What CIOs Look for in Service Providers

By Brian P. Watson  |  Posted 02-19-2008

CIOs' intimate involvement in choosing an IT service provider shouldn't be surprising; after all, outsourcing is becoming a fundamental way businesses achieve efficiencies. Isn't that the job of the CIO?

Seeking a better understanding of what CIOs look for in their outsourcers--and what IT providers need to know about their clients' expectations, Ziff Davis Enterprise Research polled a total of 245 IT executives.

The results pinpointed the technologies and processes that CIOs are most likely to farm out, as well as what they expect from their investments.

When it comes to choosing service providers, CIOs play the most central role: sixty percent said IT chiefs are involved in vendor selection, topping other IT executives (47 percent) and business unit executives (40 percent). CFOs and CEOs were involved in decision making in less than 30 percent of the companies. That should allay some CIOs' fears that their domain is being invaded by the non-IT powers within their organizations.

Backup and disaster recovery led the list of outsourced projects and processes, with 51 percent of respondents saying they used outside vendors. Coming in a close second was hosted or outsourced infrastructure, at 50 percent. Barely behind that was software development, at 49 percent, followed by business applications (46 percent) and security (37 percent).

All five services increased from 2007, with business applications seeing the largest jump (eight percentage points). And the number of CIOs seeking new providers for each of those services rose by double digits. Those findings synch up with what CIO Insight calls "The Hollowing of Big IT,"--the trend of in-house IT departments outsourcing more technology work, from the non-critical to the most fundamental to the business.

More than six in 10 IT executives are in the market for a new IT service provider. Whether IT executives are looking to replace a vendor or farming out work for the first time, survey respondents said they're seeking more capabilities and products, better value and lower costs. Cost plays a minor role: of the top 10 factors influencing vendor selection, price came in ninth. So CIOs are looking more closely at the potential benefits than the potential costs. That might come as a surprise to some, but recent projections show IT budgets continuing to grow--albeit at a slower rate than in previous years.

For more on the results, see Channel Insider's coverage

Also see this slideshow on the survey findings.