Information technology permeates every corner of the organization, so it just makes sense for procurement and IT to be aligned—meaning, working together but remaining as separate entities. Unfortunately, traditional corporate silos can prevent this from happening, often to the detriment of both departments.
“By finding common ground, IT and procurement can team up to bring several lucrative improvements to the broader business, including far more than just cost savings, risk prevention, and increased revenue contribution,” Sam Rea points out in Capitalizing on the Common Ground Between IT and Procurement. “Indeed, a working partnership between procurement and IT can be the foundation for building a successful digital transformation.”
Consider what goes into repairing computer equipment, for example, or installing a new telecom system across multiple facilities. For these processes to go smoothly, and for the internal “customers” to get what they need, both IT and procurement must be involved. The same cohesiveness must kick into gear when companies implement new technology—a process that necessitates good vendor selection and management.
“A technology selection process will run most smoothly when procurement and IT combine their strengths,” Rea writes. For example, IT can accurately appraise the technology and buyers can leverage their sourcing negotiation expertise. “When it comes to contracts, IT better understands the risks (e.g., preparing for the possibility of software license audits),” Rea concludes, “and procurement has the contract lifecycle management expertise to maintain milestones and manage deliverables.”
The Four Makings of a Power Couple
Like anything in life, bringing together two powerful forces onto the same page and then asking them to work in tandem can be a challenge in and of itself. Throw the rigors of running an IT team and a successful procurement department in today’s evolving business world into the mix, and the “convergence” of the IT-procurement power couple becomes that much more difficult to create.
The good news is that there are specific steps both sides can take to better align with the other and capitalize on one another’s strengths. Here are four of them:
1. Open up those lines of communication. This one may sound obvious, but it’s often easier said than done. “When procurement knows what types of products IT actually needs, and why they are essential to the team, time between the initial procurement request and the fulfilled solution will only improve,” ScoutRFP’s Andrew Durlak writes. “With greater context, the procurement team can make sure they’re sourcing the most appropriate technology for the job, which will in turn make the IT team more efficient.”
2. Help them understand each other. Your IT team should already understand the importance of aligning technology to business needs. But if not, make sure IT has a strong understanding of procurement and finance function objectives and the key technological challenges faced by these vital business partners. “While there could be competing priorities,” CIO points out, “it is important to drive the decision-making process based on an elevated understanding of the overall business strategy and align the enterprise’s tech capabilities with business goals.”
3. Play up procurement’s value proposition. In her article In IT Buying, Does Procurement Play Any Role at All?, Linda Ashok outlines five key benefits that procurement brings to the table for IT, and how the two can work together to leverage them:
- Flexible contracts: Procurement can help IT structure flexible contracts with vendors in which services or equipment requirements can rise and fall depending on the company’s business performance.
- Consistency: Procurement helps streamline buying processes that can be easily duplicated and used over and over again.
- Eye for detail: Buyers know what parts of standard vendor contracts need to be reworked in order to suit the company’s needs.
- Vendor leverage: “Experienced procurement pros know the art of nurturing vendor-relationships,” Ashok points out, and how to contribute to sustainable business partnerships that help organizations benefit from idea exchange and collaboration.
- Risk and governance: Procurement is pretty good at predicting and forecasting events (i.e., a merger, a bankruptcy, or a supply chain interruption) and can help IT do the same.
4. Let everyone have a say. An ideal solution from procurement’s point of view may not be the best solution from IT’s standpoint, and vice versa. “It’s important that buying decisions be made together with input from CPOs and senior procurement leaders, who likely have perspectives derived from experience within their respective functions,” CIO notes. “[IT] in turn can help procurement identify and deploy new technologies powered by AI, big data, IoT, blockchain, etc.”
When they come together, procurement and IT can create a pretty powerful force in even the most competitive business environment. By working toward common goals, acknowledging each other’s strengths, and aligning their objectives, these two departments can create a win-win scenario for themselves and for their organizations as whole.