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Gartner recently cut their expected IT budget prediction from 5.1% to just 2.2% in 2023. This is three times lower than the projected 6.5% global inflation rate. As the world continues to experience economic uncertainty, IT leaders look to tighten budgets, consolidate tools and resources, and generally become more risk-averse when evaluating new investments. So how can you request a new investment from your decision-makers while ensuring minimal costs and maximum ROI this year?

Here’s four pieces of advice from procurement on how to evaluate and propose new IT investments during an economic downturn.

Involve your procurement team from the beginning

McKinsey surveyed more than 1,100 organizations worldwide and found that the best-run procurement teams can generate twice the annual savings of those in the lowest quartile. Procurement professionals are skilled at negotiating contracts, identifying cost-saving opportunities, and evaluating vendors.

By bringing them into the conversation early on, you can leverage their expertise and get the best cost and contract structure available upfront while you focus on the technical requirements. This can also help you avoid a long and onerous contract process with better quality in the long term.

To get started, develop a list of criteria your IT and security investments should meet. This might include things like cost, feature set and functionality, reliability, scalability, and vendor support. Once you have this list, work with your procurement team and use it to evaluate potential solutions and vendors.

Consider the total cost of ownership

When investing in IT and security, businesses need to consider more than just the initial purchase price. The total cost of ownership (TCO) considers all costs associated with an asset over its lifetime, including shipping, taxes, installation, training, maintenance costs, and more.

In a survey by Deloitte, 65% of organizations reported that cost reduction was a top business priority, and 52% cited TCO reduction as a key strategy for achieving this goal. By evaluating TCO, businesses can make more informed decisions and avoid unexpected expenses down the line.

Reduce the perception of cost

Change can be scary, especially if there are dollar signs attached to it. By reducing the perception of cost and associated risks, you can help decision-makers feel more comfortable with investing in new solutions and technologies.

To do this, consider taking the following steps:

Validate proof: Check references and testimonials, ask for proof of concept, and talk with the vendor’s partners. Compile this information and use it as part of your analysis and presentation to decision-makers.Focus on positive impact: Focus on the benefits and ROI of the proposed investment, such as increased productivity, better security, or improved customer satisfaction. Present these benefits in a clear and concise way, using data and real-world examples to support your case.Consider your company scorecard: Your procurement team has a scorecard with clear metrics to evaluate purchase decisions. Consider their metrics to make informed decisions and best support your proposed investment.Present the facts and numbers: Be transparent about the costs associated with the investment. Provide detailed information about the total cost of ownership, including any ongoing maintenance, support, or upgrade costs. This can help decision-makers understand the full picture and make informed decisions.

Evaluate the risk of doing nothing

In addition to ROI, it’s also important to consider the risk of doing nothing. This may include lost productivity, increased downtime, and slower time to market. Provide decision makers with credible industry research, as well as your own team’s statistics to support your request.

For example, if you’re proposing to invest in a security solution powered by AI and machine learning, it would behoove you to present cost savings from automated security, such as that from IBM.

Or if you’re finding that building your in-house web application platform is locking you in, report on the specific challenges associated with the project, such as hidden costs, maintenance fees, and compliance issues your team faces. These are common problems that procurement and IT/security professionals should work together to address.

Wrapping Up

Collaboration between procurement and IT/security professionals is crucial to evaluating current and future investments in order to minimize costs and maximize ROI, especially during an economic downturn. By clearly defining needs and requirements, evaluating TCO, and performing risk assessments, these teams can work together to help their business leaders make more informed decisions for an improved bottom line.

Edgio’s holistic applications platform helps address challenges associated with website security and performance, hidden costs, maintenance, and compliance requirements. Learn more here.

SaaS

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Every organization pursuing digital transformation needs to optimize IT from edge to cloud to move faster and speed time to innovation. But the devil’s in the details. Each proposed IT infrastructure purchase presents decision-makers with difficult questions. What’s the right infrastructure configuration to meet our service level agreements (SLAs)? Where should we modernize — on-premises or in the cloud? And how do we demonstrate ROI in order to proceed?

There are no easy, straightforward answers. Every organization is at a different stage in the transformation journey, and each one faces unique challenges. The conventional approach to IT purchasing decisions has been overwhelmingly manual: looking through spreadsheets, applying heuristics, and trying to understand all the complex dependencies of workloads on underlying infrastructure.

Partners and sellers are similarly constrained. They must provide a unique solution for each customer with little to no visibility into a prospect’s IT environment. This has created an IT infrastructure planning and buying process that is inaccurate, time-consuming, wasteful, and inherently risky from the perspective of meeting SLAs.

Smarter solutions make for smarter IT decisions

It’s time to discard legacy processes and reinvent IT procurement with a new approach that leverages the power of data-driven insights. For IT decision makers and their partners and sellers, a modern approach involves three essential steps to optimize procurement — and accelerate digital transformation:

1. Understand your VM needs

Before investing in infrastructure modernization, it’s critical to get a handle on your current workloads. After all, you must have a clear understanding of what you already have before deciding on what you need. To reach that understanding, enterprises, partners, and sellers should be able to collect and analyze fine-grained resource utilization data per virtual machine (VM) — and then leverage those insights to precisely determine the resources each VM needs to perform its job.

