Companies often perceive their IT Procurement departments as having one purpose: to minimize expenses for purchased goods and services. While purchasing is certainly a core functionality of the Procurement team, the Procurement team can also become a significant business driver that can positively affect the company’s bottom line. Borrowing strategies from the most innovative Procurement teams can help internal stakeholders to recognize that Procurement isn’t just about costs; it provides significant value to the company.
We took a look at several top Procurement teams to analyze their unconventional strategies and approaches. Below are the top 10 strategies that we found many of them had in common:
1. Be willing to step out of your vendor comfort zone
One natural tendency is for businesses to use a vendor because of an established relationship. Even more common, IT Procurement leaders inherit vendors from previous leaders. You don’t want to disappoint your vendor by withdrawing your business, and it can feel risky to try something new. However, you might be locking yourself into inefficiencies or expensive contracts. Make a point to review relationships and ensure that you’re getting the best.
It will be important to maintain active communication with internal stakeholders at the company about any inefficiencies you do uncover and any changes you might want to make.
2. Be an instigator of transformation
Don’t let old processes linger for the sake of convenience. Constantly re-evaluate, if something seems unnecessary or inefficient, consider potential changes.
One great way to drive changes is to ‘brand’ initiatives (as suggested in this article from Coupa). Create a compelling story about why the change is necessary and how it will benefit the company. Generate collateral around the story and share it internally. Find an advocate for the change, or be that advocate yourself! Evangelize the change and use data to back up the reasons you believe the change is necessary.
3. Train effectively
When someone joins the Procurement team, most companies provide a standard training regimen and plenty of on-the-job training. Top IT Procurement leaders (such as Christian Schuh who wrote about training in “How to Become a Procurement Champion“) understand how critical additional training is in areas that may be overlooked, such as: negotiation skills, contract writing, risk analysis, and courses in Excel. Finding top talent is key, but developing your talent and ensuring that new employees are familiar with the latest tools, technology, and procedures is equally important.
4. Closely track and analyze spending
Know your team’s spending habits. Keep track of growing costs and question every increase. This will enable you to bring data to the table in negotiations with existing and new vendors, and allow you to track trends.
5. Maximize efficiency
In evaluating the Procurement process, understand the intrinsic value of every step. If there is a step that doesn’t provide sufficient value, remove it. This will keep costs low and decrease the timeline of the Procurement process.
6. Unite the procurement team
Make sure that every individual on the procurement team is on board with decisions and that each team member is all able to convey the value of the decision to internal stakeholders. A united procurement front in which every player possesses the ability to explain the buying process is key.
To unite the team, it’s important to have a tool for communication between members. Tools such as Slack and Flowdock are effective at enabling group conversation and collaboration.
7. Utilize agile communication
Here at MobileDay, we use an agile development methodology in which cross-functional teams collaborate continuously, helping them rapidly respond to changes. Communications between IT Procurement professionals and suppliers or vendors should share similar qualities. Agile methodologies emphasize adaptability and continuous iteration, and these concepts shouldn’t be confined to the development team.
If there are processes in place that may be acting as barriers to communication between teams and vendors, identify these barriers and work with the involved teams to determine a more agile approach.
8. Correlate procurement goals to overall business goals
Identify how the procurement department can permanently eliminate costs for the business rather than focusing on saving money short-term. Achieving goals that affect the company’s bottom line will begin to transform the procurement department. Once executives view Procurement as not simply a department that tries to reduce costs but as an element of the company that can add real value, it will be easier to gain funding for new projects. In turn, Procurement can maximize efficiency even further and add value. It’s a continuously improving system!
9. Cost isn’t ALWAYS king
Procurement departments are necessarily adept at finding the lowest cost technologies and reducing expenses. However, this might not always be the ideal strategy (from this article by Veda Applied Intelligence). For example, Procurement is becoming more and more involved with the purchasing of marketing services and ad spends. While this strategy does reduce cost in the short-term, Procurement might not always recognize the importance of finding the highest quality marketing and ad products for the money, which are not always the least expensive. Over time, the lower quality purchases could start to undermine marketing efforts and decrease the value of the company as a whole. Instead of solely focusing on the short-term savings of a procurement initiative, make sure you contemplate the long-term benefits of projects and expenses.*Note: In order to understand how expenses may be beneficial in the long run, it is critical to maintain open communication between departments (see point number 7 about agile communication strategies). Be receptive to the marketing department’s justification for costs and communicate openly with all company stakeholders. This lesson can be applied across several Indirect Procurement categories as well: hardware, HR services, and other IT-related services.
10. Explore new tools to increase efficiency
Another natural tendency in the Procurement department is to stick with what’s known and firmly established in the company. Some of the top Procurement pros understand that in order to take the Procurement department beyond its traditional role, they have to try new tools and processes. There are tools that will show ROI over an extended period of time, but there are also tools such as MobileDay that will dramatically affect a company’s bottom line by reducing costs immediately (learn more about MobileDay).
In sum, IT Procurement departments can be much more than cost-saving teams in today’s business world. The most successful procurement professionals realize the importance of effective leadership, communication, training, team-building, and purchasing strategies. Teams who exemplify these best-in-class traits help their companies simultaneously achieve broader business objectives and save money and increase ROI.