IT and procurement often find themselves at each other’s throats, but the two functions have many similarities that escape the first glance.
By finding common ground, IT and procurement can team up to bring several lucrative improvements to the broader business, including far more than just cost savings, risk prevention and increased revenue contribution. Indeed, a working partnership between procurement and IT can be the foundation for building a successful digital transformation.
Where’s the Common Ground?
Procurement and IT should not be in conflict. In fact, they’re more similar than you might think.
One similarity is that both are responsible for demand or stakeholder management within their respective fields. Other business functions have needs, and both IT and procurement are responsible for answering the call. Whether fixing a computer or procuring more office supplies, these are the first responders. At the same time, both want to enable a certain degree of stakeholder autonomy (DIY troubleshooting/purchasing) while also maintaining adherence to business rules.
A big-picture goal here is automating low-value work, so that IT and procurement staff can spend more time working with stakeholders to identify needs and dedicate time and resources to more complicated, valuable projects.
Aside from internal processes, procurement and IT have to grapple with the same external businesses trends that are reshaping their functions. The chief example of these pressures is the digitization of, well, everything.
Nearly all business processes are now touched by the digital transformation. Many goods and products are now delivered “as a service” in some degree through digital communication. This couples with externalization; outside services providers and software companies are increasingly responsible for the formerly internal core tasks of a company.
As departments on the forefront of the digital transformation, both IT and procurement overlap in another significant role: vendor selection and management. A technology selection process will run most smoothly when procurement and IT combine their strengths. IT can appraise the technology accurately while procurement taps into its sourcing negotiation expertise. When it comes to contracts, IT better understands the risks (e.g., preparing for the possibility of software license audits) and procurement has the contract lifecycle management expertise to maintain milestones and manage deliverables.
Through all of this the goals are the same: decisions should lead to increased productivity of stakeholders and business profits.
To reach these goals, the two functions first have to turn their common ground into a strong working relationship. A joint study by Spend Matters and ISM, for example, found that organizations enjoying cooperation between IT and procurement achieved nearly 20% higher automation scores than those with ineffective relationships. And once common ground is reached, IT and procurement need to take advantage of IT sourcing best practices.