Buying sign-off cycle creates paralysis

Aligning IT spending with business has created a long and drawn-out purchasing cycle that is paralysing market activity.

The days of a quick sign-off are long gone with some organizations juggling a long list of in-house approval bodies such as investment review committees, stakeholder committees, executive committees, process boards and myriad other corporate watchdogs all wanting to take part in IT purchasing.

Proteome Systems CIO Warren McDonald said it is a Catch-22.

"On the one hand it is good that IT projects have to pass a business case but it really brings responsiveness down; sometimes these projects may be worth too much money to stall, hence, speed is of essence," McDonald said adding that everyone talks about IT agility and extreme programming, but what about the purchasing process?

While purchasing has always had to go to the top for approval, McDonald said there has never been "so many sets of eyes" and often projects end up in the too-hard basket because nobody can make a firm decision.

"We looked at a videoconferencing system between here and our US office, but no one could agree other than to say, 'there really isn't a business case for expenditure', so it came down to a too-hard decision," he said.

IDC Australia's end user program manager, Peter Hind, said there is vendor frustration in the marketplace because users want to "have their cake and eat it too".

Hind said it is very much a buyer's market and there is a climate of "cost-cut to greatness", which doesn't do the longevity of the organization much good.

"There are now checks and balances to ensure an HIH or OneTel doesn't reappear, and IT shops have a duty to their own organizations for governance."

Not surprisingly, vendors agree the 'no-decision' factor and extended purchasing cycles are a killer.

Genesys Asia Pacific VP James Brooks says governance has gotten completely out of hand.

"IT governance is restricting companies. Internal rigour is making decisions too complicated and the process too long-winded; I think the process has gone to far," he said.

Interwoven Australia MD Richard Collins said organizations have replaced strategic decisions with no decision.

"They are not willing to make a decision and sign-off isn't reached because it is all too hard," he said.

Taming the purchasing plan

Proteome Systems CIO Warren McDonald avoids drawn-out purchasing cycles while still ensuring decisions have a rock-solid foundation.

As a rule, McDonald says hardware is a less complex process because there's little differentiation between vendor offerings.

"Software is very different and evaluations are longer depending on the size of the project; however, a lot of IT purchasing is related to replacements which takes more time," he said.

"If I want to buy a mid-priced server I have to build an initial case, explain why the current capacity isn't suitable. I may prepare a business case in six weeks and then consider the best option, which may take another two weeks.

"At best, this sort of purchase will take at least 13 weeks which includes evaluating whether the correct technology choice has been made and that we are not spending too much."

Lower priced items are easier because there's less impact on business.

"We pride ourselves on a one-page decision for smaller items which take three weeks," he said, adding that vendors are sometimes responsible for longer purchasing cycles.

Vendors are lengthening the evaluation process, he said, by insisting on pilots instead of simply doing a half-day demo.

"I see fewer vendors wanting to demonstrate products. For anything over $50,000 there is a pilot; one vendor wanted to do a 20-day requirement guide," he said.

"It is also harder to get new hardware for evaluation. If that is the only thing that can help you decide, it can extend the purchasing cycle."

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