Similarly, IT has been under pressure of its own to reduce cost or minimally do more with the budget they have, all while business requirements grow and demand for innovation increases. IT has evolved to address these challenges…sometimes. Generally, we see IT garner more leeway on budgets than any other group. Maybe this is because IT is the lifeblood of the organization: increasingly, everything a company does is facilitated by a multitude of facets of infrastructure and services for which IT is responsible. Maybe this is also because it is complex: if it cannot be understood it can’t be optimized, and those who do understand it are measured far less on a basis of budgetary responsibility and far more on uptime, security, innovation, and management of changing requirements. But, the days of leeway on IT budgets is waning. It is simply too large a spend to ignore, is growing all the time, and it is too important to the organization to let risk go unmanaged.
We are experiencing a convergence. One in which Procurement needs IT in order to find new opportunities to reduce costs enterprise-wide and one in which IT needs Procurement to complete primary objectives within budget. Even mature organizations where IT and Procurement are collaborating, a great deal of activity is focused simply on keeping the lights on, reactive, or both. In some cases, large strategic projects happen in collaboration between IT and Procurement. In very few do IT and Procurement share the same roadmap. One that is driven by common goals and is coordinated around maintaining steady state management of existing spend and tackling technology transformations, process changes, and infrastructure overhauls proactively.
Whether Procurement is still working on getting a seat at the table with IT or a longstanding relationship exists, both organizations need to leverage one another’s resources and expertise in order to fulfill their respective roles in ensuring a strong return on their investments and continuous improvement. This is not something that will naturally occur by scheduling periodic planning or status sessions. It also will not yield optimal nor long-term results if efforts are based on a short-term viewpoint like a simple spend analysis and immediate action on low hanging fruit and quick wins. It requires a long-term focus with a roadmap that accommodates short term benefits while laying the groundwork to realize improvements over a three to five year time horizon and the necessary governance to adapt and recalibrate as time goes on. For help getting started or taking your IT and Procurement collaboration to the next level, contact Source One today.