The procurement process of an IT department is a continuous process that involves the purchase of IT assets that efficiently drive the organizational goals. These assets comprise hardware and software, and services. IT services include strategic and administrative responsibilities, cyber security services, telecom and cloud services. Each business needs to manage its IT procurement process in a style that fulfills its specific needs without exceeding its constraints.
IT leaders should always ensure that the procurement process reflects the company objectives by achieving the most out of IT spending. The CIOs and CTOs of any company are actively involved in making informed purchases. It is the role of the CIOs to oversee vendor negotiations and ensure an effective procurement process. They find themselves in the role of customers to multiple technology vendors, which places them in the position of establishing and maintaining amicable vendor relations on behalf of the company.
IT procurement processes should be properly designed and implemented to maximize the value of your spending. This article takes you through various best practices that make an IT procurement process run smoothly in your organization.
Organizational needs are a principal determining factor in purchasing IT products and services. The acquired technology should be exactly the kind that will befit and support your business goals. For example, some things like expense management software and expense management tools are customized to serve individual organizations. You might end up losing time and money by having to deal with inefficiencies and integration problems.
Vendor relationships are a crucial aspect of the IT procurement process. Having close relations with these IT vendors will help you reduce costs through establishing service level standards. You will assist in adopting problems and technology that integrates with your existing ERP systems. Having cordial relations with specific vendors will also keep you at par with the advancing technological changes.
The IT procurement process also involves many stakeholders like the other staff within the organization that uses the system. They are a great source of information that will help the procurement department to understand the organizational needs. This knowledge will help the procurement personnel to create a budget. You will also know how the acquired technology will impact the organizations' operations.
Acquiring IT products and services comes with an element of risk. The technology can have compliance issues that may cause it to fail in supporting the company's needs. Such an occurrence can be a financial setback; thus, the procurement team should minimize all potential risks. Risk analysis should be done, and a roadmap with plans to reduce the impact on future projects put in place.
Technology is ever-changing, and whatever you acquire should be capable of withstanding and retaining its significance with time. Many companies tend to look at their short-term needs and the upfront price to lower procurement costs. An example is choosing a cheap telecom provider that has poor connectivity. When purchasing technology items, you would rather look at how much they will cost to operate and choose the most cost-effective option with a good ROI.
Having the above-mentioned best practices in mind, you can now embark on the procurement process. The following procedure will ensure that you optimize the process and save time. Some steps can be accomplished simultaneously to reduce the IT procurement process time. You can track the process while measuring the results to help in reengineering the system.
Find out the exact needs to be addressed by the assets you intend to acquire. Is the new IT product or service requested necessary? Other stakeholders in the company can help you to identify an actual need. Inventory audits will also help to determine if something is needed.
You can initiate the authorization and approval process if the need is justified. It involves using investment analysis techniques such as cost-benefit analysis that measures the benefits and risks of procurement. Once the project team is done, the approving authority can give the go-ahead to initiate the procurement process.
Supplier appraisal should be done meticulously to ensure that you end up with the most appropriate ones. You may settle on new suppliers or the existing ones, but it is important to remember that you want to establish cordial relations with the one you choose. It will help you reap some benefits of having a set framework of working together and assessing their performance. Having a reporting and analytics platform that consolidates all the facts related to your existing vendors eliminates your dependence on the vendors for the facts, and ensures you have the ability to accurately assess all options, and what they will mean to the bottom line.
At this stage, you can prepare the RFPs or RFQs to set the stage for bidding. When preparing these, you should include pricing structure, financial terms, evaluation criteria, delivery, and service requirements.
Take your time to wait for all the potential suppliers to present their proposals before you can evaluate their responses. Some bidders might inquire for more information to develop a more practical bid. Your team should come up with criteria to shortlist the successful bidders. Upon shortlisting the bidders, negotiate the terms to try and get the best deal.
After shortlisting and evaluating the vendors, you can now settle on the most cost-effective one. Have them sign the IT procurement contracts to supply the required product or service.
At this stage, you need to prepare a purchase order. It should explicitly define the specifications, price, and terms and conditions of the purchased item. If there are other obligations, then you can include them as well.
Once the supplier receives the purchase order, they will acknowledge receipt and deliver. You are obligated to make the payment upon receiving the product or service.
The IT procurement procedure is culminated by creating benchmarks to monitor the IT assets and team. The Metrics will help you measure the ROI and are useful for future IT procurements. You can have reporting tools to monitor the progress.
Having gone through all the information provided above, you should be better prepared to make your next major IT procurement. By so doing, you will ensure that the operations of your business run smoothly without incurring many overhead expenses. Incorporating best practices in your IT procurement process will help eliminate all potential challenges.
SpikeFli is a SaaS platform that supports Enterprise and Government in managing and reducing costs on Telecom, Cloud & other Information Technology products and services. We do this by centralizing all vendors raw billing data into one platform, then combine it with our clients own internal data. The data provided is then used to provide reports, graphs, charts, and location insight. Having this insight centralized and in easy to read/understand format drives cost reduction/control activities for IT, Finance and Procurement leaders. As well, helps create internal efficiencies for the multiple departments across the organization. Contact us today to find out how we can support your Information Technology Procurement processes at SpikeFli.com. To see SpikeFli in action and stay up to date on all things SpikeFli, subscribe to our YouTube channel here.