The Success of Procurement within IT and Telecom

There’s no doubt category managers and stakeholders make significant investments to sourcing the products and/or services they use, building relationships with suppliers, and ensuring these purchases meet specific business needs. However, sometimes having an outside perspective and a more strategic methodology to how purchases are made can result in a cost effective and efficient solution that betters overall business operations. Procurement resources within an organization offer tactical and objective insight to improve processes and enhance manager’s abilities to effectively obtain the required services.

Specifically within IT and Telecom commodities, managers and their supporting resources are responsible for ensuring technologies meet business standards and requirements that are critical to maintaining business operations. The focus tends to be less on the cost of service or market conditions, but rather on keeping business communications and connectivity to the outside world working. Although Procurement’s role is to help simplify and standardize processes, in order to be successful in working with stakeholders, Procurement needs to be mindful of current initiatives and relationships in place today. With that in mind, here are a few benefits procurement can offer IT and Telecom teams and parallel best practices for approaching stakeholders and implanting oneself within the sourcing process.

• Leverage market competition: While IT and telecom professionals know the technical details of the services they are using, they might not know all of the suppliers capable of providing that service or other solutions available that might be a better fit and more cost effective. Procurement teams invests resources to research market conditions and uncover potential viable alternatives to both the supply base and technology. This allows for competition when sourcing these commodities and negotiating with incumbents suppliers resulting in improved service at a reduced cost.
• Learn from the subject matter experts: Have a foundation of the product/service being purchased. Procurement needs to be educated by end users why they are buying what they are buying and what the requirements are. If you understand how all pieces fit together the team will not only have confidence in your capabilities, but will respect the investment you are making with instilling yourself to support them.
• Spearheading sourcing initiatives: If stakeholders have good relationships with suppliers, they tend to rely on them to not only bring ideas to the table, but to be fair with pricing and overall account support. Unfortunately, supplier sales teams have their own agendas and quotas to meet. Procurement takes a more strategic approach by engaging in sourcing activities, such as Request for Proposal or Request for Information initiatives, with both incumbent suppliers and the alternates they have uncovered during their market research. Stakeholders do not typically have the time to interview multiple suppliers, review proposals, and assess capabilities in a productive way. Procurement will not only facilitate and manage these processes, but will assess and report the results in a way that allows the team to make an informed decision.
• Be sensitive and considerate of existing relationships: Within the telecom and IT categories, most suppliers have ingrained themselves from both a financial and technological perspective and are involved for many years. It is not common practice to changes suppliers. Therefore, Procurement needs to approach the team delicately if recommending a change. There will be some hand-holding and it is important to consider all of the requirements and focus on the facts. For example, if alternate supplier pricing is very attractive, what are the technical and functional benefits on making a change? How will the new supplier ensure an easy transition? What are the value added-services they provide and how do they differentiate themselves compared to the incumbent? If you can get everyone to see the big picture, it is more likely they will support your recommendation for a change.
• Perform billing audits: Although basic checks and balances might be in place when reviewing invoices, it is very common especially within telecom and IT for miscellaneous discrepancies to occur. They might be small miscalculations or slight price increases, but these minor changes can have a major impact on the overall budget. Procurement will ensure an understanding of each billing element on an invoice from monthly recurring costs to applications of taxes and surcharges. They will validate against contractual obligations and work with suppliers to correct any billing anomalies.
• Provide constructive feedback: Don’t put the blame on the team for missing billing errors or shame the suppliers for making mistakes. Many times these are system generated issues; although both stakeholders and account reps should be completing reviews to catch these inaccuracies. Procurement should offer insight into best practices for completing billing audits and suggest more formal assessments from the supplier accounts team to ensure not only correct billing but to motivate opportunities for price concessions or recommendations for innovative technology refreshes.

Procurement can be a great asset to IT and telecom teams in support of overcoming challenges, better internal sourcing processes, and achieving the best bang for your buck!  However, if Procurement wants to be considered an ally, they need to promote themselves as an additional resource to the team and not someone trying to take control.