Written by Marijn Overvest | Reviewed by Sjoerd Goedhart
Fact Checked by Ruud Emonds | Our editorial policy
IT Procurement 2024: Definition and Strategy Example
What is IT procurement?
- IT procurement leverages automated software to streamline procurement tasks and ensure a smooth workflow.
- IT procurement cuts down paperwork and accelerates processes by automating workflows, which helps teams focus on strategic goals.
- Looking ahead to 2024, procurement software will prioritize adaptability by enabling smoother data management, effective contract analysis, and enhanced support for procurement functions.
What is IT Procurement?
IT procurement is the process of using automated software for procurement purposes. Most companies are now using automated software as a means of relegating the cumbersome task of data management and analysis. Other tasks, such as contract management, the analysis of data coming from sourcing vendors, as well as creating bids and RFQs are just some of the menial but important tasks that IT procurement does.
With IT procurement, the important tasks that need focus and superior decision-making can now be assigned to all important members of the procurement team, since the data analysis can be left to the program.
Why is IT Procurement Important?
The problem with most procurement processes is that it will sometimes take you all day just to complete every step and process. Companies that still rely on paper are spending hours upon hours listing down every important information gathered from the series of talks with the suppliers. Not to mention the long list of paperwork that needs completing.
Finally, you have the need to get your superiors to sign your request for quotations and requests for information. Imagine how many days you have to wait or line up in his/her office all because your procurement process won’t move unless you get those signatures.
Imagine all those tasks done with just the simple click of a button.
Of course, these programs are only assisting the company with more than half of the actual procurement process. In the end, the procurement manager is still in charge of how the whole procurement system should go. For those who are looking to improve their skills in procurement and sourcing, our Negotiation Course For Procurement Professionals is available for interested individuals to check. Our course is designed to help procurement managers and negotiators in becoming the very best in their craft, so feel free to check it out!
The reasons above are just some of the examples of the advantage of investing in IT procurement. The programs created for the IT procurement system are built to automate most procurement processes. The processes include sourcing, RFQ, RFI, and others.
IT Procurement Strategy
The IT procurement strategy is similar to a regular procurement strategy. Perhaps the only difference is that the procurement management uses procurement software instead of the traditional pen-and-paper process.
Let’s face it; the bigger the procurement, the more data and research you’re going to put into the whole process. And with more data needed and gathered, you are going to need something big to store all that data. And we’re not talking about data written on paper. That would be extremely inefficient.
Procurement managers will find it useful to get help from these companies, as they can make the whole procurement process easier. They’ll assist you in managing automated queries, using data for sourcing, and others.
With the use of procurement software, the procurement manager and his/her team can use it to analyze data, do market research, conduct sourcing among potential suppliers, and even process requests for information and requests for quotations. The latest IT procurement software allows the program itself to track invoices, create records for suppliers that won bids, and other important procurement functions.
To make things as simple as possible, you can do the following for your own IT procurement strategy:
1. Create a simplified purchasing chain
Your procurement process should not be too difficult to understand. The simpler it is, the better your procurement software can create the necessary adjustments for each process. This clarity not only simplifies overall operations but also ensure better collaboration among team members, leading to more efficient outcomes.
2. Managing supplier risk
The more aggressive your procurement process is, the more risk it’ll draw in. Make sure that your procurement software can be managed to handle risk during the whole procurement process. Additionally, you can further mitigate potential pitfalls by regularly updating and training your team on risk management strategies.
3. Consolidating the supplier database
Your procurement software should be at the center in consolidating all supplier databases. It should have all records of important transactions created throughout the procurement process. This way, you don’t have to look or ask your team for specific invoices. Moreover, having a centralized system improves accountability and allows for quicker decision-making when addressing supplier inquiries.
4. Building predictive analytics
The beauty of automated systems is that they can sometimes predict the flow of a process through analysis. The more advanced procurement software can even create the flow for you. This will allow you to proactively address potential bottlenecks and optimize procurement strategies.
5. Incorporating the department into the global system
With the help of your procurement software, your procurement team can also check for information regarding the procurement process in the global system. This access to real-time data helps make informed decisions and stay ahead of market trends.
Jobs in IT Procurement
The IT procurement position is usually just a part of a larger procurement department. However, some considered it as part of the IT department. Nonetheless, professionals in this field tend to have similar skill sets and job titles to procurement professionals.
Titles included in the field of IT procurement include IT procurement manager, Technology Procurement Analyst, IT Procurement Specialist, and so on. In this industry, professionals with great knowledge of technology and purchasing thrive in these roles.
Starting an IT Procurement Project
1. RFP creation
Before creating an RFP to procure new tools, an IT procurement professional must do some research first which includes:
- Defining and understanding the needs of the company by interviewing stakeholders
- Checking if an existing tool can fill the need in order to save some money and avoid duplicates
- Writing an RFP that indicates the project background, scope, requirements, and RFP questions.
2. RFP management
Now that you know your project scope and have written an RFP, you must now issue and manage the RFP by:
- Making a list of potential suppliers and send the RFP
- Collecting any follow-up questions or asking for additional information
- Answering the questions of the potential suppliers and providing context if you must.
