Document Management Solutions Procurement: How Gartner’s IT Spending Report Should Affect Your Budget
In April, Gartner issued a press release listing their predictions for IT spending in 2022. The projected spending growth of 9.8% on software and 6.8% on IT services. This gives reliable insight to CIOs and decision makers on the pace of procurement decision-making if they want to solve business problems with technology solutions in a cost-effective way.
In this article, we’d like to dissect the Gartner’s study to extract more actionable conclusions for CIOs and decision makers. While Gartner’s study offers data, our study is aimed at offering insights and wisdom out of that data, so that your organization can gain a better understanding of how fast you should move toward investing in modern solutions for your document management needs.
We will focus on several key conclusions from Gartner’s IT Spending press release and what that means in business terms:
- 2022 will be the noisiest year on record for CIOs
- IT modernization is not a fad and will continue for the foreseeable future
- Geopolitical shifts will not slow down IT spending any time soon
We’ll cover each of these conclusions in separate blog posts. For now, we’ll focus on the first conclusion.
The noisiest year for CIOs: What does this mean for document management solutions procurement?
According to the Gartner study, this year is set to be “the noisiest year on record for CIOs” and decision makers.
Why should this be an issue for decision makers that are considering a document management solutions procurement? It’s important for several psychological, market, talent and currency reasons. The agile decision makers can win excellent results for their organizations.
1. Psychological forces in document management procurement decisions
Earlier this year, the world was waking up from a two-year hibernation induced by COVID-19 lockdowns. During this time, while there was some activity in decision-making, more astute decision makers knew that this crisis would put in a new colloquialism: the New Normal. . So, this new period of time required a new set of eyes and a new, heuristic decision making process.
As the world saw the end of the crisis, those decisions that awaited fruition sprung onto the corporate agendas, and things started happening. Boardrooms and discussions became more bold, more decisive. Deals were made.
This results in increased spending in IT to build a more resilient enterprise, up to 9.8% more than 2021. The important takeaway here is that organizations are making IT investments to increase their cyber maturity, connect with their customer to provide an improved experience, prepare for the next global event and position themselves to capture market share. Document management is a key enterprise capability that supports collaboration and digital transformation – organizations are moving toward a cloud-based highly secure content services capability.
2. Market forces that affect costs accompanying document management solutions
After a two-years of deliberations and hesitations, organizations that want to adapt to the new normal are energetically seeking technology solutions. They pursue solutions that will empower them to conduct business operations from anywhere in the world. So, in the first quarter of 2022, demand has grown for technology solutions and service providers.
On the other hand, the market does not have time to meet this increased demand with increased supply. Solutions integrators and software providers need to reach a certain technology maturation in order to qualify for most RFPs. This is especially important for government procurement RFPs. Solution providers need to have a FedRAMP offering in order to qualify and attaining that status is not an easy task.
Combining increased demand with an unchanged supply means that companies that do meet FedRAMP requirements have to increase prices simply because available staff is a limited resource. This could potentially result in an increase of prices as the year progresses.
3. Talent pool and its effects on supporting document management solutions
Two factors are shaking the IT industry: the Great Resignation and Russia’s invasion of Ukraine. Because of this, the IT industry’s talent pool has seen a lot of mixing and reshaping.
The Great Resignation, a term coined in 2020 and popularized in 2021, was a social shift in employee satisfaction—or better said, dissatisfaction. After over a year in isolation, people realized that a proper work-life balance is more important than financial affluence. This resulted in many resignations, even with no other job interviews lined up. Studies show that this trend picked up pace in 2021, rather than slowing down:
The Gen Z and Millennials seem to be the age groups most prone to quitting. Respectively, plan on quitting their job within the next 12 months. Up to 44% of people making $80,000 and more are reporting intentions of quitting.
Most though, report 3 key reasons for quitting: low salary, no advancement opportunities and feeling disrespected:
This means that IT companies need to improve these conditions. They need to find ways to offer higher salaries, create opportunities for career advancement and invest in team dynamics by making sure employees feel respected for their contributions.
This general dissatisfaction results in a mere 34% of US/Canada employees being fully engaged at work. The rest are doing the bare minimum to keep a job, which does not bode well for service-oriented companies. The same study shows that to get the engagement level up, salaries should grow more than 20%.
For document management solutions shoppers, this means that as time goes by, companies will have to increase their fees by at least 20% in order to win your business. So, the sooner you can lock in a contract with a solutions provider, the better your chances are at making a deal that will save your organization at least 20%.
4. Currency fluctuations and the cost of document management solutions
As the war in Ukraine continues, the ripple effects are touching every pore of our lives, even for countries that are thousands of miles away from the war zone.
From a US perspective, there’s one interesting development. The currency exchange rate between the US Dollar and the Euro have shifted. Looking back, the Euro has always been stronger than the dollar. In the past 20 years, you’d need 1.2 dollars to buy 1 euro. Until a week ago, when in the first time since George W. Bush’s administration, the dollar became stronger than the euro. What does this mean for investing in document management and IT modernization?
Well, since a lot of the technology work is done globally, the US dollar goes further than at any other time in the past 20 years. More value means being able to afford more services, more IT equipment, etc. This is especially true when getting services from companies that have distributed teams across the world.
Time will tell how the currency exchange rate will be affected, but for now, it’s a good time to invest in IT modernization and software services with US companies that have international teams.
Let’s Wrap Up
There’s an old saying, “May you live in interesting times.” We definitely don’t live in a boring time in history. This dynamic time is affecting everything we do, even procurement decisions in agencies that work with document management systems.
After two years of a work-from-home mode, organizations understand that with the proper technology solutions, they can empower their employees to work from home. In fact, when done right, document management systems empower employees to do more work in less time.
For agencies that consider improving their document management solutions, this year is a good time to make such that investment.
There are plenty of solutions integrators on the market that are FedRAMP certified, so you should be spoiled for choice.
However, the attentive CIO and procurement decision makers understand that the favorable circumstances are no secret. With the increase in demand, suitable companies will have to eventually transfer the higher operating costs to the clients. So, the sooner you close a deal, the better your chances to avoid major price spikes.
Combining an expected20% salary increase for employee retention and the strengthened dollar/euro ratio, the sooner you find a company that is FedRAMP certified, the better off you’ll be. If you find a company that has a distributed team that can leverage the strong dollar value, you may be looking at a great deal for your agency.
2022 seems to be a year when, the best time to invest in technology is “yesterday.”
Armedia has been a solutions integrator for over 20 years now, with a solid position in the document management solutions market and has key partnerships with Hyland Alfresco, Microsoft O365 and OpenText. We have helped various private and government organizations tackle the document management challenge in a cost-effective manner. We are a FedRAMP compliant solutions provider capable of deploying cloud and hybrid solutions that fit your needs.
If you resonate with this blog reach out to us so we can discuss your document management needs.