Feb 07, 2021

IT procurement in 2021 and beyond: how to be effective

ITprocurement
Bain
suppliers
Strategy
Georgia Wilson
5 min
From cybersecurity to the cloud, Business Chief investigates how organisations can be productive in their IT procurement strategies in 2021 and beyond
Business Chief looks at how organisations can be effective in their IT procurement strategies in 2021 and beyond...

Defined by The Chartered Institute of Procurement and Supply (CIPS) as “the processes and procedures inherent in good, responsible procurement to acquire technological products and services that meet the needs of business and supply chains”, the day-to-day tasks of an IT procurement executive may include market research, pricing negotiation, terms and conditions agreement for services and status of purchase communication with internal customers. 

“With an effective IT procurement policy in place, any business can execute its projects seamlessly,” adds Bao-Viet Lê, partner (Middle East) at Bain and Company.

Breaking down the current trends in IT procurement

Currently in the world of IT procurement there are four key trends emerging: cognitive computing, cybersecurity, automation and the biggest being cloud. 

“Organisations around the world are moving away from legacy, on-premise, company-owned data centres to leveraging the massive computing power of hyperscalers,” comments Tony Harris, global vice president, Business Network Solutions, SAP. “With businesses having to store large amounts of data, cloud computing assists not only in storing but also in processing and seamlessly transferring data without the use of external devices,” adds Lê. 

When it comes to cognitive computing, Harris comments that “the second is a focus on cognitive computing, inclusive of big data analytics, artificial intelligence (AI), machine learning (ML) and robotic process automation (RPA), given the enormous benefits it can yield when done right. These technologies can help discover business insights that might otherwise not be possible due to the huge volumes of data they can analyse quickly. These are also increasingly being used to automate repetitive tasks, enabling more staff to be freed-up to focus on strategic, value-added work.” 

Adding to Harris’s comments, CIPS states that “recent research highlighted that in the next five years businesses are looking at implementing autonomous vehicle technology (60 per cent); robots (52 per cent); augmented reality (47%) and 3D printing (44%) making this new digital business world very exciting.”

Finally, cybersecurity and risk. “As more of our lives go online, and more business processes extend beyond the four walls of the organisation, there becomes a heightened level of IT risk. Organisations must do everything they can to protect and defend against cyber-attacks and data theft as this is not only extremely damaging to their brand reputation, but can also be very expensive as a result of government and industry body fines,” states Harris. 

Current challenges faced by IT procurement executives

When it comes to the challenges faced by IT procurement executives CIPS explains that “the market is in a state of constant flux, in which hundreds of products are launched each day. As a result prices can fluctuate widely. We’ve seen changes of 66% in a day. It’s a time-consuming task to keep on top of such trends. Sometimes ‘good deals’ go quickly and there may not be enough stock to satisfy your particular need which is frustrating.”

Other challenges highlighted by Lê include manual, operational activity and the capability to keep on top of digital IT Procurement transformation. 

“Typical challenges faced by IT procurement include a lot of manual, operational activity that take a lot of resources, large quantities of data across disparate sources; inconsistent taxonomies and KPIs, and increased need for collaboration across business partners and suppliers. In addition, many functions are advancing quickly in their digital capabilities, IT procurement will need to keep up, particularly when it comes to P2P suites, automated spend compliance tools, supplier portals for increased data sharing, and artificial Intelligence (AI) to inform decision and ID spend opportunities.”

Adding to the challenges outlined by Lê, CIPS reflects on the effects of challenges created by COVID-19. 

“The need to build stronger, more resilient businesses and supply chains is uppermost in everyone’s minds as the effects of the pandemic are still being felt and IT systems play an integral role. But without end-to-end-transparency across all tiers, suppliers and teams, potential weak points will remain hidden and no amount of digitalisation can solve the problem of ignorance of slavery, turning a blind-eye to fraud and corruption or not achieving sustainability goals. 

"Any digital programme must encompass the core values and needs of the business and align to responsible business practice, otherwise the benefits from IT systems will not fully justify the investment.”

Getting the most out of IT procurement

“The traditional role of IT procurement is evolving, driven by both internal and external forces,” says Lê, who explains that internally organisations are striving to be “faster, better and cheaper, but still limit risks, with no additional funding,” while externally, “the supplier landscape is changing, sourcing of solutions not products and new ways of working are emerging.” 

To address this evolution, Lê adds that “a dependable procurement system is one created to improve accuracy, efficiency and speed. To ensure that the IT procurement is effective, it is essential to ensure that everything functions competently as well as cost effectively. Additionally, unclear details and specifications, lack of transparency, inflexible suppliers and team, inaccurate date, collectively, could hamper the procurement process.” 

With this in mind, Harris details five best practices for IT procurement:

  1. Ensure business cases focus on total cost of ownership (TCO). IT procurement can often have ‘hidden’ costs.
  2. Align the solution with the needs of the business. Projects that require minimal people and process change carry less risk and tend to be more successful than those that aim for significant transformation. Where projects require substantial transformation, this is best done in phases to help ensure that each phase is successfully completed before introducing the next.
  3. Choose solutions that can easily adapt. Businesses must now be more agile than ever before and any technology solution underpinning the business needs to be capable of the same.
  4. Include IT experts and other relevant business stakeholders early in the process. Too often the business line makes a selection on a piece of technology and then brings IT into the process at the end only to find that the technology does not meet corporate technical standards in some way. Likewise, having IT drive the process with no early involvement from the business stakeholders can result in a solution that is a perfect technical fit but doesn’t address the needs of the business. IT procurement must be a marriage of IT and business to achieve optimal outcomes.
  5. Where possible, seek to build strategic relationships with the supplier. This will provide potential co-innovation opportunities and help accelerate issue resolution should any arise.

Adding to Harris’s five best practices, Lê concludes that “three key themes emerge: smarter procurement with advanced optimisation of procurement spend; automation and agility, enabling greater efficiency, faster processes, fewer errors, better controls and stronger risk monitoring; and frictionless collaboration, enabling increased collaboration (and agile), enhanced stakeholder experience.”  

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