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IT and Procurement are two important pillars for making sure employees have the right tools to grow the company. According to the 2021 State of Work report, nearly half of workers say they’re likely to leave their current job if they’re unhappy or frustrated with workplace tech.
We sat down with Adam Shapiro, CIO of Performance Health to talk about the partnership between IT and Procurement and how it is essential to delivering the right business outcomes; IT can choose the right tools that meet the business needs, while Procurement can negotiate the best prices.
1. When do you feel is the best time for IT and Procurement teams to start partnering?
It’s never too early to build partnerships, especially when technology is such an integral enabler of driving a company’s value and growth trajectory. Having the right balance between choosing the right tool and paying the right price is critical to ensure technology drives the desired outcomes. These outcomes enable companies to grow faster than they otherwise would, as key solutions drive both topline and bottomline growth. I have personally been part of key strategic initiatives that have driven savings of 10-25% and single-digit top-line enablers (think of IoT, RPA, and intelligent automation). For each one of these initiatives, a close partnership with business units and procurement was needed for successful outcomes.
2. What are some of the best partnership practices you have seen companies adopt between IT and procurement?
Partnerships that deliver collective value, are ones that share common goals and objectives. Foundational operating priorities and goals need to cascade throughout the organization to fulfill business objectives. I strongly encourage no more than 5 goals that have objective metrics & quantifiable results. Goals have to be meaningful and drive results, so it’s important to have cross-functional alignment. Goals and operating priorities flourish in sunlight, so it’s important to align, review and discuss on a regular basis with your team. An aligned approach between business units, Procurement, and IT with clear guidelines of accountability and responsibility will help deliver value-driven outcomes.
3. When proposing a new tool purchase, how do you ensure the value of the tool is realized?
I usually start with a business case and align the organization around shared goals. I am a firm believer in starting to shape the value proposition by being technology agnostic, and focusing on the business process and outcomes. Value is first driven by the problem you are trying to solve, and ensuring there is a balanced techno-functional approach. It’s a multi-step process; First and foremost, we identify the top use cases and features we would like from the solution. Secondly, we align and identify the key stakeholders. Lastly, we finalize the overall budget for the project. Building the business case helps solidify the need and ensures alignment across the entire organization, which includes business process owners and procurement. Narrowing the top 3-5 vendors, an RFP process, and subsequently, vendor negotiation will ensure successful outcomes. Additionally, accurate data about your current and future vendors is critical in ensuring that your solution fits the needs of your organization and you optimize your software spend. Having a tool such as CloudEagle which consolidates your vendors, contracts, and usage data across your enterprise will help ensure you have visibility into your current stack and shorten the time you spend on getting a new tool.
4. While performing contract rationalization, how do IT and procurement split duties of due diligence?
It’s important that there is a clear understanding of accountability and responsibility. IT needs to be accountable and responsible for ensuring the application portfolio is well-positioned across the enterprise. Procurement is responsible for helping navigate through the agreements identifying any contractual roadblocks, then supporting any subsequent negotiation. Some of the key data points/elements that should be part of your overall renewal process are; contract value, user true-up, YoY % increase, term, and functional positioning, or usage. A SaaS Management tool like Cloudeagle is immensely helpful since it can show actual usage of your current tool as well as all the contract details, all in one place.
5. How does your team keep track of all the renewals? What are the steps you take before and after a renewal process?
Successful application portfolio management starts with a well-established contract database, which is a critical component of a well-positioned enterprise IT strategy. As mentioned previously, your contract database should be your key data set that looks at your overall application usage, vendor information, and functional fit. This is a key deliverable in which Procurement should have shared ownership. Being a step ahead and knowing your contractual terms and conditions will help the team determine if an application is renewed, decommissioned or an RFP process should kick off. I have led enterprise IT strategies that have rationalized application portfolios by over 30%, and the critical success factor has always been the Procurement partnership backed by an accurate contract database.
Key Takeaways
- Ensuring your Information Technology application landscape meets the needs of your users and customers is a foundational step to growing your company and meeting board objectives.
- Given the dynamic nature of today’s technology and vendor landscape, establishing a close partnership with sourcing, procurement, and Information Technology is an important step in helping achieve successful results.
- In addition to the partnership, you need to ensure you have the right tools and metrics that provide the analytical insight for transformational stability and growth. Having had the opportunity to transform Information Technology organizations using solutions such as CloudEagle can give you a leg up in delivering best-in-class outcomes.