Why is this so important? VM admins often select from a menu of different sized VM templates when they provision a workload. They typically do so without access to data — which can lead to slowed performance due to under-provisioning, or oversubscribed VMs if they choose an oversized template. It’s essential to right-size your infrastructure plan before proceeding.

2. Model and price infrastructure with accuracy

Any infrastructure purchase requires a budget, or at least an understanding of how much money you intend to spend. To build that budget, an ideal IT procurement solution provides an overview of your inventory, including aggregate information on storage, compute, virtual resource allocation, and configuration details. It would also provide a simulator for on-premises IT that includes the ability to input your actual costs of storage, hosts, and memory. Bonus points for the ability to customize your estimate with depreciation term, as well as options for third-party licensing and hypervisor and environmental costs.

Taken together, these capabilities will tell you how much money you’re spending to meet your needs — and help you to avoid overpaying for infrastructure.

3. Optimize workloads across public and private clouds

Many IT decision makers wonder about the true cost of running particular applications in the public cloud versus keeping them on-premises. Public cloud costs often start out attractively low but can increase precipitously as usage and data volumes grow. As a result, it’s vital to have a clear understanding of cost before deciding where workloads will live. A complete cost estimate involves identifying the ideal configurations for compute, memory, storage, and network when moving apps and data to the cloud.

To do this, your organization and your partners and sellers need a procurement solution that can map their entire infrastructure against current pricing and configuration options from leading cloud providers. This enables you to make quick, easy, data-driven decisions about the costs of running applications in the cloud based on the actual resource needs of your VMs.

And, since you’ve already right sized your infrastructure (step 1), you won’t have to worry about moving idle resources to the cloud and paying for capacity you don’t need.

HPE leads the way in modern IT procurement

HPE has transformed the IT purchasing experience with a simple procurement solution delivered as a service: HPE CloudPhysics. Part of the HPE GreenLake edge-to-cloud platform, HPE CloudPhysics continuously monitors and analyzes your IT infrastructure, models that infrastructure as a virtual environment, and provides cost estimates of cloud migrations. Since it’s SaaS, there’s no hardware or software to deal with — and no future maintenance.

HPE CloudPhysics is powered by some of the most granular data capture in the industry, with over 200 metrics for VMs, hosts, data stores, and networks. With insights and visibility from HPE CloudPhysics, you and your sellers and partners can seamlessly collaborate to right-size infrastructure, optimize application workload placement, and lower costs. Installation takes just minutes, with insights generated in as little as 15 minutes.

Across industries, HPE CloudPhysics has already collected more than 200 trillion data samples from more than one million VM instances worldwide. With well over 4,500 infrastructure assessments completed, HPE CloudPhysics already has a proven record of significantly increasing the ROI of infrastructure investments.

This is the kind of game-changing solution you’re going to need to transform your planning and purchasing experience — and power your digital transformation.

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About Jenna Colleran

HPE

Jenna Colleran is a Worldwide Product Marketing Manager at HPE. With over six years in the storage industry, Jenna has worked in primary storage and cloud storage, most recently in cloud data and infrastructure services. She holds a Bachelor of Arts degree from the University of Connecticut.

Cloud Management, HPE, IT Leadership

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , , ,

Government organizations have the longest average buying cycle for technology when compared to other sectors, with procurement laws injecting complexity into the procurement process, according to a Gartner report.

The report, which is based on a survey of 1,120 executives with the inclusion of 79 public sector employees across the US, Canada, France, Germany, the UK, Australia and Singapore, showed that the average buying cycle for government entities is 22 months.

This is in contrast to at least 48% of all respondents saying that their buying cycle for technology averaged around six to seven months.

“Technology acquisition brings challenges to the public sector that do not commonly exist in other industries,” said Dean Lacheca, vice president and analyst at Gartner.   

“Each jurisdiction has its own procurement laws and policies, and within that, each agency or department can have its own interpretation of them. A failure to conform to the rules can have serious consequences, from unwanted publicity to personal risk of prosecution,” Lacheca added.

Some of the other reasons behind the delay include changes in scope, research and evaluation along with reaching an agreement around budgeting.

Many respondents also said that these delays occur before the beginning of the procurement process, with at least 74% of public sector respondents claiming that developing a business case for purchases takes a long time.

More than 76% said that scope changes requiring additional research and evaluation was also another major factor resulting in delays, Gartner said, adding that 75% of respondents listed reaching agreement around budgeting as a major concern for delays in the buying decision.

“While government buying cycles can be long, it is important to note that these time frames are not set,” said Lacheca.

“Initial planned timelines can be delayed as a result of a combination of both controllable and uncontrollable factors, especially when no external deadlines exist.”

Government procurement teams are large

A typical public sector buying team has 12 participants, with varying levels of participation in the process, Gartner said, adding that government C-level executives tend to be less involved in the technology buying process when compared to the private sector in order to avoid association with the process and creating the perception of political influence in the outcome.

This also makes government C-level executives less willing to defend the process if challenged by unsuccessful vendors or the media, the research firm said.

Further, the survey shows that public sector buying teams are more likely to be composed of lower-level operational staff, who act as subject matter experts providing recommendations to their C-suite.

At least 68% of public sector respondents claim that another reason for delay is their inability to obtain specific product or implementation requirements details from the provider, Gartner said.

The research firm adds that public sector organizations are significantly more likely to value references from existing clients than non-public sector buyers, partly because public sector organizations are rarely in direct competition and often share common challenges.

Government IT