5 Tips for Efficient IT Procurement
Insight 30 Jan. 2018

5 Tips for Efficient IT Procurement

The rapid emergence of new technologies, the opacity of the prices of the main market players, the shortage of IT purchasing experts are all elements justifying a pressing need to bring performance and professionalism to IT purchasing.

1 / Provide the Company With an it Purchasing Policy Shared and Validated by All Stakeholders

In large companies, with multiple geographic locations, IT purchases are often managed directly by the countries where the business lines are located, without real coordination. Each country, in line with its own development, has been able to set up an IT department which is implicitly in charge of managing its expenses. And so many of them are off the purchasing radar screens and not covered by any coordinated policies.

In collaboration with the IT department, IT purchases must therefore:

  • Define the policy to be adopted in each segment in connection with the structure of each supplier market, – centralization, global or regional, coordination, 100% local
  • Calibrate an RACI on each phase of the purchasing process: budget forecast, purchase, procurement, expenditure control, SRM
  • Set this policy to music through transversal animation of the various entities of the company: countries and / or business lines

2 / Arm the Purchasing Department With Specific Skills in IT Purchasing

Under the term “IT spending” is in fact hiding a veritable maquis: nothing in common between spending on hardware, clouds, software or services.

It is in this bush that we come across some very big, unmissable names: Google, Oracle, Microsoft, Salesforce, to name a few.

It is also in this maquis that we find unscrupulous salespeople who leverage their expertise and the apparent complexity / uniqueness of their solutions to sell more and more.

It is therefore vital to bring together buyers who are experts in their field to develop a peer-to-peer exchange by best understanding the interests of sellers, the sales cycles and alternative developments that emerge.

The expert IT purchasing profile is a rare resource with long training. It is illusory to rely on internal mobility to quickly have such a skill. Only the search for external profiles in mature IT purchasing organizations can meet a pressing need.

3 / Switch From One Mode by Allocation to a Mode by Use

The current period is more one of fiscal restraint on indirect spending, of which IT is mostly a part, as the complexity of technologies is constantly changing. The salvation lies in adapting the offer to the real needs of the company rather than in the negotiation of such and such material or support.

The principle consists of switching from a purchasing model in silos – equipment, service – to a full cost model indexed on use (IT as a service), therefore to limit the expenditure to just what is necessary and above all to put it subject to activity.

This approach makes it possible, on the one hand, to directly connect the cost of IT to actual use and, on the other hand, to make the distribution of costs between the various internal customers objective, this distribution being most often in the classic model. , carried out by means of more or less arbitrary keys.

4 / Strengthen the Control of IT Spending

In a context of constant increase in IT expenses – + 4% per year on average, + 4.5% expected for 2018 – in particular due to digitization, many of these expenses not being managed by purchasing and being directly in the hands of internal customers – a large part of CIOs, but also businesses that may have specific needs – monitoring, whether budgetary, contractual or functional is a real headache. In particular, having a consolidated view of IT costs is often a challenge.

Two points are particularly lacking:

  • The budget monitoring itself
  • The vision of the adequacy between the expenses actually incurred and the
  • Planned budget, and the control of invoicing before payment

The first point begins with the establishment of a homogeneous and precise classification of expenses so that the allocations are clear, easy to achieve and aligned between the entities.

The second may require the implementation of dedicated tools, which will never completely replace human control, as service providers often show ingenuity (not always voluntary) in invoicing.

In addition, the establishment of a contract library and a SAM (Software Asset Management) are two examples of particularly relevant control tools for IT spending.

5 / Develop Agility to Capture Innovation From "Iconoclastic" Players

The IT ecosystem is made up of a multitude of players of a heterogeneous nature. Many purchasing procedures, purchasing processes, rules particularly in risk management, evaluation criteria, are not adapted to this diversity.

For example, it is common for supplier qualification rules to be incompatible with working with start-ups:

  • Ability to present 3 years of balance sheets,
  • Significant level of potential dependence insofar as the activity of the target company is in its infancy,
  • Lack of certification

Capturing innovation is therefore perceived as an exercise presenting a significant risk, which mature organizations are not necessarily ready to take.

Agility requires the definition of specific processes in order to be able to collaborate in a different way with companies having “exotic” configurations, even if it means strengthening certain aspects to secure collaboration:

  • Co-development model
  • Exclusivity
  • Incubation
  • Intellectual property

Often, the effectiveness of this type of measure is increased tenfold by setting up a dedicated organization within purchasing, with specific skills, not only in new technologies, but also in the legal or financial field to better support these fragile young shoots.