IT procurement is the series of activities and procedures in a business for acquiring information technology (IT) hardware, software and services. It involves both strategic and administrative responsibilities and a frequent question of IT leaders in mid-sized businesses is who in the business should handle which parts of the process.
Due to the complexity of making IT purchases, the obvious answer is to keep this within IT and away from the central procurement function. But is this really the right choice when one considers that procurement in general is a fairly well-defined process and requires many other competencies which are not specific to IT at all?
One of our IT Leader Mastermind groups recently tackled this question. Here is a summarised version of the outcomes.
The Mastermind Answer
The best answer is not to choose one over the other but to implement the procurement process in such a way that both teams can play to their strengths.
To do this, all IT purchases have to be reviewed with the idea of standardising as much as possible so that central procurement can handle the majority of the process, leaving IT to attend to the exceptions or more complex purchases.
Items such as printer cartridges, mice, keyboards, screens and even standard computer configurations can in many cases (even more so when a little bit of training is added) be outsourced to central procurement.
The remaining purchases are either once-off or require in any case significant IT involvement with quoting, ordering and receiving that it makes complete sense to handle this within IT.
Some More Insights
- Even though smaller businesses may not have a centralised procurement department, similar principles still apply and purchase options should be standardised as much as possible so that they can be handled by a fairly junior and low-cost person (e.g. service desk operator).
- Standardising purchase and vendor options is highly recommended, regardless of who does the work as it greatly reduces the overall effort (especially quoting, which is the most time-consuming part of the process).
- For IT consumables and other smaller, high-volume items consider implementing a stock system and a simple min/max re-order system. This means, as soon as stock for an item gets below the minimum stock level, stock is replenished to the max level (this can even be automated).
- IT procurement is a critical IT process and user expectations and service levels should be carefully managed.
Pro Tip – Align Purchases with Supplier Financial Cycle
Try and align major purchases with the last quarter of your major IT suppliers. Since they usually have some internal sales targets to achieve, it is often possible to negotiate excellent discounts (in some cases up to 40%!).