Purchasing software for a multimillion-dollar enterprise can be a daunting prospect, especially considering the fact that there isn't one solution that can meet all the needs of every professional within an organization.
CIO.com contributor Matt Kapko spoke with David Berkowitz, CMO at technology agency MRY. Berkowitz acknowledged the abundance of applications, asserting that "the CIO will have no shortage of technologies to vet in the years ahead."
Why strategic sourcing should be leveraged
What a marketer requires to develop content differs from what a human resources representative needs to manage talent. Exacerbating this disparity are the differing preferences of professionals - some like Google Apps while others would rather use Office 365.
Leveraging strategic sourcing in procurement is an advantage for a number of reasons. First, it allows enterprises to identify and eliminate any purchasing redundancies within their operations. Second, the practice provides analysts with a deep understanding of how indirectly procured materials (assets purchased to support day-to-day processes) hinder or support workflow.
Data aggregation and analysis
To gain a better understanding of the value strategic sourcing can bring to software procurement, suppose the COO of a fictional corporation - Yusk Management - wanted to decide whether the company's primary productivity suite should be Office 365 or Google Apps. To achieve an educated decision, the COO conducts the following process:
- She contacts her subordinates at each of Yusk's branches, asking them to provide detailed reports regarding what kind of tools their colleagues and employees use on a daily basis.
- She creates a survey that asks workers key questions and proposes work-related scenarios pertaining to productivity software (i.e. "How often do you use analytics tools?" and "Say you're creating a service brochure - do you use Google Docs or Microsoft Word?" etc.)
- After receiving the survey results and reports from her subordinate operations managers, the COO consults the CIO to request data pertaining to application usage - are employees using Google Apps more than they are Microsoft Office or vice versa? How often are emails with attached documents exchanged among workers?
- Once the aforementioned information is received and analyzed, the COO conducts a spend analysis of the company's current usage of productivity software. For instance, are there instances in which workers will write documents in Word, paste the content into Google Apps and share the forms with colleagues? Do those co-workers then paste the language back into a Word document?
How does the latter point pertain to spend analysis? While often used to scrutinize expenses on a monetary level, leveraging the strategy from an operational standpoint gives professionals an accurate perception of whether material (or, in this case, software) use is generating a return on investment. Redundant processes demean the value of applications, and finding ways to eliminate them should be a priority.
Making the comparison
This is when price comparison comes into play. First, a budget for Yusk Management's long-term productivity software must be formulated - $11 per user per month. Then, the company's needs must be factored into the equation. Based on the data outlined above, it is clear that Yusk requires a solution that allows workers to share and collaborate on documents.
When comparing the pricing plans of Google Apps ("Flexible" and "Annual" plans) against Office 365 Enterprise E1, Yusk's COO deduces that the latter solution will fit her organization's needs for several reasons.
- Yusk's employees favor Word capabilities over Google Docs'.
- Office 365 comes with easy audio and video conferencing tools, which aren't included in Google Apps.
- Office 365 allows departments and teams to create "sites" for themselves, serving as easy communication and data-sharing portals.
This is a very basic outline of how strategic sourcing can improve software purchasing agreements. Overall, professionals should remember the key practice at the heart of centralized procurement: aggregate information in an organized fashion.