Is your procurement process flawed?
Too many companies embark on the journey to acquire bought-in or outsourced services from a provider with no clear procurement strategy, or target outcome. So the process rolls on and the plan evolves, driven largely by supplier responses and agenda. And the result? The companies don’t get the outcomes they want, or need, they get what suits the suppliers.
That might not have been such a significant problem in the past, as the commercial, services and delivery models were fairly well understood by buyers and service providers. But today’s market has seen a major shift to new ways of thinking about service provision, triggered by fierce competition, the shortage of capital companies have to invest, their need to cut operating costs and, for IT and telecoms services, the Cloud-based revolution in service delivery applications.
- New flexible, pay-as-you go, outcome-based and opex-funded commercial models have emerged, which businesses need to take advantage of.
- New visual user interface tools are being used by techno-savvy customers to define and configure their network and IT services dynamically.
- Cloud-based, Software as a Service (SaaS) delivery models offer ‘off the shelf’, modular and ‘mix and match’ business applications, such as Enterprise Resource Planning (ERP) systems, at a fraction of the cost of traditional solutions.
- The same delivery model is now enabling rapidly developed specialist software to be made available on demand to the smallest companies, changing forever the competitive landscape.
Intellect, the UK technology industry member organisation, has recognised this. They accept that:
“This new decade is marked by the confluence of the global credit crunch, the emergence of cloud computing, and a record of failed outsourcing relationships, creating a pivotal point in the history of business computing and technology outsourcing. We are witnessing the end of an era, and a new outsourcing challenge!
“Business survival and performance will be driven by business leaders demanding: agile technology, fast procurement, speedy delivery, opex-funded transformational initiatives that payback within the financial year and the delivery of value deep into their business’ frontline.” (A new decade, a new outsourcing challenge: Intellect, October 2010)
Procurement planning should reflect the business’s aims and priorities.
You should be clear about the role that procurement will play in the delivery of your business objectives. For example:
- Achieving value for money
- Meeting customer needs
- Consistent application of good practice and continuous improvement initiatives
- Alignment with other strategies
- Collaboration to maximise purchasing power and stimulate innovation
Effective processes should be in place to plan, monitor and review procurement activities across the business to ensure that this is achieved.
We can help you achieve this.
In a recent assignment we worked with a client to define their procurement strategy and success criteria. Our analysis showed that the location, size and culture of the service providers were critical to the ability of the business to influence and control their service outcomes. We helped them put in place an evaluation tool which enabled them to give high weightings against these factors in all their bought-in and outsourced service tendering exercises.
For further information on Procurement please visit our Procurement Strategy page
Email [email protected] or call 03333 555 111 for all enquires.