In IT Buying, does Procurement play any role at all?
For procurement professionals, the IT products market has always been challenging. This is for reasons more than being the largest indirect spend category. It includes the scale and pace of change in pricing of over 30,000 products on a daily basis, introduction of thousands of new products, change in stock inventories, political instability leading to volatile exchange rates and so on. As if these were not enough, now there is this notion that when it’s an IT product, only IT is intelligent enough to know about it or negotiate for it, and no one else. Sigh!
If organizations consider the above purchasing model as legit, it is limiting talented IT people to doing task that doesn’t leverage their core competency. Moreover, such deals where an IT person is expected to deliver in procurement, end up being in favor of vendors and not the buyer-company. Ideal IT procurement practices mitigate such drawbacks by bringing procurement professionals and technology professionals together. In this coming together of the departments, procurement professionals contribute their expertise in sourcing, while IT delivers its expertise on specifications and technical designs. To review information provided by vendors, IT and procurement can be confident of the company’s investment. This strategic partnership facilitates best purchasing with the company’s overall interest in mind.
In the above discussed partnership model for IT procurement, setting parameters, budgets, documenting equipment specifics and drafting contracts, should all be rolled into the task of relationship management so the buyer-company can milk all the benefits from the vendor. It is a good thing to note that IT managers acknowledge the need for a good procurement professional on their side which would result in cost-savings, process efficiency, and overall effectiveness.
But wait. Do you think that’s all? Here are five more reasons why IT considers that together with procurement, they can always seal the best deal.
- Flexible Contracts: Procurement pros can help IT structure flexible contracts with vendors in which services or equipment requirement can rise and fall depending on the company’s business performance.
- Consistency: Procurement pros help in streamlining buying processes that can be easily duplicated to avoid operational hazards when similar purchases are to be run.
- Eye for Detail: Procurement pros know what parts of a standard vendor contract needs reworking to suit the need of the company along with other transactional clauses.
- Leverage with vendors: Experienced procurement pros know the art of nurturing vendor-relationships that contributes to sustainable business partnerships helping organization benefit from exchange of ideas.
- Risk & Governance: Procurement pros through experience can predict/forecast an event of merger/bankruptcy in which an IT supplier may no longer be in business with the company.
The role of procurement pros in IT buying does not expect IT to blindly hand over all responsibilities ton them. Both the parties have distinct roles that complement each other. Matter of fact, it it is irrelevant with whom (whether with the CIO, the CFO or the COO) lies the decision of purchasing IT products/services as long as both IT and Procurement are willing to collaborate and not step over each other’s expertise. What do you think?