SAN FRANCISCO – Not that long ago the Line of Business decision maker was turning the IT buying process upside down. The narrative went a little bit like this: managers in human resources, finance and marketing used the cloud to obtain technology they needed to speed up its go-to market activities bypassing the slow moving IT department.
This trend put a lot of pressure on CIOs to maintain relevance at their company along with channel partners who never dealt with these types of buyers. Only two years ago Boston-based management consulting firm Bain & Company released findings from a worldwide survey of the marketing, customer service and supply chain decision markers that saw nearly one-third of technology purchasing power moving away from the IT department to the line of business. That was 2014! And, one of the talking points from Line of Business buying trend was that it created shadow IT. IDC Canada found that 40 per cent of Canadian organizations suffered from some type of shadow IT.
But somewhere between 2014 where the Line of Business trend potentially hit its apex and today the trend’s momentum seems to have stunted. According to IDC, the current share of worldwide corporate IT spending that is funded by non-IT business units is forecast to reach 47 per cent in 2019, an increase of just three per cent since 2015. In North America (the United States and Canada), projects funded by line of business units accounted for 58.2 per cent or $324 billion of all corporate IT spending in 2015.
Cisco CEO Chuck Robbins reasons that security concerns within corporations may have put the kibosh on the Line of Business buying power.
“Remember when all the money was moving to the line of business? Well, that did not quite happen. Now the Line of Business wants to move faster but they also have to understand what they have to do inside the broad security strategy of the corporation,” Robbins said.
Robbins told CDN that the initial predictions for Line of Business was too aggressive. “We talked to CEOs two years ago who were concerned about bringing the Line of Business and IT together and they were organizational battles that needed to be resolved similar to the way the network and the voice guys battled in the early 2000s. I think perception was everything and the big move to the Line of Business was overstated,” he said.
What ended up happening, in Robbins estimation, is that this group was finding dollars they would be spending on IT eventually.
Wendy Bahr, the worldwide channel chief of Cisco, said the Line of Business trend was real as a lot of IT budgets did shift to the Line of Business or was at least influenced by this group. “As trends go in typically fashion you expected to see a pendulum swing, but in reality it’s turned into a hybrid decision,” she said.
Bahr added that from a channel perspective the Line of Business executive is still an influencer, but security concerns have become greater threat for the CIO and the Chief Security Officer mind set. She suggested that channel partners need to explore the sales opportunity for Line of Business buyers and help them understand the needs of the business and have them go back to the IT department and engage with them. “It’s time to make them a supporter instead of a road block,” she said.
Recent statistics Bahr provided CDN shows that channel partners who are able in making these two groups communicate are 45 per cent more successful than those are struggle who are at a 15 per cent success rate.
One quick hit before I go. Eric Krauss is the new vice president of sales for the Americas, which includes Canada for virtualization backup vendor Altaro. Krauss will be responsible for executing Altaro’s sales strategy, focusing on accelerating its continued growth in the Americas and developing strategic channel partnerships.