A survey of 1,000 senior IT leaders conducted by TEKsystems finds that more than a third (35 percent) plan to increase spending on IT outsourcing in 2018, a six-point increase over 2017. Nearly half (47 percent) also reported that spending on managed, project-based, or statement-of-work IT services would increase in 2018 as well.
Perhaps most intriguing of all, the report also suggests that senior IT executives have less direct control over IT spending. The report concludes that senior-level IT executives are maintaining their control over centralized legacy technologies. But, when it comes to emerging technologies, senior IT leaders are not as indispensable as they once were. Only 10 percent of the IT leaders surveyed said VP and director-level leaders are most critical for enabling their organizations success. Only 15 percent said IT managers are the most critical for enabling success.
Less influential IT leaders
That doesn’t mean IT managers don’t play a critical role. But it does suggest individuals within the line-of-business (LOB) that are technically savvy are exercising much more influence. Of course, IT service providers have a long history of selling around IT departments when necessary. IT service providers generally prefer for there to be a little contention as possible. But many times, an external services providers will find themselves competing against internal IT organizations to deliver a specific service.
The trump card internal IT teams usually play is they can deliver the service at a lower cost than external services providers that need to turn a profit. The trump card external services providers rely on is they can deliver IT as an operational cost that organizations can scale up and down as needed without needing to adjust headcount. With the rise of cloud computing, external services providers have been winning more often because organizations are getting used to paying for IT as a service.
At the same time, many LOB executives have come to appreciate the fact that external IT service providers enable businesses to be more agile when responding to new opportunities with a minimal amount of upfront IT costs.
Most IT organizations are also struggling to find people with the skills they need. That means they simply can’t compete with external services providers that can usually better afford to hire and retain IT talent that has leading-edge skills.
Adjusting to new realities
Naturally, the leaders of many internal IT organizations are trying to adapt to this new dynamic. In most cases, that means the senior IT leaders are acting as either a general contractor that oversees the delivery of services or an internal consultant that provides advice to the LOB. Once IT executives make that mental transition, many of them quickly become more open to working with external services providers.
It may take a while for most internal IT organizations to come to terms with this new reality. But many IT service providers are enjoying a new era of détente with IT leaders. This creates an opportunity to establish a mutually beneficial working relationship that is light-years ahead of how both parties viewed each other as little as two to three years ago.
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