Procurement Policy in Europe is Depriving Companies of Real Technology Benefits

47% of IT decision makers believe that long term business goals and best practice are being compromised due to inflexible purchasing processes in Europes boardrooms. Independent pan-European research commissioned by Unisys, the global IT services and technology company, reveals that short-term earn-back time and preferred IT supplier lists have become increasingly influential in the specification of key technology choices, at the expense of performance and suitability for purpose. This is creating a potential conflict between corporate practice and business advantage.

According to the survey of 250 CIOs and IT directors, meeting budgetary requirements is by far the most influential factor when implementing IT systems, with short-term quarterly budgeting taking precedence over long-term business advantage. 25% of businesses surveyed admitted to spending most of their budget on business as usual technology that keeps the business ticking over, rather than moving the business forward.

The lack of IT supplier diversity highlighted by the survey means that new and innovative ideas are not being pitched into corporate business through new technologies or companies. For example, 43% of respondents confirmed their companies favour existing relationships over other IT suppliers, despite the fact that 29% of them think that this restricts the way they do business and a further 24% do not believe that it is conducive to long-term business objectives. Overall, the challenge of changing current processes is steep with 46% of businesses admitting that adding a new IT supplier to the preferred list was fairly difficult or very difficult in existing business environments.

Intelligent spending on hardware and software has never been more important, yet IT systems are in danger of failing as inflexible purchasing guidelines are taking precedence over a companys technology needs, explains Steve Rawsthorn, vice president of sales and marketing for Unisys, Systems & Technology EMEA. These are worrying problems for businesses already pressed enough to demonstrate real return on investment. Achieving the right technology choice should be a straightforward matter for the IT director or CIO. Much harder and costlier, by far, is managing the explosion of applications or servers, for example, that inflexible or short-sighted purchasing policies create. Companies are in danger of getting the balance of risk and innovation wrong, compromising long-term business performance.

Rawsthorn continues, Whilst procurement has a valuable role in streamlining costs, this shouldnt be at the expense of business performance, innovation and growth. CIOs and IT directors need to closely examine their current purchasing policies and ensure that guidelines really meet their business needs.

In response to the survey findings, Unisys has developed a series of questions to help IT assess whether they have an adaptable, flexible IT procurement policy. This questionnaire is available on March 1 2005.