Latest / Technology Now / Who pays for our IT? The move to subscription hardware is making that complicated
Transcript
- Michael Bird (00:09): Hello and welcome back to Technology Now, a weekly show from Hewlett Packard Enterprise where we take what's happening in the world and explore how it's changing the way organizations are using technology. We're your hosts Michael Bird. Aubrey Lovell (00:23): And Aubrey Lovell, and in this episode we are looking at who is paying for our IT. Now sounds like an odd question, right? Well, the answer isn't all that clear cut. New findings from IT transformation specialist, American Digital, has suggested that the way we fund IT is changing and with it who controls those purchases. Now traditionally, IT has been a capital expenditure. You pay out a lump sum and at some point a whole load of boxes arrive, you put it all together into a server or data center or whatever else you might need, and you slowly recoup the cost over time. That model is changing though. IT capability is increasingly being leased, becoming an operational expenditure, and that means it's often coming under the remit of an organization's chief operating officer, not its chief information officer which seems like an odd development. So that's what we'll be navigating in this episode. Michael Bird (01:17): So that's why. If you are the kind of person who needs to know why what's going on in the world matters to your organization, then this podcast is for you. And if you haven't yet, make sure you subscribe on your podcast app of choice so you don't miss out. Right, let's dive in. IT expenditure is growing and fast. According to International Data Corporation or IDC spending on compute and storage infrastructure products, including dedicated and shared IT, increased by 36.9% in the first quarter of 2024 compared to the same time last year, rising to $33 billion in the US alone, and we've linked all that research in the show notes. Aubrey Lovell (02:05): All that is to say we're spending a lot on IT infrastructure, and when things get more expensive, people start to look at other options, and renting or subscription based IT is increasingly popular. The thing is, when you're renting something, not buying it, that moves it from a capital investment to an operational expense which means different people are paying for it from different budgets and those people aren't always the most IT savvy. So what does this mean for our organizations and how do we make sure that the right people are being educated to ask the right questions when it comes to IT? To help us unravel what's going on, we're joined today by Bob Panos, senior VP of sales and strategic partnerships at American Digital. Hi, Bob. So let's dive right in and ask the big question. From the conversations you've been having with customers, who is making the decisions around our organization's IT right now? Bob Panos (02:56): So it continues to be the IT executives, but more and more we're seeing the CFOs involved because IT in many organizations reports in through the CFO. So I'd say both, and it's also become more of a financial decision because as a service component that many of the infrastructure and software providers out there are shifting to subscription models, et cetera. So the way that payments get made is impacting how IT decisions are made. Aubrey Lovell (03:33): So I'm paraphrasing, but you talk there about chief information officers maybe ceding territory to CFOs. Are IT chiefs still being involved in the decision-making process or is it being taken completely out of their hands? Bob Panos (03:47): No, they're definitely part of it. They're just getting scrutiny. Again, the customers that we have, it seems to me they're just getting scrutinized over the spend, the amount, the discounts, the budget, right? It's not the technology per se, other than maybe enterprise software where a CFO would have a say in say an ERP system or some type of financial system. They're really not getting scrutinized over the technical details. It's more the macro like, okay, do you really need to spend this much money. It's around the actual financial expenditure as opposed to the technologies decisions being made. We don't find that the IT executives we work with are getting scrutinized over those. In good organizations, the financial leaders I think trust their IT leaders to make those decisions. It's just the financial structures where we see the most scrutiny being put on. Michael Bird (04:47): Bob, when you're talking about scrutiny, do chief financial officers or CEOs or COOs understand the right questions to ask? The example you gave there is do you need WYZ. Is that the right question? Bob Panos (04:59): No, it isn't. The right question to ask is what is the ROI on this investment, right? Does the CFO see IT as a cost center or a potential profit center? And that's really, in my view, that is the difference of somebody who is insightful in terms of how their IT is going to help them or somebody who's just looking at it as a cost, and he or she sees other areas of the business that are profit centers. IT these days if done strategically can absolutely be a profit center. So to your point, that is not the right question. The question is what is the ROI we're going to get from this investment, is it better than buying a piece of machinery for the shop floor, can we improve our customer experience better by investing in this IT is an example. Those are the right questions