Tech Buyer Decentralization, Disparate Data Lead to Contract Chaos

MMI's Lina Sosa

Lina Sosa

By Lina M. Sosa, Vice President, Business Execution, Managed Maintenance

Over the past several years, the profile of the end-user technology buyer has shifted. No longer the sole purview of IT departments, technology purchasing decisions now sit squarely within line of business leaders’ duties. In fact, according to a recent CompTIA study on the new IT buyer, IT departments currently have exclusive control over technology decisions in just 19 percent of organizations. Another report says there as few as four and as many as 10 people involved in the decision-making process.

What does that mean to the channel?

Frankly, while decentralized procurement can benefit individual business units, it has the potential to create contract management headaches for both channel partners and IT departments.

Now, non-IT participation in the purchasing and implementation of technology isn’t new. The pendulum has swung both ways — many partners remember when most organizations had a decentralized or departmental approach to tech buying, shifting management to the IT department only once decisions were made. The move to centralization was largely cost-driven: IT departments could reduce costs by buying in volume for the entire organization rather than allowing each line of business to acquire its own solutions. The downside of centralization? Procurement became an IT-centric process, and lines of business were often excluded from selecting the technology they relied on to do their jobs.

The rise of cloud technology, while great for partners’ MRR growth, has facilitated the shift back toward decentralization by providing unlimited storage (as long as the credit card limit holds out) and eliminating the problem of disparate hardware across the organization. In today’s IT landscape, it simply makes sense for lines of business to play a larger role in selecting the solutions and services they require.

However, if the trend toward decentralization continues, contract management will become a major issue for manufacturers, distributors and channel partners as well as end users’ IT departments. Remember, before tech buying became centralized through IT procurement, you and your customers lacked a consolidated view of hardware and software deployments. Many enterprises and midmarket organizations suffered from missed upgrades, compliance violations and invoice confusion — problems that are inevitably associated with a siloed approach to IT.

The cloud model helps with upgrade cadences and resolves hardware concerns. But now, customers are forced to manage a dizzying portfolio of LoB-specific cloud agreements, not to mention tracking compliance with contract terms, payment and approval of invoices, and managing licenses and renewals. Selling and walking away does no one any good.

Decentralization also creates new challenges for manufacturers, distributors and channel partners because it substantially increases the number of touch points, contracts, invoices and relationships that partners have to manage. Case in point: In organizations with decentralized procurement, channel partners must look beyond their usual customer – the IT department – and forge relationships with line-of-business leaders. But that’s just the first step. Partners and manufacturers must also contend with …

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