Source One’s IT and Telecom team has spoken, written, and generally waxed-poetic about the challenges with - and benefits of - building a strong IT and Procurement partnership. But similar to the procurement function as a whole, before you can start applying these best practices, it's important to take a step back and examine the maturity of the current (if any) IT procurement support. As with general procurement operations, there is not a quick fix to get to “best in class” and starting with incremental improvements can go a long way in advancing the value that Procurement brings to IT.

To assess IT-specific procurement maturity, we'll leverage the Procurement Maturity Model that was introduced by Source One in 2018 and understand how that model applies to IT Procurement:

Laggard (Tactical): When we talk about “Laggard” procurement teams it’s those that are stuck in the function's tactical past…Cutting costs and making purchases on a reactive, as-needed basis, they're helping keep the lights on…

When IT Procurement is tactical within an organization, they are typically working in an extremely reactive nature to IT spend management. Typical activities may be simply processing renewals or purchases, pushing paperwork without adding value to the process, and generally just reacting to what IT and its suppliers are pushing. Tactical IT Procurement does very little to understand holistic IT supplier relationships and the criticality of those suppliers on the organization’s infrastructure and systems.

Traditional (Operational): Traditional Procurement is where purchases are still made on a largely reactive basis with little thought to anything other than hard dollar cost...Managing inventory, processing purchase orders, and renewing contracts constitute the bulk of their daily workload...

When applied to IT, operational procurement may have a sense of when larger software or maintenance renewals are due, have a role in managing and maintaining POs, and take on maintaining hardware and software inventories, but little strategic or long-term value is being added. I think of these groups as “record keepers” – they’ve started gathering and maintaining the information and inventories to make strategic decisions, but they don’t have the time, resource, and/or capabilities to turn that information into proactive supplier, contract, and service management.

Augmented (Strategic): These Procurement departments enjoying a good level of executive support and buy-in, employ a strategic sourcing process that takes into account far more than price alone. It's earned internal respect by optimizing supplier relationships, providing for greater spend visibility, collaborating with other business units and perhaps, most crucially, gathering metrics to report on its success.

For IT Procurement, strategic work begins when procurement teams turn their “record keeping” information into actionable strategies and discussions that inform and define a holistic IT category plan. Strategic IT Procurement works with the IT department to understand the organization’s technology roadmap, anticipating where and when sourcing, negotiations, and supplier/contract management can benefit and support IT’s short, mid, and long term goals. By shifting from a reactive to a proactive approach, IT Procurement starts to add value and become a true partner of IT. This is where Procurement should begin expanding the IT areas/subcategories it supports. Where tactical or operational IT Procurement may have an eye on hardware and software purchases/renewals, strategic IT procurement understands and supports oversight of managed service providers, staff augmentation, infrastructure and hosting needs, and project-based products and services - all the while seeking opportunities for optimization and consolidation, and establishing a framework for KPIs and metrics around supplier performance.

Consider that many IT suppliers do not sit in silo-ed subcategories as we may see in other areas of indirect spend – many service providers within IT can resell hardware and software solutions, and many “traditional” hardware and/or software suppliers offer services and are expanding vertically within their own supply chains. Given the range of products and services that IT suppliers can provide, it’s important for someone (read: Procurement) to have a holistic view of spend and service performance to inform negotiations and long-term relationship planning.

World-Class (Innovative): These Procurement teams occupy a fully-strategic, highly-valued role within their organization. They have the ear of the C-suite and are trusted to drive organization-wide strategic initiatives. Change is not merely a goal, but a cultural imperative for everyone across the business. A culture of continuous improvement enables them to stay on the cutting edge of emerging technologies and consistently refine their own internal processes.

Innovative IT Procurement teams are in lock-step with IT and are applying procurement best practices with consideration for the IT department’s performance goals and technology roadmap. These procurement folks understand and are able to balance optimizing costs, mitigating technology risks, and supporting IT as they look to innovative solutions/suppliers and are actively engaged by IT based on the value they provide to vendor selection and management processes. Similarly, Innovative Procurement ensures IT is brought into sourcing events and supplier selection decisions within other areas of the organization to ensure alignment with IT’s current and future requirements.

It’s worth considering that the level of maturity that any IT Procurement team can achieve is going to be dependent on how mature the IT function is within your organization. By asking the right questions, Procurement can help IT to be more proactive in anticipating and meeting the changing needs of the organization and developing a longer term vision for the technology roadmap. Consider where your IT Procurement team is on the maturity curve and take active steps to strengthen the value proposition to IT. For many, the first step is having a conversation with IT and beginning to form collaborative working relationships with key stakeholders. Simply start by engaging stakeholders with the goal of understanding their priorities to form a solid foundation for longer term IT and Procurement collaboration!
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Torey Guingrich

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