Skip to main content

New Challenge for CTOs and CIOs


Introduction 

I am not an engineer by background, but I am always interested in anything related to Tech, Innovation, current trends. Ever since I started working on Technology Sourcing projects, I consistently tried to feed my curiosity to learn about the technology I am supporting. How is it helping my bank? What problem is it solving for us? When I understood the role that technology plays in my business, I was well equipped to understand what my CIO and CTO want(s) to achieve.

The Traditional Target

The CTOs and CIOs have a very critical role to play in the success of an organization. They have to invest in advanced tech to keep the company competitive in market place, they need keep the organization agile and nimble, but they also have a serious responsibility to save/cut technology costs. Never goes an year, when that savings target is kept the same or dropped, essentially saying we need the best at lowest cost. Leaders in Tech partner with Vendor Management and Strategic Sourcing Groups to drive that cost savings agenda with the vendors. If the sourcing team (I’ll just call VMO and SSG that)  team doesn’t understand the tech, the role it plays in the success of the organization, the nature and sensitivity of the relationship with the tech vendor, they will never be able to find the opportunities to support the tech leaders in achieving the cost target. Sourcing team has to and must play the role of a critical strategic partner to the CXOs so that they can deliver what they have to. 

A New World, A New Challenge 

Gartner pointed out in 2019 in one of their reports that more than 45% companies in North America alone plan to invest a majority of their new funding on cloud technology adoption. Organizations are now depending heavily on the innovation happening in cloud space and developing a cloud first strategy as a foundation of innovation in their own industry. This means that CXOs have to now evaluate different use cases for Software as a Service (Saas) and Platform as a Service (PaaS) and decide what’s the right mix of public, private and hybrid cloud technologies with their own Data Center. Tech leaders are leveraging the advancements in cloud technology to Develop, Test and Build applications in cloud that provide competitive advantage. Which leads to the second point. CXOs have an additional responsibility to generate revenue. Not directly, but by enabling technologies that support the revenue generating applications and making sure that it comes at lowest cost and best quality. 

With the advent of consistently evolving technologies, as i pointed earlier, Sourcing teams have a strategic  role to play. While we thought we are gaining the knowledge and coming up to speed on cloud contracts, we are hit with another wave of technological innovation called Artificial Intelligence and Machine Learning. Vendors already have advanced product offerings in AI, and i don’t think we are prepared or fully understand what it means in terms of technology sourcing. One example that i came across was an artificial intelligence based software, which will integrate with your systems, learn from past fault tickets and resolutions, build an algorithm to predict the fault in the system and fix it itself. It will draw information from the stuff that it learnt from past incident tickets, behaviour of the system and users, and similar incidents and solutions from thousands of  other customers to provide a preventive remedy. And it will continue to learn about you and constantly improve itself. Is 99.999% uptime going to a thing anymore? Wow!! Sounds amazing to read? Isn’t it? All tech problem- GONE. However, what we don’t realize yet is that there is no established or well defined agreement model for such contracts. Why? Because it is difficult to determine who has control over data and systems? Client, vendor or this new entity called AI. Who is making decisions? How can i hold AI accountable for a wrong decision it made? How do i hold the vendor accountable for a wrong decision that AI made? You’ll say “well we can configure the AI to ask us every time it makes a decision or every time it makes a decision that has not been approved earlier”. Well then I’d say, you are not using the full potential of AI. It’s like buying a DSLR camera and using it in Auto mode. See my point now?

Buying newest technology products that have bot been purchased before is a point of concern from contract perspective, but the bigger concern is skillset. Does anyone except the CTO and CIO and the tech team understand what we are buying? How can sourcing teams support the CXOs if they don’t understand the tech and what is the future technology strategy. Today it is mostly reactive, we buy it first and then try to understand what we bought. It’s too late by then. You can’t improvise a contract that has already been signed in blood. There is a serious gap in skills, education and partnership with Sourcing teams to prepare them for future technology strategy and  adoption. Gartner released in a 2019 report that “by 2021, 55% of the technology procurement staff would  require additional business, digital and analytical skills to realize business innovation and growth”

Leaders in Technology, Vendor Management, Strategic Sourcing, HR &Training must invest time and money in upgrading the skillsets of sourcing team. The future of sourcing team is a place where procurement team is able to understand the CXO’s vision on tech strategy and follow why CXOs are making that move, how will it help the organization in gaining competitive advantage, how will it help in agility, how would it save cost in the short and long term,  so that they can contribute in a meaningful way. A skilled sourcing team would be proactive in identifying the legacy provisions in the contract and replacing it with better provisions that are relevant, actionable and holds the vendor accountable. A skilled team can be your proxy in working sessions with Lawyers and Contract Managers and provide feedback. If upgrading sourcing team’s skillsets becomes an ongoing process, then tech leaders can easily navigate through unknown risks because there is a confident and trained sourcing team ready to identity the risks and take proactive steps to minimize the exposure. 

Summary

CXOs would constantly face pressure in the coming years to adopt new technologies, while keeping the organization nimble, competitive, cost effective and generating new revenue streams. Leaders must create a consistent process to keep the sourcing partners updated on the new technology trends, the direction they are taking, and invest in upgrading the skills of procurement staff, and have brainstorming sessions on how to manage contracts for innovative  technologies.  This will remove a lot of barriers and set you up for success. 



Comments

  1. Superb! Your blog is incredible. I am delighted with it, Knowledge giving Article! I appreciate you. I completely agree with you. If we talk about current scenario then it is must be update. You can also avail more information at Enterprise Cloud Security. I enjoyed reading. Thanks for sharing with me.

    ReplyDelete

Post a Comment