on its way to breaking $100 million in revenue and preparing for IPO
- ServiceNow was a single-laptop operation in founder Fred Luddy’s home
- Microsoft’s annual revenue had just cracked $32 billion ($198 billion in 2022)
Meanwhile, a group of software sales executives were outlining NPI’s mission – to help companies eliminate overspending on IT purchases and renewals. Having sat on the vendor side of the negotiation table, they knew first-hand how inconsistent pricing was from customer to customer. They also understood how well-trained IT vendor sales teams were, and that buyers were outflanked.
It was the wild west of IT buying back then. In 2003, few people had ever heard the term “IT spend management.” Today, few haven’t. Smart business leaders know that getting rid of IT cost waste isn’t just good hygiene – it’s a business enabler. IT purchase and renewal optimization has a material impact on a company’s ability to deliver on its most strategic business initiatives by stretching every budget dollar to the max.
As we think about NPI’s beginnings and where we and the IT procurement sector are heading, here are a few observations:
IT procurement has never been more strategic or important as it is today.
IT procurement has come a long, long way. Twenty years ago, it barely existed as a discipline. In most cases, IT professionals were doing IT buying, and procurement professionals weren’t viewed as informed enough to be involved. And that’s just the way vendors liked it. The absence of procurement equated to higher revenues, less flexible contract business terms, and stronger vendor lock-in.
The alignment between IT and procurement is mission-critical to achieving world-class outcomes on IT purchases and renewals. IT procurement teams not only have a seat at most large enterprise IT buying tables today, they are trusted orchestrators of vendor negotiation outcomes that reduce IT costs and improve business agility.
We’re in the middle of an enterprise technology revolution and that’s going to make IT buying even more complicated.
Much like enterprise adoption of the internet, mobile computing and cloud, generative AI and machine learning drive a new wave of spending on emerging technologies. The implications for IT procurement will be material. Vendors will find new ways to capture more revenue as enterprises seek and build these capabilities into their IT ecosystems. Licensing and pricing models will get more complex and confusing. Disparity between what one company pays for AI-related purchases and renewals versus the next company will grow as vendors figure out market thresholds. The same goes for contract business terms.
Innovation cycle bursts in IT are somewhat predictable in this regard. They create exciting opportunities for vendors and buyers alike, and they open the door for massive IT overspend. The challenges NPI set out to solve 20 years ago aren’t very different today – with two exceptions. Number one: There will be more IT budget dollars at stake and more business risk as companies race to leverage AI as an operational and competitive advantage. Number two: IT procurement has matured dramatically as a discipline, and the tools and services to support it are well-established and expanding.
AI-enabled IT procurement tools and services are going to transform the way companies buy IT and manage spend.
For the last few years, the IT procurement tools and services landscape has been a hotbed of growth and innovation. AI is going to amplify that as it ushers in new offerings that will change how easily and quickly companies achieve world-class outcomes on IT purchase negotiations (expect some exciting developments from NPI in this area soon!). Deciding which tools and services to invest in will likely be a challenge for many IT procurement teams.
Our advice is to focus on solutions that make a measurable impact on IT purchase outcomes and negotiations – driving hard-dollar savings, accelerating purchasing cycles, equipping your buying team with enterprise-grade pricing and licensing intel, and purpose-built tools to manage expanding renewal portfolios.
Enabling Next-Level IT Procurement Excellence
NPI’s commitment to helping companies eliminate overspending on IT has never been stronger. Last year, NPI analyzed over $25 billion in IT spend for our clients. We currently serve 116 of the Fortune 500 and hundreds of other large enterprises. Our clients span various industries, but they all have one thing in common: they understand the value of strategic IT procurement and the uplift that price benchmark analysis and vendor-specific negotiation intel can provide. We are honored to support them and energized to find new ways to deliver value to their organizations – the best is yet to come!
Interested in learning more about how NPI can help you eliminate enterprise IT overspending? Contact us.
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