Pulling Value from Complexity: IT/Procurement Strategic Collaboration

One of the most common IT sourcing challenges our clients' face is how to optimally align sourcing objectives with operational and technical objectives, and vice versa.  That's not to suggest that it can't be done is is insurmountably difficult, or that expectations need to be low.  The root of the problem with making changes in an IT environment financially and operationally efficient is a lack of information.

Increasingly, what we've traditionally called "IT" has pervaded enterprises with little or no oversight or insight by the traditional IT gatekeepers.  Further, the nature of what we call "IT" today has become a more complex web of inter-dependencies than ever before.  To make matters worse, it's not just the infrastructure and applications running in the enterprise, but the suppliers and the relationships and contracts with them that need to be considered as well.  Even minor changes can be just the first domino to fall in a series of otherwise "unpredictable" concerns downstream.  Unpredictable, that is, without the right information and analysis.

The intuitive solution to a lack of information would be to close that gap.  To gather the needed information, analyze it, and plan for it.  But in most organizations, that's not practical, due largely to time and resource constraints.  Instead, the ambiguity is accounted for with ambiguous planning.  Timelines are setup around stage gates based on specific points in time.  While it could be worse, there's a lot that happens between each gate that's largely unaccounted for in a plan, which means room for unnecessary risk and cost.  

Instead, a good plan will factor current state and planned changes usually starting with the technical/operational priorities, and then factoring current, new, and changing costs and other constraints into the equation.  The latter being where the information gap typically lies.  However, investing the time and effort into uncovering and planning for these factors yields a significant return.  In doing so, often plans can be adjusted and prioritized with minimal or no operational impact.  In other cases, compromises may be made on the operational side to realize substantial financial benefits.  And what's more: more information allows for increases specificity.  This means that all of the time between stage gates can be meticulously accounted or and planned around.  Often, the timing of those stages may even shift as diligence reveals opportunities to begin certain activities sooner, or to hold off on others to shed unnecessary cost along the way. 

Optimal planning is challenging or impossible for most IT organizations to do on their own.  Their focus is on keeping the lights on and typically that's all they have time for.  Even given more time, other priorities need to come first and further, even with ample time and resource the skill set to efficiently complete the diligence and research required to form a long-term, complex plan.  All that said, this side of the planning process should be coming from Procurement.  In order for that to happen, though, a collaborative relationship is necessary, which, unfortunately, many Procurement organizations lack with their IT groups.  As best, there is reactive Procurement support of IT needs.  But, this introduces an opportunity for Procurement to do what it does best and develop a stronger relationship with IT that creates a proactive management approach that will extend months or years.  And if Procurement can't get a seat at the table, it's a perfect opportunity to bring in a partner who knows the IT space well, can speak IT's language, and can liaise between the business and the IT organization.  Doing so will open up dialogues and act as a catalyst to further, close collaboration for the future.  If you'd like to discuss how your Procurement group can collaborate and plan with IT, contact us.