to ask I think, not, oh, what brand are you buying or how many of these widgets are you buying. Aubrey Lovell (05:56): As someone who spends a lot of time talking with customers, how are you trying to help these conversations and help that journey between the different departments that are getting involved in these buying decisions? Bob Panos (06:06): Right, it's a great question. Our job is to make the chief information officer and their teams look good in front of the people asking the questions, whether it's the CFO or whether it's the CEO or CMO, whomever, the line of business people questioning why they want to go with some piece of software or infrastructure, et cetera. Our job's to make them look good, enable them with the right information, enable them with the right technology architecture so that when people try to poke holes in it, they have the answers to all those questions. That is our job, and that's what we do day in and day out is we educate our clients, and that's part of our sales process is that education process. We tend to call it pre-sales, but at the end of the day that pre-sales is really prepping your customer for those hard questions they may be asked. Michael Bird (07:06): From the conversations you're having with clients, are senior leadership like COOs and CFOs becoming more IT savvy? Do they understand, do you think, the right IT decisions are about more than just say cost? Bob Panos (07:19): That's something we're seeing more and more, just the amount of available information out there, and sometimes you get people that think they know and they don't necessarily know, and that comes back to the organization and trusting the people within. Do you trust your IT leaders or not? Everybody has their swim lane. A CEO, he or she is looking over the entire organization. CFO, financial, your IT leader, their job's IT. So do you trust those people? But at the end of the day, everybody's better off educated. An educated CEO and CFO is the best case scenario, just want to make sure they're well-educated. We've run into some folks that, it's like anything, you have people who listen to 30-second soundbites on say a social media platform. That's what we're trying to prevent from happening is the wrong type of education of those folks. They want them to be educated but in the right way. Aubrey Lovell (08:19): Okay, closing this out, how do you as an organization manage these new relationships? Bob Panos (08:24): It goes back to my earlier comment about educating our customers. So we have to educate the IT executives on good information, at least good information that we have so that they can counter that misinformation or disinformation some folks are hearing that may put them down a path that is not necessarily beneficial for the company, it just may be trendy. We are doing more of that education that I was talking about, more of that pre-sales, more of that exposing them to the various experts within the partners we work with throughout the IT ecosystem, having to have more of those conversations around education, and that's it. It's really, the word education is where I come back to and enabling the IT leaders we work with to have the right information. (09:16): That literally is the key focus area for us, and that's increased greatly, where people just took you for granted 10, 20 years ago, like, "Oh, these are my two or three choices. There's not much to talk about other than... Because it's a pretty straight decision." There's a lot more complexity today. So you're having a lot more of those education sessions to make sure the IT buyer at least has the right information to enable the best decision possible. Aubrey Lovell (09:45): All right, thank you, Bob. There are some amazing insights in here. Michael Bird (09:52): Okay, well, now it is time for Today I learned, the part of the show where we take a look at something happening in the world that we think you should know about. Aubrey, what do we have this week? Aubrey Lovell (10:03): Well, this week, Michael, it's another trip to outer space and we know that we do love a good space story. Michael Bird (10:11): We do love a good space story. Aubrey Lovell (10:12): Put on your astronaut outfit. Michael Bird (10:15): That's what they call it. Aubrey Lovell (10:17): Yes, your space suit. There you go. Michael Bird (10:19): No, no, no, astronaut outfit from now on. Aubrey Lovell (10:23): Well, a pair of scientists in Italy have discovered the first ever cave on the moon, and it could be the perfect spot for a future moon base or moon picnic. It's long been thought that the moon was covered in a network of caves formed by old lava flows just like earth, but until now no one has actually seen one. We spotted what could be cave entrances in 2010, but haven't had a chance for any further investigation. The researchers, Lorenzo Bruzzone and Leonardo Carrer, confirmed the cave system using radar, and it's a big one. The mouth of the cave is a hundred meters or 300 feet across. Michael Bird (11:02): Wow. Aubrey Lovell (11:02): And at least 130 meters or 390 feet deep, opening up into an intact network of tunnels. Michael Bird (11:10): Wow. Aubrey Lovell (11:11): Now sending any moon base within structures like this would offer a whole lot of benefits, for example, protection from the elements, the need to only cap off an entranceway rather than have to build a whole structure, and easy access to the moon's ancient geology. But in this case though, you'd also need