By Steve Nicholls
Every private and public sector business is now 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 is IT procurement.
The IT market is a highly volatile and dynamic environment - presenting a real challenge for end users, specifiers and buyers to make consistent, best value purchases. Vast swathes of time are spent managing suppliers, manually comparing prices and securing product that is in stock. This is before the additional layers of procurement administration and invoicing are even considered.
I have no doubt that as organisations continue to chase best prices, in an ever changing market, the likelihood of achieving optimum prices becomes increasingly difficult. These tough times are undoubtedly prompting teams to rethink their approach to buying IT through a more rationalised process.
More savvy organisations are starting to adopt a cutting edge, yet common sense, consolidated supply chain framework-style model. With a consolidated supply chain, organisations put out to tender for a procurement supplier to deliver a managed service structure - meeting EU procurement directives.
The winning supplier adopts sole status and then manages the entire end-to-end procurement process — from purchase to delivery, implementation, imaging and maintenance. However, to achieve sole supplier status there needs to be robust benchmarking in place that shows significant overhead savings for both sides
Importantly, as the supplier purchases large product volumes across its client portfolio, the achieved prices will better those obtained directly by the customer. From a consolidated supply chain perspective, this means consistently better value. By outsourcing this task, also saves time and money, whilst freeing internal resources up to focus on core strategies and IT development - without making redundancies.
A more streamlined approach to the supply chain devolves the risk of the supply chain from customer to supplier. Risk is a key issue at the moment, so as part of a service evaluation process, it’s best to draw up a list of risks inherent in the service, including financial, technology and installation. The potential cost impact of these risks should be established, including the risk probability and mitigations. It may then be better to try and move / reduce the risk - even at a cost premium.
Other benefits of consolidating procurement involve a significant reduction in accounting administration to one monthly invoice, rather than myriad invoices from multiple suppliers. This obviously benefits the customer’s cash flow and a reduced procurement overhead.
This centralised approach improves the agility of an organisation by freeing up management time and stretching the reach of corporate IT budgets. It also provides for a CSR methodology as it can help achieve greater green IT compliance.
By proliferating procurement and managed services can ensure IT is recycled, re-used or appropriately disposed of within the terms of an agreement. This is an area that often creates enormous management challenges for overstretched multi-tasking IT managers and lifting this operational burden as part of a structured SLA can be highly rewarding.
Forward thinking organisations may be starting to switch on to the bottom line benefits of a streamlined and consolidated supply chain approach but it is paramount that procurement suppliers are appropriately assessed to ensure they are up to the role. Proof of large corporate technical expertise and directly associated managed services should be the norm.
Ask the procurement supplier if they possess special relationships with manufacturers, offer innovative approaches to service delivery, financing options etc. A supplier should also take time to establish what the customer wants by analysis of the requirement and understand the needs of the key stakeholders.
The consolidated purchasing is a proven way of managing multiple suppliers and should not be seen as a risk but as a reward. The returns can be considerable and as more organisations enjoy cashable and non-cashable savings that help maximise internal resources and overheads. The key is find a supplier that can demonstrate quality and an innovative approach — this will make the difference.
Steve Nicholls is a Director at CSA Waverley