- Checking the responses of your potential suppliers and sending follow-up reminders
3. Supplier scoring, assessment, and selection
Now that you have collected their responses, it is time for you to select the right supplier by:
- Review the proposals to ensure high-level of compliance
- Engage with other stakeholders to score functionality, customer success, and implementation stages
- Calculate weighted scores to prioritize the most important decision factors
- Compare scores to see which supplier wins your criteria
- Negotiate with your selected supplier to form a contract
- If your selected supplier does not agree with the negotiation, you can narrow your selection and request additional information and presentation to choose again for a supplier.
Technology Procurement Process
If you are handling the IT department, you should understand how to procure IT systems for you to be able to acquire high-quality hardware and software solutions that you will use in your business.
The following is the usual step in acquiring IT solutions for your company:
1. Identifying the IT requirements
Of course, the starting point will be to identify your IT requirements. You must know if you need a new IT system or service. At this stage, you will collaborate with internal teams to know the needs of the company.
2. Approval of purchase requests
After identifying what you need, you must review your request and justify why you will need to procure it before initiating the IT procurement approval process.
At this stage, the authorization and approval process involves project teams in evaluating the benefits and risks of your request.
3. Make a list of potential suppliers
Once approved, you must now move to the process of evaluation and selection of potential suppliers by making a list. It would be good to build relationships with new and existing suppliers to assess their performance.
4. Release bids or RFPs
Once you have the list of your potential suppliers, you must send out bids or requests to know if they can meet your requirements.
The request should include detailed specifications about the product or service, delivery and service requirements, pricing structure, evaluation criteria, and financial or payment terms.
5. Negotiate
Once you receive the response from your potential suppliers, you must assess them using your evaluation criteria to decide if they are a good fit for your company.
Additionally, if one of those responses piqued your interest, then you should try to negotiate the terms and see if you can get the best possible deal.
6. Select a supplier
Once you compared and evaluated all the bids, you should now select the most appropriate supplier and sign IT procurement contracts for the needed product or service.
7. Prepare a purchase order
Once you have selected a supplier, you must now prepare the purchase that specifies the price, specifications, and terms and conditions of the product or service that you want to acquire.
8. Receive and integrate
Once you deliver the purchase order, the supplier will acknowledge the receipt and deliver the product or service. Once delivered, you must check the quality of the product and pay for it after.
9. Make IT procurement metrics
In this stage, you should create metrics to monitor the performance of the IT software and the internal team. These metrics will be used to measure the ROI which can be utilized for future IT procurements.
Important Key Trends of IT Procurement Software
Technology is not constant. It is always evolving, always changing. And so does IT procurement. Since it is a piece of software that is always updated to keep up with the latest changes in sourcing and procurement, it is only right that you, the procurement manager, should also have an idea of its latest key trends.
There are several factors that procurement managers may have to consider while they are shopping for which IT procurement software to get. Here are some of those factors:
1. The wide use of AI or artificial intelligence in procurement is creating new opportunities to reduce costs and enhance efficiency. – This means new procurement software means new technologies created to give procurement managers a lot of new options to choose from. Procurement software platforms can now use machine learning algorithms to organize unstructured spending, costs, contracts, and supplier data. There is even new procurement software that allows the use of chatbots. These chatbots can now answer inquiries coming from potential suppliers.
2. Shifting from an on-premise model to software that can access the cloud has a lot of potential benefits for procurement teams. However, always choose a cloud-native solution instead of a procurement program that is a cloud-based solution. A cloud-native model allows a business to unify a huge range of relevant applications under a single platform.
3. A transition from the old monolithic architecture to the updated microservices architecture is giving procurement more focus on other strategic tasks. Thus, the company can deliver more value for the business. Microservices allow developers to build and improve the features of the procurement program. Developers can easily tap into whichever microservice feature the company needs without having to worry about difficult integrations.
4. Enterprises can now access new supply channels thanks to crowdsourcing. For those who are not familiar with the term, crowdsourcing means signing up a digital platform provider to getting specific deliverables and outcomes. The members of the crow can then start to work on realizing the said outcomes.
5. RPA or Robotic Process Automation is being adopted in procurement at a rapid rate. And it’s not that surprising, since most businesses and industries all over the world are either run by actual robots programmed by AI or specific programs called robots that are by automated programming.
In any case, Robotic Process Automation is software that learns and recognizes patterns, which then performs rule-based tasks. The RPA is a big help for any procurement team, as the mundane and repetitive tasks are assigned to the said programming to help the team become more efficient, as the more important tasks are assigned to actual people instead.
6. Blockchain is efficiently changing the meaning of digital transactions and the source-to-pay process. Blockchain in procurement helps create digital transaction ledgers with the use of its cryptologic data structure. The said ledgers can help verify and validate P2P transactions. The program can also simplify purchase order management, process invoices, order validation, and multi-way matching.
Conclusion
As technology continues to evolve, procurement managers are urged to stay abreast of these trends and leverage the power of IT procurement software to drive efficiency, mitigate risks, and contribute to the global success of the procurement process.
The synergy between adept procurement professionals and cutting-edge IT procurement solutions holds the key to navigating the complexities of modern procurement in 2024 and beyond.
Frequentlyasked questions
What is IT procurement?
IT procurement is the use of procurement programs to help in creating the procurement process.
How to do IT procurement?
It’s easy to do IT procurement. All you have to do is buy or create your procurement program and integrate it into your procurement process.
How is IT procurement different from normal procurement?
IT procurement is all about integrating a procurement software or program into your procurement process. Normal procurement is just following the flow of a procurement process.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.