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How to make the most of an IT buyer's market

Cindy Waxer | June 10, 2014
After years of fighting tooth and nail with vendors for meager price discounts or modest service-level agreements, IT has seen the tables start to turn: Sweeping changes are reshaping the vendor landscape, shifting negotiating power from stingy service providers to savvy CIOs.

After years of fighting tooth and nail with vendors for meager price discounts or modest service-level agreements, IT has seen the tables start to turn: Sweeping changes are reshaping the vendor landscape, shifting negotiating power from stingy service providers to savvy CIOs.

At the center of this sea change are trends such as cloud computing, social media, data analytics, remote monitoring, automation and mobility. Whether it's manufacturers opening sensor-operated plants or healthcare providers using remote patient-monitoring systems, organizations are acting fast to seize new opportunities and satisfy customer demands. And as the need for agility increases, cloud-based computing is booming: Infrastructure as a service and business process as a service are the two fastest-growing segments of the IT services market, expanding 44.9% and 12.4%, respectively, in 2014, according to Gartner.

Just ask William Graff, senior vice president at Cerner Technology Services. "We're spending a lot of time with specific internal business units looking at cloud solutions that traditionally we would have hosted on our own data center. But because of business pressures to move rapidly, we've selected a handful of cloud providers over the last year," he says.

Decisions like that at companies of all kinds are adding an infusion of new, agile cloud providers into the average company's mix of more traditional vendors.

Combined with the need for speed is an increased awareness of high-tech products and services. "The buyer's paradigm has changed dramatically over the last several years," says Keith Lubner, CEO and a managing partner at Channel Consulting, a Philadelphia-based management consulting firm specializing in vendor relations. "Access to information and content is so dramatic that buyers are more astute than ever before. They have instant access to information on every single product out there — they've flipped the whole sales cycle on its head."

Armed with information and eager to take advantage of fast-acting cloud, analytics and mobile technologies, CIOs are voting with their wallets: A staggering two-thirds of respondents to a recent Gartner CIO survey said they expect to change primary suppliers by 2017.

Desperate to stay on top, traditional IT vendors are responding by tossing out their typical IT sales models to offer flexible subscription services, shorter sales cycles, unprecedented product innovation and personalized service. And that's creating a once-in-a-career opportunity for savvy CIOs: a chance to negotiate huge price cuts, packaged deals, favorable contracts and unique partnerships with big-time vendors once too busy to return calls.

Tough Customers

Jim Forbes is a perfect example of the type of technology executive that's keeping vendors up at night. The CTO at University Health Network (UHN) in Toronto, Forbes had for years relied on standard criteria such as "functional requirements and server compatibility" to select technology solutions. But a desire for a more scalable cloud-based tool recently convinced him that it was time to switch IT management vendors.

 

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