When You Get 200 CIOs in a Room, Here’s What They Have to Say

By Jeff Muscarella

Partner, IT and Telecommunications, NPI

March 11, 2015

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Recently, I had the chance to speak at the Premier CIO Forum down in Orlando. My colleague and I gave a presentation on “Microsoft License Optimization – Averting Licensing, Cost and Audit Risks” and were thrilled to have two-thirds of the conference attendees in the room.

It was a great opportunity to listen first-hand to the concerns and opportunities facing CIOs, and – rest assured – there are plenty on both fronts right now. There’s no doubt that enterprise IT is at a crossroads as the old guard tries to reinvent and the new guard challenges the status quo. The innovation and opportunity that surrounds it is mind-boggling.

But, changing tides can be difficult to navigate and that’s what’s keeping CIOs up at night. How do I embrace change without creating chaos? It’s a macro-level question, but it’s the fundamental one that drove most of our discussions with the CIOs at the event where, of course, NPI’s focus was on IT sourcing.

Here are a few IT sourcing-oriented takeaways from our discussions:

Even organizations that have traditionally succeeded at staying on top of changes to licensing, pricing and contract terms are struggling. While some of the attendees we spoke with are proactively tracking these changes, most have found it impossible keep up. Even those that are keeping abreast find it difficult to interpret the impacts on their IT strategy and spending.

Frustration with sourcing complexity is at an all-time high. Impatience and frustration with the state of IT sourcing has been growing among CIOs for some time – but the situation is reaching a boiling point. Conducting an effective renewal or true-up has become overwhelmingly cumbersome. As vendors attempt to “simplify” licensing programs, they’re only creating more confusion and skepticism with CIOs.

That frustration is leading some CIOs to actively pursue alternatives to their largest enterprise IT vendors. Forget empty threats. Some CIOs have already made the leap to Google, Amazon and other non-traditional enterprise vendors – while others are in active discussions.

Informal audits, often under the guise of “software asset management assessments” are a very real threat. In fact, it’s the new reality. During our presentation, I asked how many attendees have received a request from Microsoft to conduct an audit or SAM engagement in the last 12 months. The answer? More than one-third. If you put those same attendees in a room six months from now, I bet another third would raise their hands. Microsoft – and other enterprise IT vendors like Oracle, IBM and SAP – are using informal audit practices to “train” customers that this is the new normal and that it will become a routine part of how they manage customers.

It’s never been more important for CIOs to equip themselves with definitive answers to the following questions: What licensing changes are happening with my largest vendors? How do those changes impact my current state and cost of IT? How do I reconcile those changes with my current-state vs. future-state demands? What alternatives and options are available to me inside and outside of my current vendor mix? How can I mitigate the risk and impact of an audit (informal or official)? The answers gleaned from these questions will be key to reducing chaos, and cost, as enterprise IT continues to evolve.