Sourcing IT talent is a challenge. Whereas before companies used a handful of large IT firms to take care of their needs, today competent IT professionals can be found with a variety of providers, including online platforms. Joseph Taylor, K D Joshi, Terence Saldanha and Arvin Sahaym write that firms with in-house administrative teams that engage with online platforms can both expand the procurement of IT talent and maintain control.
The technology workforce has never been more dynamic, and getting the right talent at the right time can be the difference between success and failure for many IT projects. Although demand for specialised talent remains high, the growth of online labour platforms has created new career pathways for workers with technical skills.
Organisations have many ways to source the tools and talent required to address requirements. Gone are the days when a CIO could handle the bulk of their sourcing needs with a few well-managed contracts with large providers like IBM and SAP. Advancements like cloud computing have upended traditional infrastructure and software as a service has changed licensing requirements. In this environment, the gig economy provides alternatives to outsourcing companies and AI can provide basic coding services.
For technology leaders, the breadth of ways in which they can procure technical services presents both challenges and opportunities. Online procurement portals can streamline the processes of assessing goods and services from potential suppliers, thereby reducing the needs and costs of traditional sales channels. Self-service procurement facilitated through online platforms can bring speed to organisations while reducing costs, leading some to speculate on whether internal IT organisations are even needed.
An IT organisation is the internal unit or department in charge of overseeing a company’s information technology needs. Our study reveals the critical significance of these IT organisations’ role within a company, particularly in harnessing new and evolving methods for procuring IT services available in the market.
To remain relevant, IT leaders need to rethink the types of in-house capabilities they cultivate and prioritise. Specifically, they must deliberately and systematically enhance their internal IT administrative capacities to fully capitalise on emerging procurement opportunities. Organisations may welcome the speed and simplicity of online procurement, but this approach may seem to conflict with bureaucratic requirements associated with administrative controls such as security, contract or architecture reviews.
Although the desire for speed might initially seem incompatible with protocols of organisational control, our research reveals that the objectives of on-demand online procurement options and good governance can coexist harmoniously.
IT flexibility is determined by the adaptability of a firm’s applications, infrastructure and data. It results in the degree of scalability, modularity, transparency and standardisation that, along with effective IT administrative functions, are instrumental in shaping self-service procurement.
We reveal that the firms that are better able to expand procurement while maintaining organisational controls are those whose in-house administrative functions are capable of deeply engaging with online procurement platforms. We surveyed over 300 firms and each of those with the highest level of usage of online procurement platforms also had the greatest understanding of platforms’ technical capabilities.
Governance functions are necessary. However, as online procurement provides shorter and faster options for sourcing IT services, administrative functions such as security, procurement and HR may need to reexamine processes and procedures and determine if modifications are necessary to support different types of purchases.
For example, legal reviews may be required for all contracts. However, the nature of a legal review for a $2 million-dollar contract to develop and implement a payroll system may be different from the nature of a legal review for a $10k contract to complete a database design. Most online procurement platforms provide features to simplify procurement processes, such as time tracking, escrow or task management. However, administrative functions that are rigidly bound to standardised processes may not be positioned to take advantage of these features.
We surveyed firms regarding the maturity of their architecture for data, infrastructure and applications as well as the maturity of their administrative governance for procurement, security and IT HR management. We found that, in general, firms that have better developed architecture and administrative governance practices were more likely to use online platforms to procure IT services.
When we took a deeper look at which firms were taking advantage of self-service procurement, a more nuanced picture appeared. Firms that had engaged with online procurement support capabilities such as task management, payment coordination or worker reviews were significantly more likely to use online procurement platforms to complete overall work and to procure more types of work. In these firms, administrative governance professionals were adjusting processes to take advantage of platform features, and as such were better positioned to use online procurement tools. In our survey responses, the firms that had the greatest understanding of online procurement tools had significantly higher levels of maturity in IT procurement.
We also examined how firms’ different elements of IT architecture maturity interacted with different elements of administrative governance maturity. We found that architecture maturity contributes to online procurement, but when considering the impacts of each type of architecture separately (data, infrastructure and application), only greater levels of data architecture lead to significantly higher levels of using online platforms for IT services procurement.
We also considered how different elements of administrative maturity in relation to procurement, security and IT HR management contributed to using online platforms to purchase IT services. Unsurprisingly, having mature internal procurement was the most important factor in predicting the extent to which a firm used online procurement platforms. Yet for complex projects, having mature IT HR practices in place was also important.
Surprisingly, the maturity of IT security functions did not influence online procurement practices. This indicates that whether your IT security functions are well established or emerging, security concerns need not be a barrier to using online procurement. By focusing on connecting procurement processes to leverage online platform capabilities, a firm can gain access to additional sources of technical talent more quickly and potentially at lower rates.
New tools and platforms are continuing to give organisations more ways to develop and implement technology to create value. Cloud computing, software as a service (SaaS), crowdsourcing and AI are trends that can improve speed and reduce costs for IT organisations. However, our research demonstrates that getting the benefits of these innovations requires organisations to have more than a general understanding of the available opportunities.
Technology leaders need to challenge their administrative functions, engage in self-service sourcing platforms and challenge organisational processes that may have been appropriate in managing a large contract with IBM, but are not relevant in managing a contract with an individual freelancer. New opportunities will continue to develop, but it will be the responsibility of leaders to help their administrative teams become enablers, not obstacles, to innovation.
- This blog post is based on Procuring services through IT crowdsourcing: The role of IT administration and IT flexibility, Journal of Information Technology.
- The post represents the views of the author(s), not the position of LSE Business Review or the London School of Economics and Political Science.
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