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The current population of CIOs is, in general, significantly more professional and well-informed in its approach to procuring and managing service and supply. CIOs need to be because the days of the unintelligent customer are long gone, and suppliers have to work hard for their money.

Internal and external sourcing has gone through three or four generations of re-evaluation and competition. Most CIOs preside over a complex mix of internal teams, external providers and commoditised services. All are adept at complex integration of systems and solutions, and they have a clear delivery plan for a known set of stakeholders. Given this picture, It comes as something of a surprise to realise that CIOs are potentially missing out on up to 40 per cent cost savings on their organisation's IT services contracts.

It initially appears that the UK public sector has made great strides in achieving effective mechanisms to procure goods and services. There are a number of key cross-government procurement frameworks where buyers can take advantage of pre-arranged, cost-effective pricing for a given subset of goods or services. Major departments have put in place similar frameworks to ensure complete coverage. The private sector has long had a strong focus on procurement, with specialists assisting at corporate level to ensure best value from suppliers. Strong category management and price awareness have generated a competitive environment.

There are, of course, still problems to overcome. If a key supplier, with intimate knowledge of your business mechanics and unique insight into your needs, fails to jump the procurement hurdle, there is all too often an unexpected drop in service efficiency or increase in overall cost. Supplier or service evaluation is slow and often scored in minute detail; suppliers spend more time working out the marking system than they do in engaging with you to determine the main priorities.

Procurement teams do not regularly look at what the supplier is doing, paying full attention instead to business references and visiting other clients; most business teams will say there simply isn't time. People are afraid of making innovative decisions, and this often translates into a fear of choosing a new supplier. There is a tendency to go for the big name or the accepted face.

Suppliers have often committed to a rate structure for the lifetime of the supply, often with limited, if any, ability to increase due to business changes. These problems are currently understood and, to a greater or lesser extent, they are being addressed by both the buyer and supplier communities. Solving them is important but they alone are not the answer. The major problem is more fundamental and requires a change of approach from today's CIOs.
Becoming more effective in IT service procurement and management is applicable both to the public sector (given Treasury directives to cut costs and improve efficiencies) and to the private sector (impacted by the effects of the recession).

In the private sector, the demands for increased commercial competitiveness are driving innovation in IT services, generally at a high cost - however, the weak market and desire to cut costs often leaves CIOs with one hand tied behind their backs. The Office of Government Commerce recorded that the public sector spends over £100bn each year on procuring goods and services and, even though they are required to demonstrate full accountability for their actions, there is much wastage.