How to put together an IT procurement strategy

Steve Evans

Monday 10 November 2014

Creating an IT procurement strategy is a lot more complex than just deciding what your business needs to upgrade or refresh and then going out and buying it. All parties have to be on board from the beginning, and simply choosing the cheapest supplier may not prove to be the wisest decision.

Spending on the rise

There’s no doubt that the global economic crisis put a stop to a lot of IT spending over the last five or so years. As money dried up, businesses across the world tried to squeeze more value out of their existing assets; software continued to be used beyond its intended life and the life-cycle of hardware was extended time after time.

Now, however, there are signs that spending is beginning to return to the IT department. Many economies across the world are now in recovery mode, and businesses are once again looking at updating their technological infrastructure. Analyst company Gartner believes IT spending during 2014 will have increased by 2.1 per cent compared to 2013, with most of this increase coming from spending on devices and data centres.

It’s likely that PC refreshes will currently be high on the agenda for many businesses. The end of support for Windows XP means that enterprises have to get off that platform as soon as possible, with Windows 7 being the most likely destination, ahead of Windows 8 or the upcoming Windows 10. Upgrading to a new operating system enterprise-wide is often best achieved via a total PC hardware refresh.

Buying right

But, of course, IT procurement isn’t just about hardware; software – such as ERP, analytics or CRM systems – needs to be bought or refreshed. But, according to Dale Vile, research director at Freeform Dynamics, whether it’s hardware or software that is being purchased, the key is to make sure a procurement strategy fits in with a business strategy.

“You can’t have an IT procurement strategy without an IT strategy, and you cannot have an IT strategy without a business strategy, so really you need to get your act together at a higher level before you start to make decisions,” he states. “Whatever you are procuring, you need to know what you are trying to achieve before you can sensibly put together a plan.”

Fundamental to this is including in the process anyone who will ultimately benefit from the new technology – meaning whoever gets the new PCs, or whoever will access the new ERP system or CRM software, for example.

IT should of course be involved at this stage, as should the person or team who will eventually sign-off on the procurement. It’s also increasingly common for a representative of the legal department to be involved, particularly if the business is considering a cloud-based deployment, where compliance becomes a big issue.

Getting all parties to agree is the first step; once that’s achieved it’s then a case of scouting out the field to see what is available. According to Vile, it’s worth looking beyond what the vendors and services providers offer at first.

“Get a couple of vendors in to give a pitch, but also speak to industry analysts and other people or companies who have dealt with the suppliers you’re considering,” he explains. “And use resources like LinkedIn and other networking groups or events to see what they say.”

Optimising spend

Although it must be tempting to simply find the cheapest supplier, that is almost certainly a recipe for disaster. Obviously, the price a vendor is offering should be taken into consideration, but, as Vile points out, there are other elements to consider.

“There are other things to look out for, such as bundling. If you’re looking to optimise your spend, you can try to get more for your money,” he says. “So some vendors will bundle elements such as some BI or analytical or mobile capabilities that would otherwise be a separate cost. And, of course, the support offered is key as well.”

Developing a relationship with the chosen vendor is also something worth considering. Being on friendly terms with the account manager, or whoever the point of contact is, will help when it comes to support and future upgrades.

Overall, the key to a successful IT procurement strategy is to ensure all the relevant departments are in agreement, and that the ultimate aim is to improve the business in some way. So, for example, rolling out new mobile devices such as smartphones, laptops or tablets, will cost money but will make the workforce more productive while reducing travel costs.

“Everything needs to be done in a business context,” Dale Vile concludes. “Keep things in perspective; IT spend should never been considered in isolation, because you’ll end up making crazy economies in IT that are counterproductive in the wider business picture.”

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