In my past blogs I have expressed that Cloud computing is not a technology paradigm – but a delivery model. I also subscribe to the view that the impact of cloud computing is not just limited to IT departments. In this article I want to explore the impact on the procurement function.
The trigger for this article is my experience in responding to few tenders for IT Service Management tool. Both the responses have the tune of 600 (yes, you read correctly – six hundred) questions that need to be filled up in an Excel spreadsheet. Each tender has similar questions but the wordings were different. So, every time one need to go through these questions.
For those who are not familiar with IT Service Management – the product market is mature. In fact, Gartner has dropped IT Service Management from their magic quadrant citing that the convergence of the functionalities. Yet, you find each organisation consider themselves as unique and the need to customize their processes to fine level.
Do not get me wrong. I do acknowledge that each organisation is different. However, the processes we are talking are not that different. In any organisation, you need a service desk to log incidents and service requests, escalate to the second level when they cannot resolve. You may customize the underpinning procedures – but the high level processes should be out of the box.
With Software As A Service (SAAS) provisioning, there will be more drive for standardization. The providers will drive “out of the box” configurations for a compelling cost that you cannot ignore.
If the organization need to be competitive they have to start looking for standard business processes. Especially there is no competitive advantage is customizing Service Support functions.
The trend in lengthy procurement is not just limited to IT Service Management. The procurement game need to be played differently in the cloud services market. Instead of focusing too much on product features, the procurement need to focus on cloud specific functions – for example, hosting characteristics, performance, physical security, service management compliance, sub-contracting arrangements, back up and restoration, information security and overcoming contract lock-in.
The Australian budget has just been released with massive cuts to public sector spending. There has been predictions that now the public sector will be forced to take cloud computing more seriously. (Pain expected from hit to IT jobs, The Australian, 8th May 2012). One of the first things that need to happen is to streamline the procurement function to be more “cloud computing services aligned” by reducing the standardising the features and focussing on cloud specific attributes. I am sure it is going to happen sooner than later!