Thursday, 3rd December 2020

EIU study finds most IT procurement functions not ready for digital transformation

71% of IT procurement executives say that continually optimising practices is extremely or very important to delivering value to the business—but only 37% say digital transformation is changing how the function operates.

IT departments are becoming ever more closely aligned to their companies’ business strategies — but IT procurement is lagging behind in supporting digital transformation, according to a new study released today by The Economist Intelligence Unit (EIU).
The report “The state of IT procurement” sponsored by HPE Financial Services, is based on a survey of 302 IT procurement executives in the US and the UK. It shows that although IT procurement is feeling pressure from their businesses’ digital transformation, from the workforce’s demand for new technologies and from accelerating change in the business technology landscape, many procurement executives remain focused on the function’s traditional goal of cost control.
Nearly two-thirds, for example, say their function is evaluated on returns on IT investment, compared with 49% citing satisfaction among business users. And only 23% say they’ve reevaluated their policies to support greater flexibility over the past two years—while only 19% expect to do so in the next two years.
However, there is a group of IT procurement executives who report that their function is excellent at a range of activities that support business value, such as prioritising resources based on current business needs. This group of “progressive” procurement functions more often report to the IT department than the finance department, are more often evaluated on the quality of technology they provide and more often say their work is influenced by the long-term benefits to business users of what they provide.
The report suggests a few priorities for change for IT procurement functions seeking to become more progressive, including building their own understanding of business and technology trends and establishing a collaborative approach with their internal customers. Companies can also help their IT procurement functions by clarifying and updating lines of authority and performance criteria.
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