Procurement is a process that involves obtaining and accepting terms and getting goods or services from an outside source. You achieve the process via tendering and competitive bidding. In other words, procurement is deciding to buy under conditions of less availability.
IT procurement challenges revolve around high costs, complex processes, and increased chances of failure. It’s advisable to understand the challenges and address them to succeed in this IT procurement process. By doing this, you’re preventing future problems from arising while undergoing the process.
Here are some of the challenges encountered in the procurement process. Read through this article to know the obstacles you might experience and how to address them.
1. Mitigating The Risk Of Supply
The ability to face the supply risk is often an uphill task for businesses, especially in the procurement process. The supply process is faced with various issues, including increasing costs, the potential of fraud, logistics that are unreliable, and economic or political market factors.
2. Technology Is Fast Changing
Owing to the fact that technology is growing every day, specialists in procurement have a hard time choosing what will be a sustainable standard for technology that will both have a positive effect on IT procurement and also, be of advantage to the supplier.
To succeed in overcoming IT challenges, consider engaging concerted efforts between the members of an organization making the purchase and other stakeholders.
3. Outdated Procurement Rules And Processes
IT is a set of products, consulting, and support services, so it can’t fit in generally obtaining the best prices and terms. To get better and more consistent results, you need to understand the characteristics of the product well enough.
The rules and processes for IT procurement must be reviewed and replaced with newer technologies like engaging technology industry analysts.
4. Conflicting Needs Of Stakeholders
In many organizations, buying items usually involves a decision process by more than one member. This could bring about conflict because different members would like their needs to be satisfied and, in the process, they miss the particular goal for the purchase.
To address this challenge, organization members should work in a team where the process will be well-coordinated from the start to the end.
5. Improper Initiation Of The Procurement Process
In this case, improper initiation means that members of an organization embark on the process focusing on the result and not the actual service that the procured items will give over a given period.
You need to ensure that at the initial stage of the process, an organization conducts a needs assessment, to determine the value that will be brought to the organization, the technology they will obtain from the procured items, and the innovation they will get from that particular technology.
6. Lack Of Experts For Procurement
Organizations usually have a department specifically for procurement and sub-departments for particular items. That said, there’s always a team to manage IT procurement, but this may be a risky affair in case the people involved don’t have the required expertise considering that IT is a critical area.
To be on the safe side, you need to consider outsourcing an expert team in technology to help with the procurement. This will save you time and unnecessary costs in case the in-house team makes the wrong purchase.
7. Inapplicable Terms and Conditions
Organizations fail when they approach the purchase of IT equipment and other accessories following the standard purchasing terms and conditions like it’s done for other items. Adjustments should be made to payments depending on the piece of equipment and the purpose it’s for.
The delivery of the equipment also matters. To succeed well in procuring IT materials, consider reviewing your purchasing contract terms and probably use contracts that allow for co-procuring. This means procuring together with another agency that may have the same needs as yours so that you can cut costs and also be able to share the services.
8. Less Involvement Of the Procurement Team/Department
In many cases, you realize that when an organization needs to procure some items, most of the process is handled by the managers and the accounts department. The procurement department is involved in the last stages, which include contract development and the purchase terms and conditions.
It’s important to have the procurement on board, from the start of the process to the end. This will give room for discussion and consultation in order to get the right items. This will help to avoid blame-shifting when the wrong items are procured, which is also a costly affair.
9. Following Non-Compliant Processes
This is also known as dark purchasing, where products or services are obtained from suppliers who have no official accreditation to sell the goods or services. Non-compliance attracts loss when an organization ends up getting products or services that are of low quality.
The other disadvantage is that the buyer has to deal with non-compliance issues. The IT procurement process should involve the buyer, the seller, as well as the manufacturer to see that all standards are followed as required.
10. Engaging Suppliers For The Sake Of It
Many times, organizations engage suppliers who have the items they require and the lowest bidders just to get over and done with the process and continue with the business. In most cases, organizations may find themselves purchasing similar equipment with their competitors and from the same supplier.
The entire procurement team should be keen to ensure that they don’t just engage a supplier because they can provide the items needed. You should find suppliers who can also provide you with solutions, which in return will help you gain a competitive advantage.
IT procurement should not be considered as standard procurement for other items but as a special transaction that needs careful and serious considerations. Experts in IT need to be involved fully in the process in order to avoid the challenges in the discussion above amidst many others.
Organizations also need to be keen to go through the procurement process while focusing on the future needs of the business.
IT Procurement article and permission to publish here provided by Claire Glassman. Originally written for Supply Chain Game Changer and published on February 23, 2022.