Leadership & Collaboration

Webinar Notes: Bridging the Gap Between IT and Procurement

Webinar Notes: Bridging the Gap Between IT and Procurement

This week’s webinar notes are from the Next Level Purchasing Association’s January webinar on IT and Procurement. Bill Dorn, the VP of Operations from Source One Management Services was the main presenter. You may also know Bill as the co-author of Managing Indirect Spend with Source One’s Joe Payne. Although the full event and presentation are only available to NLPA Premium members, I will share an exclusive excerpt of the audio in my weekly procurement update on Blog Talk Radio update on Monday, February 10th.

In this event, Bill took what could have been a stock topic and provided a unique and interesting perspective on the challenges associated with bringing IT spend under management. What are some of procurement’s most common complaints? We are brought in too late be effective. When we are finally pulled into a purchasing effort, the internal group spearheading the effort just wants us to rubber-stamp their purchase order.

One of my take-aways from this event is that procurement and IT are in the same boat more than we realize. Just like procurement, IT is often consulted too late in the process and considered more of an administrative check box than an internal resource for the improvement of results. If we should naturally be allies, the likely culprit for any existing disconnect between IT and procurement is the difference in our performance metrics. Procurement is incentivized to generate savings and increase spend under management. IT on the other hand, is rewarded for 100% uptime as well as meeting organizational needs for automation and connectivity.

Although we are used to associating a category of spend with a function of the organization, we would be wise to remember that IT spend does not always originate with IT. Many other functions seek out and implement their own solutions, including sales, marketing, operations, and human resources. Frustrations and broken processes notwithstanding, procurement’s best bet is to form a solid working relationship with IT. Since the rest of the organization is likely to feel that they’ve done enough by consulting one outside function (IT in this case) they are probably not going to involve procurement as well. If procurement and IT make a pact to bring in the other as needed, each function can ensure that their targets are met, and their role fulfilled.

The technology solution landscape changes rapidly. One of the unexpected outcomes of this is a decision by many category-centric procurement organizations not to have a dedicated resource for the IT category of spend. As resources run short, it is hard to justify keeping someone in house that will struggle to keep up with the changes in platforms, delivery models, and providers of IT solutions.

That doesn’t mean that there is no benefit to putting IT spend through the approved procurement process. On the contrary, there are a number of opportunities that are often missed by internal groups that think they can manage the requirements, proposals, negotiation, and contracts alone. In many cases, a need is determined in response to a specific solution. As a result, the requirements are so closely based on that one solution that no other suppliers are able to meet them. In other cases, the requirements may be met by a solution in house – either as is or adding on an additional module. Solution providers that believe they have the edge are certainly not motivated to negotiate.

One possible answer to procurement and IT’s common challenges is setting up a shared services model. By working with Finance (and sometimes demonstrating the value through a pilot program) procurement and IT may be able to reorganize and realize efficiencies while increasing how often they are leveraged by the rest of the organzation.

How is IT spend managed in your organization? Do you have a good working relationship with IT or is it contentious, weighed down by years of mismanaged projects and general bad blood? Share your thoughts by commenting below or by connecting with us directly on LinkedIn, Twitter, or Facebook.

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