Comprehensive Guide to IT Procurement
Procurement embodies purchasing across a wide range of categories. Depending on the way your procurement function is set up, you may be sourcing everything from the direct materials that make up your organization’s main product, down to the goods and services needed to keep office supplies in stock and the buildings maintained appropriately.
The procurement process involves strategy, research, negotiation, and implementation to ensure your company is running efficiently and cost-effectively. These factors are especially crucial when it comes to procuring the right technology solutions for your business.
IT procurement can quickly become overwhelming and cumbersome due to the sheer volume of tech vendors and IT solutions available for any given task or function.
This guide to IT procurement is designed to help you navigate this often complex process.
What is IT Procurement?
IT Procurement is the process of researching, selecting, and implementing all of the technology solutions your organization needs to function.
This includes everything from telephone lines, internet service providers and email capabilities, to cybersecurity, cloud services, software, and more.
The number of tech contracts and IT vendors that are needed to support your business can add up quickly, which can make this particular category difficult to manage.
Utilizing the right resources to efficiently manage this category of spend, along with all of the IT tools and software programs used by your organization on a daily basis, is key to ensuring you have the right solutions in place. It will also help you be successful and make sure you’re getting the most value from your IT spending.
Who Owns IT Procurement?
Thanks to a global pandemic and the evolution of the way organizations conduct business around the world, there’s been a renewed focus on investing in the right technology tools to ensure business continuity and resilience.
IT spending is expected to reach $4.4 trillion by the end of 2022 and is oftentimes within the top three largest spend categories for an organization.
It’s not a matter of if IT spend should be managed, but who should be the one managing such a significant portion of a company’s budget.
Naturally, a CIO may deem that any technology purchase falls within the realm of responsibility of the IT department as they are the true technology experts. Procurement, however, makes a strong case for managing IT purchasing because sourcing professionals are the experts when it comes to managing and reducing costs, implementing best practices, and mitigating risk throughout the buying process.
Salesforce found that 86% of employees and executives cite lack of collaboration or ineffective communication for workplace failures so one thing is clear: improving the collaboration between the procurement and IT functions is crucial for all-around success.
How Procurement & IT Can Work Together
When procurement and IT work together to fully understand each other’s goals, concerns, and pain points – and those of the organization as a whole – the entire IT procurement process is apt to run smoothly.
Here are a few ways procurement professionals can proactively collaborate with their IT counterparts:
Find common ground by looking at and understanding the organization's overall goals and objectives from the beginning.
How will each IT product will be used? How will it impact the user’s day-to-day job activities? What is the user is trying to achieve with a certain tool?
Factors to consider when purchasing IT range from supplier reputation and cost to support, reliability, fit-for purpose, and, most importantly, data.
Train members of your procurement team to gain a base understanding of IT language, along with the function’s challenges, priorities, and ways of working.
The IT procurement process is filled with multiple parties offering insight and making decisions. Procurement can leverage its understanding of IT to communicate across teams.
Have procurement be a part of IT's planning cycles with monthly or quarterly touch points and proactively show IT what the function is capable of.
Challenges Associated with IT Procurement
Technology is ever-changing – and at a rapid rate. What could be considered the top product today could very well be outdated come tomorrow. It’s impossible to have the most current or newest application implemented at all times.
Lack of visibility into spend and contract data and wasteful spending also contribute to the difficulty of managing IT spend.
Wasteful IT spending accounts for approximately 25% of costs, with some companies paying 30-40% more than they should for services like cloud usage.
Download a full copy of this guide to learn more about overcoming challenges associated with IT procurement.
IT Procurement Best Practices
As you begin to navigate this category, some of the same strategic sourcing best practices can be used as a guide to IT procurement as well. Thinking strategically involves planning for the long-term, making decisions based on data and the overall goals of the organization, building strong relationships, and more.
Here are some best practices to keep in mind when going through the IT procurement process:
Thinking long term allows your IT investments to proactively set your organization up for success, create long-term value, and helps develop a competitive advantage.
Stay aware of other major strategic plans in the business that will impact IT procurement or asset management. Likewise, procurement must become familiar with future IT architecture and plan ahead to align with this.
Identify cost savings opportunities and reduce risk, and note which IT tools promote efficiency and use this data to make better IT decisions. This data might also pinpoint technology gaps and allow you to plan for future IT purchases.
Create long-term value with IT vendors by nurturing the relationships in a way that is mutually beneficial for everyone involved. This will improve quality of service and customer satisfaction and save money.
Try to anticipate any liabilities before purchasing and implementation. Be weary of the risk of receiving little value for your large IT spend due to a perceived lack of solutions and the high cost of enterprise tools.
Yes, cost reduction is a priority at times, but other factors should be considered as well. Total cost of ownership involves looking beyond immediate costs to understand the long-term costs of a purchasing decision. Lowest-cost vendors or solutions may end up costing the organization more over the product lifespan. Factor in ongoing system support, updates or upgrades, too.
Implementing an Effective IT Procurement Process
When it comes time to sourcing IT solutions for your business, here are some basic steps you can follow:
Download a full copy of this guide for more details about each steps and ways to optimize IT procurement.
Your Personal Guide to IT Procurement
The IT procurement process can be complex and difficult to manage so why do it alone? As a group purchasing organization, Una becomes an instant extension of your procurement team, offering industry insight, category expertise, contract management, and more.
Una members have free access to an entire collection of technology vendors offering unprecedented savings on all of your IT needs.
Members can also access a state-of-the-art data insights platform designed to help guide you through the IT procurement process. Identify technology savings, centralize your technology spend, and manage tech contracts within a single dashboard to prevent auto-renewals and overcharges from impacting your bottom line.
Una GPO Membership Details
Unfamiliar with how a GPO works or trying to decide if a GPO is right for you? Una has an entire resource center dedicated to helping sourcing (and IT) professionals understand where a GPO fits in regards to your overall approach to procurement.
The most important thing to remember is that not all group purchasing organizations operate in the same way when it comes to membership.
With Una, here’s what you can expect:
Our pricing structure is set up so membership is always free to join and free to use, no matter what.
We use supplier administrative fees to finance our services, allowing us to make and keep membership free for members.
Una does not require members to purchase from certain suppliers or commit to a specified purchase volume. You are free to pick and choose the suppliers that will best suit your needs, remaining in control of all spend categories.
Una’s “keep it moving” mentality means we’re delivering at a pace that sets us apart from the competition. We have implemented tools to speed up the sourcing process, remove bottlenecks, and focus on results.
Create Value From Your IT Spend Categories
These days, skimping on technology spend isn’t an option. Being able to obtain savings on the IT products and solutions you need to run your business is an incredible advantage. And while the cost savings are key, the value a GPO unlocks in terms of effort and time saved during the IT procurement process is just as important.
Establish better overall IT contract management, eliminate shadow IT, easily compare system features and alternatives, and keep track of the data within your IT spend with Una’s technology savings platform.
Schedule a consultation with one of our expert Sourcing Advisors to learn more.