Procurement possibilities in consolidation
Suppliers should step up to help customers consolidate their IT procurement, says Steve Nicholls
Every organisation is being asked to streamline approaches or re-engineer processes to save time and money. One area that continues to be a major problem for organisations, in my opinion, is IT procurement.
The IT market is volatile and dynamic, making it difficult for end users, specifiers and buyers to choose well. Swathes of time are spent managing suppliers, manually comparing prices and securing product, and then there is procurement administration and invoicing.
As organisations continue to chase the best prices in an ever-changing market, the likelihood of achieving optimum prices is more difficult. Teams will be rethinking their approach to buying IT.
The more entrepreneurial organisations will adopt a cutting-edge yet common sense consolidated supply chain framework. With a consolidated supply chain, organisations tender for an IT supplier to deliver a managed service. This meets EU directives around procurement.
The winning supplier manages the entire procurement process – from purchase to delivery, implementation, imaging and maintenance. However, to achieve sole supplier status there needs to be robust benchmarking and significant overhead savings.
As the supplier buys large product volumes across its customer base, the achieved prices will better than those obtained directly by the customer.
Outsourcing this also saves time and money while freeing internal resources to focus on core strategies and IT development.
A more streamlined approach to the supply chain of course moves the risk from customer to supplier. So draw up a list of risks inherent in the service, including financial, technology and installation. The potential cost should be established as well as the risk probability and any possible mitigation of those risks.
It may then be better to try to move or reduce the risk.
Customers only need to do one monthly invoice, rather than a number of invoices from multiple suppliers. This obviously benefits cash flow and reduces procurement overheads.
It also provides for a corporate social responsibility methodology as it can help the organisation go green. This is an area that often creates enormous management challenges for overstretched multi-tasking IT managers.
So it is procurement suppliers who must demonstrate that they are up to the role. Proof of large corporate technical expertise and directly associated managed services should be the norm.
Firms should have strong relationships with manufacturers, offer innovative approaches to service delivery, financing options and the like. A supplier should also take time to establish what the customer wants, analysing their requirements and understanding the needs of the key stakeholders.
Steve Nicholls is a director at CSA Waverley