Effective & Efficient IT Procurement… more than hard bargaining.
"Organisations spend up to 90% of their Information Technology (IT) budgets on external providers, but sometimes fail to get true value for their spend. This scenario makes the procurement process a critical area in IT as it is essential for organisations to get consistent value for their spent monies”, Deon Basson, MD of 2interact, told SmartProcurement.
A complicating factor is that sometimes procurement sits outside of the IT department or that IT professionals are trained to act like ‘hard bargainers’ in the procurement process. True partnerships between suppliers and IT departments are thus lost in this arrangement. The focus of these procurement policies (whether inside or outside of IT) seems to be more focused on cutting cost rather than on adding true business value to the organisation. This creates an environment where long-lasting relationships are difficult to create and maintain between IT (the actual implementer of the technology) and suppliers.
Bearing the above in mind, it is important to remember that procurement policies play a very important role in this process. The focus, however, must be to get the suppliers, procurement and IT professionals to harmoniously work together for the benefit of all parties so that the IT department can ultimately add value to the organisation. It is therefore important that the people involved in procurement understand the value of the technology and therefore become true role players.
In recent times it has become a matter of fact that IT is one of the most complex areas of procurement, especially due to the vast array of technologies that can be acquired. A typical list of IT technologies, although not comprehensive, is the following:
- Hardware, Mainframes, Unix Servers, PCs, Network Routers, Physical Networks, Wireless Networks, Cabling, Telephony, Software and Printers.
- Faxes, Maintenance, Configuration, Customisation, Bespoke Development, Internet Connectivity, Storage, Upgrades and Back-up Ability.
- Modems, Firewalls, Encryption, Access Control, Outsource, Contractors, Business Analysis, Project Management and Change Management.
“In most cases procurement will not just be in one area, but in a combination of the above. This scenario is complicated further by standards, integration requirements and compatibilities. As a result, it makes the procurement process much more complex than for other commodities”, Basson continued.
The procurement of IT can be categorised into 3 basic types, namely:
- Pure Commodities / Consumables – Price and reliability are the main drivers, with the relationship as a secondary.
- Solution Orientated – The relationship, people skills and product decision are bundled together.
- Strategic Governance Driven – The relationship is everything.
To be successful in IT procurement the following must be achieved:
- Attention must be given to the procurement process;
- IT value to the organisation must be understood;
- The complexities within the technology must be grasped;
- The type of procurement required must be determined; and
- Most importantly, mutually beneficial relationships with suppliers must be created and sustained.
** The subject of information technology is one of the topics in SmartProcurement’s host of One-Day Continued Professional Development Events. The next One-Day will be held on the 19th of November in Centurion. For more information, please contact Erieka Santos on 086 133 4326 or 083 454 6915, or alternatively e-mail firstname.lastname@example.org
Article submitted by Deon Basson, Business Owner of 2interact.
Deon Basson can be contacted at the details below:
Cell: +27 83 326 3844