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UC tech-buying power shifting from IT to lines of business

Empowered by cloud-based services and consumer-oriented expectations, lines of business are wresting technology-buying power from IT departments and purchasing collaboration apps.

The increased availability of cloud services and heightened end-user expectations have shifted enterprise tech-buying power from IT departments to lines of business. Certain unified communications and collaboration applications, in particular, are well-suited for this shift, as end users can easily download free apps, test them and upgrade to paid versions.

Although this tech-buying shift isn't brand new, the trend is growing, according to analysts.

The specific UC apps that fit this budget shift include team messaging services, like Slack, and conferencing services, such as Zoom. These department-level purchasing decisions look to improve workgroup collaboration, as lines of business (LOBs) are often unhappy with their employer's UC service.

Ultimately, this tech-buying budget shift empowers UC users and gives them more control over purchases.

Team messaging apps shake up buying process

In a recent study of 40 midsize to large end-user organizations, Nemertes Research found team messaging use is up significantly. In 2015, just 2.4% of organizations used team messaging apps. That number has soared to 33% this year.

The same study found 42% of LOBs are paying for team messaging apps, compared with 33% of IT groups. Both numbers are up slightly from last year. Additionally, 25% of enterprises are unsure or evaluating who should pay for the apps.

Nemertes found no formal business case or specific ROI strategy for team chat purchases. Enterprises justified the spending by saying the apps would improve collaboration, or they bought them simply because people wanted them. These apps are also not terribly expensive.

Although LOBs are paying the bills for team messaging apps, IT is usually charged with supporting them, said Irwin Lazar, a Nemertes analyst. And while both sides drive the use of messaging apps, IT needs to educate LOBs on security requirements and what apps the company may already be using.

Tech-buying trends
More businesses adopted team chat apps in the past year.

Take advantage of volume pricing

The cloud and consumerization are the two key forces behind this tech-buying budget shift, said Bern Elliot, a Gartner analyst. Cloud services have created an easy opportunity for users to download inexpensive apps. Additionally, users are empowered by the ease of consumer apps and expect similar communication tools in the business world.

Lines of business can usually procure a collaboration service without IT's permission, Elliot said, while IT is more concerned with larger, enterprise-wide deployments. He estimated that about one-quarter of enterprise tech spending is done outside of IT.

This tech-buying shift traverses all types and sizes of organizations, said Roberta Fox, chief innovation officer at Fox Group, a tech consulting firm in Toronto. Fox cited other key reasons for the budget shift: IT budgets are flatlining; LOBs can better articulate business value for collaboration apps; and business units can easily expense purchases on credit cards.

In addition to team messaging and conferencing, Fox said other UC products shifting to LOB budgets include storage and customer relationship management software.

As end users continue to download apps and create accounts, enterprise IT groups, lines of business and finance departments need to pay attention to these purchases and take advantage of volume discounts and consolidated billing, Fox said.  

Implement a two-pronged approach

Historically, when considering a tech purchase, IT would solicit input from LOBs and determine the services via testing or requests for proposals from vendors. IT would then deploy and manage the service. Now, end users determine their needs, download a free app, test it and buy it if they like it, or maybe talk with IT about the purchase.

Elliot highlighted the idea of bimodal IT to advance UC and collaboration. The first mode is the traditional, enterprise-wide deployment with high reliability, deep roots with existing partners and services managed by IT. The second mode provides workgroup agility and is geared toward smaller projects conducted outside of IT, but IT can still provide assistance.

"By doing it this way," Elliot said, "you help lines of business achieve their goal of getting new capabilities in, but they also get some guidance. If it's a good service, IT may take increased responsibility and shift it to something that's available broadly in the enterprise."

What the tech-buying budget shift means for vendors

This LOB budget shift is good news and bad news for vendors, and often pits large providers versus smaller ones. In UC, for example, the incumbent vendors often dominate an account, but smaller vendors could enter an enterprise through a "side door" via a line of business, Elliot said.

And while some products can be repositioned and sold as department-level services -- which helps vendors bypass tight IT controls -- many vendors also want enterprise-wide deployments and not just LOB implementations.

In order to help enterprises, Fox said vendors could cross-reference individual accounts with enterprise customers and get individuals with certain business email domains wrapped into the enterprise account. By getting all employees in one account, enterprises could save money on bulk pricing.

Next Steps

Follow these three buying principles for UC products.

UC deployments need user training and internal marketing.

IT needs to rethink the business benefits of UC.

This was last published in October 2016

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