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The Oregon Trail was (and is) a computer game designed to teach about the trials and tribulations of pioneers crossing the American West in covered wagons. Critically, at the outset of the game, you’d have to guess what supplies you’d need in a few months, often to find out later that what you ordered is no longer relevant. In other words, the speed of changing needs far outstrips the speed and agility of the procurement process.
For information technology professionals that have played The Oregon Trail, the process of procuring IT products and services can feel somewhat familiar to that decision made in virtual Independence, Missouri. But instead of your pioneer family going hungry because you didn’t buy enough bullets to hunt, it’s your very real company and its business processes that struggle to be competitive because of a lack of technology support. And like in The Oregon Trail, where every new valley and vista brought challenges to overcome, it is the same with the promise of emerging technologies and how they must align with your company’s goals and business strategy. Preparation is everything.
In practice, providing the IT infrastructure and services your firm needs involve some of the same pitfalls as buying 8-bit oxen and axles: IT’s needs are constantly shifting due to new technology, and a firm’s procurement teams, and process outsourcing can have trouble keeping up. By the time procurement has obtained quotes and found a vendor that’ll work, IT strategies have often shifted, and the process must begin again.
Compounding the problem for procurement is the reality that IT services are often not commodities like flour and sugar. Sometimes IT may need hardware components or other services that have a part number or SKU number, making it easy to find multiple vendors to supply like-for-like products. More often, IT solutions, especially when it comes to managed services and the “as-a-service space,” are more complex and nuanced. This situation makes it hard for procurement professionals to find vendors to meet the IT stakeholders’ on-the-ground needs without going back to IT for technical evaluation and acceptance. Therefore, a new IT procurement operational model is needed.
IT and procurement also require data that offers relevant information about vendors. They both have requirements: IT has technical requirements around the solution, how it integrates, what its features are, and so on. Procurement has requirements around contract length, payment terms, and contractual language.
Already we can see that the typical procurement process has several axes of difficulty in working together efficiently. Consequently, for most firms, the method is ultimately effective in delivering results, but often, not the optimal results.
Components with SKUs are easy to procure within the supply chain. Still, harder-to-procure solutions can teach us how IT and procurement can work together better to meet an organization’s IT services needs effectively.
Traditionally, IT and procurement have worked in series: IT develops their technical requirements, then hands everything off to procurement to fulfill those requirements and subsequently meet their contractual needs.
Serial transmission is by nature slower than parallel transmission, so unless everybody works faster the typical serial procurement process will be slower than a parallel process.
We’re not naïve—we know there are good reasons why most organizations use the typical, step-by-step procurement process. The core reason it’s necessary to work this way is to drive confidence through a structured process that is auditable and accountable in protecting the needs of the business over the needs and desires of individuals, but it relies on imperfect information. For example, procurement may have an in-depth understanding of IT’s technical requirements and outcomes but an insufficient understanding of vendor capabilities and the route by which they can be matched to the technical requirements.
IT knows the importance of digital transformation and its technology needs, and it may also have a vendor in mind, but they may not have good information about how that vendor can meet procurement’s contractual requirements, or how each vendor can deliver their desired outcomes with unique solutions.
The only practical workaround to this set of roadblocks is a breadth and depth of specialized experience in the global IT services market. Bluewave provides this particular expertise, which helps us enable our clients to align IT’s technical requirement set with procurement’s contractual requirement set—a parallel approach. In addition, Bluewave can often provide procurement “behind the curtain” insight into where vendors sit relative to their pricing floors. We also have insight into the creative contract vehicles, terms, and structures vendors have used to win deals. As a result, we can proffer a counteroffer we know they have accepted before.
Consequently, Bluewave can help firms tee up a successful negotiation for procurement before IT even selects a vendor because we’ve considered the complete requirement sets in the first round of vendor analysis.
This may sound like a radical overhaul to the processes firms are used to and ingrained in their operations. In Bluewave’s approach, we can inject this solution of market insight, process refinement, and requirement alignment in and around a firm’s existing business model and procurement process. We always seek to meet clients where they need support, augmenting their current procurement process, not replacing, or circumventing it. Because we have a regimented strategic sourcing process, we can provide the necessary due diligence and documented narrative story around how decisions were arrived at, so leadership and auditors feel comfortable with the roadmap we’re on, and the outcomes arrived at.
If you’d like to hear more about our IT Strategy consulting, methodologies, and how Bluewave Technology Group can help you refine how you manage your digital strategy and technology lifecycle, we’d love to hear from you.
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