Procurement is a Bottleneck – and Other Myths

Consider the scenario: a business unit stakeholder approaches IT about an initiative/project that requires the procurement of hardware assets.  Scope is discussed, requirements defined and potential vendors identified. All goes well until procurement is brought to the table and immediately throws a monkey wrench into the operation – asking questions about pricing and demanding to negotiate and investigate alternatives. The business and IT teams plead that the project is ready to launch, and that there’s simply no time for nickel-and-diming on costs. Following contentious back-and-forth, the project is delayed and procurement comes away looking like the narrow-minded, hammer-wielding bad guy.

While this scene may sound familiar, the perception of procurement as a penny-pinching roadblock lacking strategic vision is deceptive and unfair. In reality, the reason procurement often plays a constraining role in IT/Business projects is because they are not involved in the process from the outset. Instead, they’re often called upon at the last minute to essentially sign off on the cost of assets or services based on a final pricing or deal construct they’ve had no or limited say in developing. And when asked to abdicate their primary area of responsibility, procurement executives are understandably reluctant to do so.

From this perspective, getting procurement/sourcing in the loop earlier in the process is imperative. And in terms of making that happen, the project management function is often the missing link – and the missed opportunity. The project manager typically acts as a liaison between IT and business stakeholders, and through this role acquires critical insight into the scope, requirements, timing, cost and potential risks and benefits of the project.  Indeed, project managers often don’t realize the extent of the power they wield by virtue of this insight. Nor do they realize how closer collaboration with procurement can add value to the business by leveraging procurement’s fiduciary oversight expertise.

From procurement’s perspective, being involved from the outset enables an assessment of the project in the context of overall enterprise spend and business requirements, rather than from a narrow, silo-based perspective. As such, having a seat at the table early in the process can help procurement in its essential evolution towards assuming a more strategic, business partner-focused role versus a traditional tactical role.

The takeaway: when project management and procurement work together and communicate early and often, the result is a corporate win that drives down project costs, eliminates cash drain positions, positively impacts the bottom line and delivers return-on-investment.

Stay tuned – we’ll explore the role of Project Management in greater depth in future blogs and white papers.

About the author

Tyrone Magby has over 15 years of IT strategic sourcing, consulting, operations, and crisis management experience and has led over 200 IT sourcing projects. He has a wide negotiation range perfect for analyzing IT environments to identify and realize IT cost reduction opportunity.