How to save on IT procurement services
In the past few years, global supply chain shortages, and inflation have made procurement for companies increasingly challenging. In order to keep up with these challenges, businesses are focusing on ways to make the procurement process more efficient by leveraging the right technology.
In PwC's 2022 Digital Procurement Survey, 69% of companies worldwide named cost reduction as one of their top three strategic priorities. The other two priorities for procurement professionals are strategic sourcing and digital transformation.
IT procurement, in particular, is undergoing a significant transformation, with many moving away from more manual traditional models and opting for unified solutions that reduce the complexities of navigating multiple vendors and programs.
In this blog post, we'll explore what traditional IT procurement involves and why they are no longer efficient for global organizations. We'll cover how companies can save on procurement services today, and how to choose the right one.
What are traditional IT procurement services?
The average day-to-day for a traditional procurement specialist can look like making calls, sending emails to suppliers and manually entering data into spreadsheets. It could involve managing suppliers, researching new vendors, and reviewing purchase agreements. They might visit supplier warehouses to pick up purchases or assess product quality. Procurement specialists also work closely with legal departments to negotiate terms for contracts and renewals.
Although procurement specialists oversee purchases for the entire company, they can clash with the IT department over buying new technology quickly. To avoid this, companies have established a separate IT procurement department that operates under mutually agreed-upon guidelines. If they don't have this capacity, they outsource the function to a company that performs all these task as a service.
This way, smaller purchases can be made without procurement management or approval from department heads, while larger investments are still subject to the Procurement team's oversight and authorization.
Technology procurement plays a pivotal role in managing the IT inventory of an organization, minimizing redundancy, and mitigating the risk of downtime or service disruptions. Following a well-executed IT procurement guide can help the overall procurement strategy in reducing costs. Most importantly, it allows companies to purchase the technology resources their teams need at the right cost.
Why are IT procurement services inefficient?
With worldwide IT spending forecasted to reach $4.7 trillion this year, companies want to ensure their investments provide value. According to PwC, 88% of executives struggle to capture value from their technology investments. This raises the question: why are IT procurement services inefficient?
One of the main reasons is outdated manual processes. Relying on procurement methods that involve repetitive and time-consuming tasks limits a company's financial and business success because they do not generate substantial savings or profit. Traditional IT procurement primarily focuses on acquiring the right goods and services at the right time but not on long-term strategy.
While traditional methods have been effective in the past, they were designed for a different era, one without global workforces or rapidly evolving information technology solutions. Digitalization and the use of online platforms have simplified this process, but there are still limitations to what these platforms can do.
Here's why they've become inefficient:
1. Unprepared for a remote and global workforce
Traditional procurement services never imagined a world where most employees would work remotely or from various global locations. The pandemic rendered all in-person interactions virtually impossible, so going into warehouses or meeting up with suppliers became a challenge. When employees were forced to work remotely, physical paperwork also became irrelevant.
This new context of distributed workforces that rely heavily on digital tools have forced procurement processes to become increasingly digital. However many companies still do not have their processes streamlined and often rely on several different tools and tracking methods to function.
2. Lengthy quote and approval processes
Procuring IT products and assets through traditional means often involves a lengthy cycle of obtaining quotes and securing approvals. When this process is done manually, procurement specialists must pay special attention to keeping up with different suppliers and following up via email or phone calls, which can leave room for loose ends or miscommunication.
3. Lack of centralized management
Without a central platform to manage every aspect of IT procurement, organizations struggle to coordinate their purchase efforts efficiently. In this scenario, stakeholders lack visibility over the supply chain or vendor relationships, making it difficult for financial management to have data-backed information to make decisions.
4. Reliability concerns in international expansion
Expanding internationally adds another layer of complexity to IT procurement. Internal capacity or traditional services that are outsourced may not offer the reliability and scalability needed for global expansion. Just think about the logistical nightmare it can be for procurement teams to look for hardware suppliers and vendors in each new country the company expands to.
How companies can save on IT procurement services
A report by Gartner states that midsize enterprises ($50M - $1B) spend around 4.9% of their revenue on their IT budgets, which can go up to 8.6% for industries like Banking and Financial Services.
13% of those IT budgets are spent on hardware, and the ratio has stayed the same over the past four years.
To start bringing that percentage down, moving procurement operations to a unified digital platform makes financial sense. It streamlines source-to-pay operations and provides visibility for all stakeholders.
Instead of contracting another company to handle hardware and software procurement or navigating the complexities of creating an in-house team, companies can now turn to innovative solutions like GroWrk.
The GroWrk platform offers customers a unified and easy-to-use Dashboard that simplifies purchasing hardware, lets IT teams manage devices throughout their entire lifecycle, integrates with your existing HR and IT systems, and offers MDM software and asset tracking capabilities.
GroWrk lets your team set up new hires across more than 150 countries in just a few clicks while following high data security and compliance standards.
By consolidating all IT procurement needs into a single platform, businesses can streamline operations, reduce overhead costs, ensure data security, and make informed decisions about technology investments.
This brings up the point that Companies should develop procurement strategies focusing on technology roadmaps.
A comprehensive technology roadmap that aligns IT needs with best practices enables informed purchasing decisions and prevents last-minute expenses. Clear technology standards eliminate ambiguity and promote standardized procurement, potentially leading to cost-effective bulk purchases.
Additionally, implementing automated workflows and reporting preventing costly oversights in renewals and deadlines.
How to choose the right IT procurement service
When it comes to selecting an IT procurement service, you need a partner that aligns with your company's goals and delivers tangible business value. Some key factors to consider are global scale and reach, reliability in delivery and costs, and intuitive software.
1. Global scale and reach
In an interconnected world, having a partner with a global scale is crucial.You should be able to access an extensive network of trusted vendors and suppliers worldwide from one dashboard. Whether your company operates in a single location or has a global presence, the IT procurement service should be able to reach anywhere, even remote locations in the Peruvian jungle, ensuring you can efficiently procure technology assets wherever your business needs take you. Say goodbye to the headaches of coordinating multiple vendors by yourself, and let our global reach simplify your procurement process.
2. Reliability in delivery and costs
Timely delivery and cost management are paramount in IT procurement. Your IT procurement service should have a strong vendor relationships and efficient supply chain management ensure that your orders are fulfilled promptly and accurately. Additionally, they should have expertise in negotiating favorable pricing agreements. This helps drive cost savings for your organization, enabling you to optimize your IT budget and maximize your return on investment.
3. Intuitive dashboard and integration capabilities
Efficiency and ease of use are at the heart of a successful IT procurement experience. When looking for a procurement solution, there should be a central dashboard with a user-friendly interface that simplifies the procurement process.
The software should be able to manage IT procurement activities, including hardware software purchases, tracking orders, and generating customized reports. It should also be able to integrate with your other tools such as HR software, your existing asset management solutions, ERP, payroll and productivity. This makes the onboarding experience much easier for any user and gives them the ability to customize the software to match their current procurement processes.
Traditional IT procurement is no longer sufficient in today's business landscape affected by global forces. The unexpected surge in remote workforces and the need for worldwide scalability have reshaped IT procurement into a streamlined and digital one.
To save on IT procurement processes in the modern era, organizations must consider innovative, centralized software solutions that provide cost-efficiency, scalability, and a streamlined user experience. Embracing these approaches to IT procurement will save costs and position your organization for success in an ever-evolving tech world.
If you're ready to streamline your IT procurement, explore how solutions like GroWrk can transform your technology acquisition process. Our team is here to help you with all your IT procurement needs. Book a demo today to learn more.