The Evolution of IT Procurement

by IT Executives Council | Jun 24, 2024 | Software

The tech boom of the early 2000s meant companies constantly had to upgrade to the latest devices. Not doing so would cause them to fall behind the competition. If you didn’t adopt quickly, you would reduce your output by as much as 25%.

2015 saw a revolution in tech with the cloud, mobile technology, and 3G. Products became scalable, so upgrades weren’t as necessary. Application updates replaced the need to purchase new equipment.

However, that does not mean IT procurement is a thing of the past. CIOs must still plan a careful strategy to ensure they are on top of the latest technology. Doing so can lead to strategic partnerships with long-term benefits.

What is Today’s Procurement Process?

The evolution of IT procurement brings a new process comprised of the following steps:

Requisition: Requisition occurs when IT departments see the need for new equipment. They will often research to determine the best products and submit a requisition form to upper management.
Approval: Once the requisition form is received, it is reviewed to ensure it fits with company policies and budget. The process is often automated based on predefined rules. Once the process is complete, stakeholders are notified of the results.
Supplier Selection: If the requisition is approved, the system will select a supplier from its database or an online marketplace. They will present information to the decision-maker regarding pricing, ratings, and delivery times.
Purchase Order Creation: After a supplier is selected, the system creates a purchase order (PO) which is sent to the supplier. The supplier prepares the item for delivery. The system may continue to alert the company on the status of the order including tracking information, delivery time, and other updates.
Goods Receipt and Inspection: Once the items arrive, the buyer will check the goods to ensure they meet the order requirements. They will ensure the correct number of items arrive safely and that pricing is correct. If all is well, they will pay the supplier.
Reporting and Analytics: The system can provide data on supplier performance, spending patterns, and the procurement process to determine the success of the sale. That data can be used to guide future procurement decisions.

Best Practices for Ideal Procurement

Define Policies and Procedures: Companies should define policies and procedures that outline the procurement process. Doing so will breed transparency among employees and vendors.
Conduct Due Diligence on Vendors: Vendor selection can be an automated process, but once the selection is narrowed down, CIOs should follow up with a comprehensive review of their reputation, quality standards, ethical practices, and financial stability.
Data Security Review: Cybersecurity is a major concern in today’s increasingly virtual world. Teams must ensure their procurement systems, and the new equipment they invest in, meet the latest cybersecurity measures.
Foster Strong Vendor Relationships: Strong vendor relationships can lead to better pricing and better service. Foster your relationships with regular communication that leads to prompt issue resolution. Collaborate to attain the best pricing and innovation.
Provide Employee Training: Utilize training programs to ensure employees are up to date on the latest system. Address concerns and implement change management strategies to ensure your employees feel supported.

Things to Consider in the Procurement Process

Most Advantageous Tender (MAT)

MAT is a strategy that focuses on purchasing cost-effective products. Products should offer the best value for the money. They must produce the most output and offer sustainability. A combination of energy-savings and durability will get you more bang for your buck.

Sustainability also helps strengthen relationships with customers. Customers appreciate a company that looks out for the environment. Make your sustainable measures public, and they could give you a leg up in your industry.

Circular Computing

Circular computing is a carry-over of sustainable technology. It refers to the remanufacturing and refurbishing of laptops and other equipment. This win-win strategy reduces costs and works as an environmental solution.

Some companies may be concerned about the reliability of refurbished equipment. However, most recycled gear comes with warranties the ensure functionality. Advances in refurbishing methods have also increased trust.

The shift has changed the partnerships that are important to CIOs. Once, CIOs focused on building relationships with OEMs. Now they work more closely with refurnishing vendors.

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