What Can CIOs Do About Overzealous Vendors

Information Week recently touched on the “Reasons Tech Vendors Exaggerate.” This instantly caught my eye as it was not only compelling, but also an important issue for today’s leading technology executives.

IT departments today often suffer from certain technology vendors who “overpromise” and “under-deliver” on either the product or its “capabilities, true cost or overall performance.” More importantly even, said vendors exaggerate on the product’s “time to value.”  Let’s take a moment to better understand why vendors often do this and what to do about it if it happens to you.

The article’s author offered four reasons for “why it occurs”:

1. IT vendors can make far-reaching theoretical possibilities the norm.
2. Competing vendors sell largely identical products with regard to outcomes which compels them to find ways to differentiate themselves and therefore leads to exaggerated claims.
3. The move towards proving the business value of technology has connected technology purchases to “competitive advantage.”

Vendors and IT buyers share the same mindset about technology.  Both truly believe that the new stuff can transform companies.
We all would like to believe that the answer for this exaggeration is in the technology or in the tool itself – but we often see it go beyond that. We see it in the culture of the business itself, existing practices that are in play and/or those that need to be modified, the implementation process, and lastly by the product users.  Why the overzealous vendor, who is merely passionate about what his/her product, does this is only part of the problem.  We often forget the other motivating factors.

While the exaggeration from vendors is a serious issues to the credibility of IT, one cannot assume that the product can only be implemented under perfect conditions.  We can conclude that success is “all about the delivery.”  The overzealous vendors will always exist and the reasons stated above are valid but they can absolutely be overcome.

The author of the article described one way to close the gap between the promise and the reality: take the “Truth in IT” pledge.  I find the possibility of IT vendors taking a pledge and simply telling the truth for altruistic reasons to be less likely than the alternative.  That being said, IT buyers need to be more realistic speaking to their business customers.  IT Managers know better than anyone else about the process of implementing a new technology.  Fitting this new technology into the infrastructure, processes, and weaving it into the fabric of an organization is the exactly where IT can better deliver success.

Whose responsibility is it to ensure that value is truly created at the lines of business? 

It would be a mistake to say that the IT vendor owns this responsibility. This rests solely on the shoulders of IT teams.  They know the culture of the organization and understand the business – or at least they should. They can help manage the expectations around the new technology and of the changes being implemented.  Metrics help to communicate this information more clearly.  Collaboration with their user community also supports in level-setting expectations.

The office of the CIO and its IT Leaders are accountable for the ROI of any new IT investment decision. A meaningful return on investment (ROI) is not just a single component; instead, it is a collection of methods, skills, tools, activities and ideas. While these can be combined and used in different ways to assess the relative value of an investment over time,  applying it requires making many choices among the ideas and methods available and conducting an analysis appropriate to the decision at hand.  It should also be made in conjunction with the strategies of the business and the organization.

The analysis doesn’t begin and end with the technology cost but has to include the on-going support costs as well as the implementation. It should be assessed not just one time when approval is being sought but reviewed again throughout a period of time after.

What is also apparent is that the CIO cannot approach the requirement, business problem or the change at hand with only the facts and benefits from the supplier. CIOs need to understand the total costs relative to the IT infrastructure in addition to the other alternative solutions and resources that are available.  They should do this ROI based on their own fact based assumptions and numbers.

Understanding the context of an IT investment requires a clear picture of the organization’s technology infrastructure (enterprise architecture), relevant business processes, organizational environment and external relationships. There are direct costs associated with the technology and services in which to invest, and there will also be costs in terms of the impact on other technology systems already in place. The benefits of this clear picture can range from more efficient automation and workflow to improved collection, storage and access to information. A ROI analysis must not only account for the improvements to relevant business processes but also for the costs associated with training staff involved in using the proposed technology system. Other indirect costs and returns on investment considerations to the organization, for example, include altered resource flows, performance changes and changes in work flows.

Here at ComSci, our job is to help CIOs focus on what it is truly important in order to make critical decisions. Our cloud-based application provides fact-based information and can be a source of value when taking on the question of whether a new technology is cost effective. ComSci ITFM users benefit from an easy access to regular, transparent, reliable spend information in order to help them better manage their priorities and decisions specific to their business.  Of course, if you wish to only rely on the overzealous vendors in making these decisions as described earlier, you certainly could walking into a troubled area and difficult  to defend the criticisms that may come your way.