Today’s guest post is from Torey Guingrich, a Project Manager at Source One Management Services, who focuses on helping global companies drive greater value from their Procurement expenditures.
One of the challenges Procurement can face when working within the typical IT category is working on IT-related services that are used to support functional areas. Think of the marketing group or supply chain function; there are a number of different systems or software products that support those departments, but how clear is ownership of the solution between IT and the business group or function that the solution supports?
The answer to that question can vary across companies, across industries, and even across those within IT and the department utilizing the solution. Given this ambiguity, it is critical for Procurement to ensure representation from both and IT and the functional group for sourcing efforts that involve products and services that are not “purely IT”.
Does Procurement really need to be involved?
For many organizations, IT groups tend to work in a vacuum or keep their sourcing efforts separate from Procurement. While there are nuances that Procurement professionals need to be aware of and navigate within IT, there is clear value that Procurement brings to the table, especially when other functional departments are involved. Those in Procurement should be comfortable working with different areas with differing needs and finding a cohesive path forward. Procurement also brings market information (suppliers, price points, service levels) that IT may not be as focused on, but that could be critical to the overall solution. IT groups can at times limit themselves to certain suppliers for system or software solutions, but there may be alternate suppliers that easily integrate, or provide enough value to justify the effort required for working with disparate suppliers or systems. Procurement can bring that perspective forward and champion the needs of the business to balance the costs associated with IT change.
How do I know if something is “purely” IT or not?
When we look at organizations today, there tends to be a number of software and hardware suppliers that are categorized in spend data as “IT,” but fulfill a more functional or business need. When looking at spend and suppliers considered as IT, be sure to think through your organization’s end users and how the program or solution is being used by different groups. Marketing, HR, supply chain/logistics, and finance are all key functional areas that likely use some form of software to support their processes and should have a principal role in selection, whereas supplier selection for hosting or PCs and related consumables may be made more centrally within the IT area.
How do I get IT and functional departments to work together and come to a consensus?
When working with multiple stakeholder groups, no matter the departments involved, it is important to establish roles and responsibilities from the onset of the initiative. A key to working with these two groups is to consider what is most important to each group. Likely the functionality, ease of use, and flexibility of the solution will be top of mind for the functional department, whereas IT may be more focused on integration and hosting requirements, continuity with the company’s overall technology strategy, and licensing/purchasing models. Beyond IT and the functional area, discuss what other stakeholders may be affected or if other IT systems (and those who administer them) would be impacted downstream in the process. Focus the two (or more) groups on the goals for sourcing and what criteria is going to drive supplier selection – this will help to ensure that any critical issues or “deal-breakers” are identified and don’t come up later in the process. Each group will likely have their own set of requirements and criteria that need to be aligned and prioritized to ensure they are not in direct contrast with each other. Ask each group to look at their requirements and define the priority of each (e.g. rank as nice-to, prefer-to, or must-have) to ensure the core solution encompasses all must-have requirements.
Who ultimately makes the decision?
This is likely going to depend very heavily on your organization’s priority of functional and IT requirements. Ideally, Procurement can help bring these two groups together and drive to a decision point that all, including Procurement, can agree on. When the solution is business critical or the department relies heavily on the given product/service on a day to day basis, the business function is likely to be the lead in terms of making a decision, but IT will in any case need to validate that the solution will work from an infrastructure and support position.
While most may think of Procurement as a cost-reduction engine, we are uniquely positioned to enable relationships among different groups within the organization. Especially when working with software and hardware systems to meet business needs, it is critical to bring in IT stakeholders at the onset of the process to enable a more efficient and effective sourcing process that balances the needs of IT with the needs (and wants) of different functional areas.