a very, very long ladder. Michael Bird (11:31): Thank you for that, Aubrey. That was really, really cool. Right, well, now it is time to return to our guest, Bob Panos, to talk about the changing way our organizations are funding their IT. Aubrey Lovell (11:46): Let's make this something of a public service announcement to our listeners. Talking to the CEOs and COOs out there, what questions should they be asking their CIO to help make the best decision? Bob Panos (11:58): Yeah, I go back to what are the benefits, what is the ROI that I'm going to get on the investment, how is a company going to benefit from this, right? There's sometimes there's decisions that are just made. You have to stay up to date on technology. That's par for the course as they say, but why am I going to get from this investment, how's it going to benefit the business, why am I investing in this IT technology as opposed to other resources in the organization. What that does is it holds the IT executives accountable for whatever they might be proposing. Oh, we need to buy this new software. We need to buy this new infrastructure. Oh, we need to invest in AI. How's that going to help the business? And AI is a big one right now because that a lot of folks don't know. (12:50): So the real question is, what return am I going to get is the question they should be asking. How's it going to help our business grow or improve our business in some way? If I were a CEO, that's the question I would be asking of my IT leadership. Michael Bird (13:07): So, Bob, why should our audience at large be paying attention to who is making these decisions? Why does it really matter to our audience? Bob Panos (13:17): These are consequential decisions, right? This isn't something you turn around in a month or two. When folks are making IT decisions, you're making decisions for a minimum of at least a few years, sometimes even longer. Some companies are small and they don't have a big IT budget. We see some companies refresh their IT in a big way every five, six years. So think about that. If you make the wrong decision, you're stuck with something for five or six years, a technology that may not give you the benefits you could have had, had you made another decision. So to me, that is the main reason you want to make sure you make a thorough decision, you make an informed decision is because these decisions are so consequential. (14:02): When you make these large investments, yet the world around you is moving so very fast and changing in six months or a year, you're faced with this reality of, oh gosh, if I make my decision too quick, I may make the wrong decision. If I wait too long to make the decision, I may have missed out on something, or if you're waiting for the next thing. That's why you have to give it the right thought because it is moving so fast and they are such big decisions and consequential decisions. Aubrey Lovell (14:32): Thanks so much for your time, Bob. It's been great to talk. And you can find more on the topics discussed in today's episode in the show notes. Okay, we're getting towards the end of the show which means it's time for this week in history, a look at monumental events in the world of business and technology which has changed our lives. Michael, what do you have for us? Michael Bird (14:52): Well, I don't know if you remember, but the clue last week was it's 1930 and this was one small birthday. Did you get it? Do you have any idea? Aubrey Lovell (15:03): I really don't. 1930 is just, it seems like it's a weird year before a bunch of historical things happened, so I'm not really sure what it could be. Michael Bird (15:11): Well, this one is nice and short. It was the birth of Neil Armstrong on August the 5th. Aubrey Lovell (15:15): Ah. Oh, one small step, I get it. Michael Bird (15:22): Exactly. Exactly. And his birthdate was on August the 5th, 1930. Now, Armstrong was a Navy pilot in the Korean War before becoming a test pilot for the National Advisory Committee for Aeronautics which later became NASA. In 1962, he was the first civilian to enter the astronaut training program and had his first space command in 1966 as pilot of the Gemini VIII mission which accomplished the first physical joining of two orbiting spacecraft. As commander of Apollo 11, he became the first man on the moon before leaving the cosmos behind, staying earthbound, and working as professor of aerospace engineering at the University of Cincinnati in 1971, and then he eventually died in August 2012, aged 82. Aubrey Lovell (16:11): Thanks, Michael. And the clue next week is it's 1888, dude, where's my car. And that brings us to the end of Technology Now for this week. Thank you to our guest, Bob Panos, senior VP of sales and strategic partnerships at American Digital. And to you, our listeners, thank you so much for joining us. Michael Bird (16:30): Technology Now is hosted by Aubrey Lovell and myself, Michael Bird, and this episode was produced by Sam Datta-Paulin and Sydni Michelle Perry, with production support from Harry Morton, Zoe Anderson, Alysha Kempson, Alison Paisley, Alyssa Mitry, and Camilla Patel. Aubrey Lovell (16:46): Our social editorial team is Rebecca Wissinger, Judy-Anne Goldman, Katie Guarino, and our social media designers are Alejandra Garcia, Carlos Alberto Suarez, and Ambar Maldonado. Michael Bird (16:57): Technology Now is a Lowest Street production for Hewlett Packard Enterprise, and we'll see you at the same time, same place next week. Cheers.