The silos that exist between procurement and information technology (IT) departments at many organizations have been well documented. They’ve also been identified as major sticking points for any company that wants to streamline and “flatten out” its global supply chain in today’s competitive, risk-fraught marketplace. The problem is that getting these two important players to work from the same playbook isn’t always easy, nor is it a natural blending for the people involved.
The bottom line is that synchronizing procurement and IT—along with operations, logistics, manufacturing, and fulfillment—helps companies better anticipate demand, create accurate forecasts, and get the raw materials that they need to be able to effectively meet customer requirements.
The Situation is Improving
According to a new CIO-CPO Report from ProcureCon, the overall state of collaboration between IT and procurement is improving as a whole in response to macro trends in the technology market.
“Procurement and IT leadership will often require a closer working relationship to contend with imperatives to digitally transform,” ProcureCon points out. “In situations where IT and procurement enjoy a solid relationship, one of the most often-cited keys to success is the ability for procurement to demonstrate understanding of category-specific knowledge.”
Even in companies where procurement and IT may not be highly integrated, it’s becoming more and more important for the former to have a seat at the table during technology sourcing, ProcureCon points out. “The rapid pace of innovation in today’s technology market means that there must be a balancing act when sourcing between leveraging economies of scale,” the company explains, “and retaining the ability to innovate and seek out nimble solutions.”
And where IT has traditionally been in the driver’s seat for all things related to a firm’s technology strategies, more organizations are now getting strategic sourcing involved in the process. The key drivers include the need to manage complex negotiations and an overall mission to break down organizational siloes that lead to disjointed business approaches.
“The most commonly echoed concept around developing a closer working relationship with IT is being able to demonstrate value,” ProcureCon points out in its report. “What this means is proving that procurement is going beyond the cursory idea of cost control and verifying the wording of licensing, and instead actively identifying how agreements can be tailored to meet the specific needs of the business more efficiently.”
5 Ways to Align Procurement and IT
Procurement professionals who want to leverage these strengths and break down the silos that may exist between themselves and IT can start by:
- Learning to speak the same language. This is a requirement in building trust with IT. “Without insider knowledge of IT terminology, it can be very difficult to maintain credibility and make a case, even in the event that there is an opportunity to create value,” ProcureCon notes.
- Not letting suppliers circumvent procurement. They may opt to circumvent procurement instead and deal directly with IT, thus creating a situation where the peak level of influence sourcing can achieve is diminished. “For this reason,” ProcureCon states, “it’s critical to bring at least some level of IT expertise into the sourcing group.”
- Developing a strong understanding of procurement objectives and the key technological challenges. Drive decision-making based on an understanding of the overall business strategy and align the enterprise’s tech capabilities accordingly.
- Coming to terms on business goals. IT should work closely with procurement to understand expected outcomes from a tech standpoint. “Identify KPIs and establish processes to measure progress,” ProcureCon advises. “Specify the course correction if needed to realign with new goals and objectives.”
- Making all buying decisions as a cohesive unit. Procurement should share its perspectives and then allow IT to identify the right technologies to accelerate the organization’s digital transformation goals.