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The Subscription Economy is Upon Us. Is Your Procurement Department Ready to Bimodal it?
Digital business and the subscription economy are pushing IT to its limits, and traditional development practices no longer apply. Trends such as cloud computing, artificial intelligence, globalization, bimodal IT, combined with tech-savvy millennials joining the workforce, are ushering rapid transformation in the enterprise. This is creating an imbalance, which is forcing the chief information officer …
Digital business and the subscription economy are pushing IT to its limits, and traditional development practices no longer apply. Trends such as cloud computing, artificial intelligence, globalization, bimodal IT, combined with tech-savvy millennials joining the workforce, are ushering rapid transformation in the enterprise.
This is creating an imbalance, which is forcing the chief information officer (CIO) to eschew traditional processes. On one hand, the CIO wants to innovate and rapidly deploy new technology as demanded, on the other, he or she must not completely throw out the legacy tools and processes that have been successful for enterprise IT for years or decades.
Today’s CIOs have the tough job of straddling the line between innovation and “keep-the-lights-on” business practices. Thankfully, a new business organization model – called bimodal IT – has emerged to ease the tension. Rather than having traditional and modern IT practices compete against one another, bimodal IT allows the CIO to achieve both by establishing two separate, but parallel tracts.
What is Bimodal IT?
Using Gartner’s phraseology, bimodal IT consists of Mode 1 and Mode 2 wherein:
- Mode 1 is the foundation of an organization which encompasses predictable project cycles based on predetermined outcomes.
- Mode 2 is work done by pioneers, which is exploratory. The impact of research and development in this cycle may be unplanned. It involves quick iterations of trying to bring the best of technologies and retrofitting in the organization with a limited set of users.
Bimodal IT and the Subscription Economy
One major outcome of the transition to digital is that businesses are living in a subscription economy. The traditional models of “buy-install-use-upgrade” are being upended by rent and use. There’s nothing to buy, except using your credit-card to rent that service for a specified period of time. Bimodal IT allows CIOs to innovate effectively in the subscription economy, but it also opens up a potential Pandora’s box of new service providers and procurement processes.
These challenges include:
- The digital transformation requires rapid sourcing and procurement process
- Emerging requirements for digital business demand new budgets
- The diverse set of smaller service providers bring additional risk, which have to be managed
- Legacy sourcing and procurement processes, built around delivery and maintenance of goods create financial risk.
Bimodal Contract Management to Leapfrog the Digital Business
Today, IT procurement teams over-rely on Mode 1 for legacy procurement and contract management solutions built around the delivery of goods. This approach cannot effectively handle the subscription economy and the on-demand economy. Using a modern contract management platform – one that supports both Mode 1 and Mode 2 strategies – allows enterprises to leapfrog into the subscription economy. A bimodal contract management platform gives IT teams a unique window of opportunity to deploy technologies which are at the cusp of Mode 1 and Model 2 to help manage risk, save money and use the savings to fund the expansion in digital business.
How has bimodal IT affected your procurement processes? Let us know in the comments below.
We’ll be at #GartnerSYM in Orlando, FL next week. Stop by our booth #ET29 to learn more about Contract Management for the subscription economy.
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