Support frontline technology spending from the central IT office

In this recap on recent research from EAB’s IT Forum, we explore the challenge of managing technology spend. Specifically, how can central IT optimize the choices our campus collectively makes in an era when frontline campus units—and not central IT experts—are increasingly the focus of purchasing activity and vendor marketing? First, we acknowledge the risks when unit-based technology spending goes unchecked. Then, we present three tactics to help central IT offices install guardrails around non-expert purchasing while also maintaining units’ autonomy:

  • Purchase authority resets
  • Comprehensive vendor RFIs
  • Dedicated IT contract reviewer

Central IT's optimal role: Between "Dr. No" and "Anything Goes"

The increase in frontline technology purchasing is reviving the debate about how the central IT office can guide unit-based technology purchasing without being seen as obstructionist. “Anything Goes” purchasing behavior, in which units retain all autonomy in technology purchases, often results in immediate waste from license duplication and failure to negotiate volume discounts, as well as longer-term risks to security, privacy, and business interoperability. “Dr. No” intervention has its own downsides: apart from perceptions of infringing on unit autonomy, IT leaders who seek to insert themselves into every purchase evaluation become overwhelmed by unsustainable workloads.

Below, read about three approaches to breaking the tradeoff between central control and units’ autonomy.

Tactic 1: Purchasing authority reset creates fewer, smarter frontline purchasers

Issue: At Rice University, free-for-all technology purchasing resulted in duplicate software packages and agreements that opened the campus to technology risk.

Response: The CIO and procurement director initiated a “hard reset” of the purchasing process. After all authorized buyers were deleted from the procurement system, unit leaders were instructed to re-nominate a smaller number of authorized buyers. A higher purchase threshold was established, prompting unit leaders to think carefully about who could be trusted with greater purchasing authority.

Result: Following this reset—which resulted in a 75% reduction in staff with purchasing authority—IT leaders at Rice set out to engage and educate this smaller group of buyers on the procurement process and the value of a central IT review. As a result of this reset, IT leaders realized they could monitor purchase trends and see opportunities for scale much easier.

Tactic 2: Comprehensive vendor RFIs reveal to frontline purchasers potential gaps in IT knowledge

Issue: At Carnegie Mellon University, IT leaders identified a disturbing trend, in which unit-based end users independently negotiated technology contracts with vendors, exposing the university to security and legal risks. End users lacked sufficient IT knowledge to inquire about data ownership, transfer, and sharing protocols, as well as the total cost of ownership and back-end integration. By not requesting multiple bids for a solution, end users lacked context for comparing vendor proposals. IT leaders at Carnegie Mellon wanted to help end users avoid these mistakes but were wary of creating a process bottleneck or confusing negotiation guidelines.

Response: To solve this problem, the central IT team created an extensive list of RFI (Request for Information) elements, including often-overlooked interoperability, security, and compliance issues. The RFI document was introduced in every campus unit and for every vendor evaluation to enable fast comparability of product alternatives. The central IT office reviewed the questionnaires for missing vendor capabilities and consulted with the campus purchaser about costs and risks of exceptions.

Result: Ultimately, setting expectations at the outset about collecting vendor information encouraged purchasers to involve IT experts earlier in the evaluation stages. Carnegie Mellon leaders also discovered a reduction in the unexpected and unbudgeted integration efforts and improved time-to-contract.

Excerpt and Components of Carnegie Mellon's Prospective Vendor Technical Questionnarie

Carnegie Mellon

Tactic 3: Dedicated IT contract reviewers sidestep bureaucratic delays to provide contract oversight

Issue: At Elon University, campus leaders found that procurement staff lacked the specialized IT expertise to negotiate and understand complex technology purchases.

Response: IT leaders designated an IT purchase coordinator to devote 100% of his time to fast-cycle review IT (especially SaaS) contracts for security, technical risk and service-level agreement clarity.

In this model, the reviewer, an expert in both IT systems and contracts, analyzes the contract for common pricing, service agreement, and data security mistakes. If necessary, he finalizes the negotiation of disputed terms on behalf of purchaser. Without the emotional investment of end users, the coordinator can take a more assertive stance with vendors, to the benefit of the university. In most cases, the reviewer can quickly approve contracts or flag errors.

Result: As Elon and other institutions have attested, the position pays for itself at a relatively modest volume through avoided pricing and risk mistakes. At Elon, as the coordinator developed relationships with campus units, purchasers began to engage him earlier in projects, given his experience and likelihood of knowing the best vendor options.

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