There are many challenges for young procurement departments in rapidly growing companies who are trying to build and scale their impact. One such challenge is integrating into existing IT environments and driving effective procurement-related initiatives with minimal disruption and friction. IT can be one of procurement’s greatest allies and vice versa – as long as the relationship is approached correctly and the emphasis is placed on long-term strategy rather than opportunistic ‘vulture interactions’. Procurement has a duty to understand what matters most to IT before making the first move to encourage IT to participate in the development of a joint IT/procurement strategy.
“Who has more power, Procurement or IT?” I recently saw this question posed on LinkedIn, although it isn’t a new question. I’m always surprised at the number of people offering answers along the lines of “IT has more power because I would never let procurement decide where I buy my stuff,” or “Procurement, because IT has to go through us to buy anything.” This power trip mentality can extinguish opportunity before it presents itself. If you’ve been hired to establish or grow a procurement function, don’t buy into the us vs. them mentality. The earlier you establish a culture of collaboration between IT and procurement, the less pain you’ll feel as the company grows.
You’ve heard the saying, “first impressions last a lifetime.” Although usually directed towards an individual, it also applies to young or new procurement organizations. We have all worked with someone who rules like a king, passing mandates down the chain with little regard for the impact to everyone else. If you have many “kings” within a company, cross-collaboration in pursuit of overarching goals is nearly impossible. Modern procurement practitioners are beginning to understand that negotiating skills, policy writing prowess, and market knowledge will have limited impact without healthy relationships. Compare these two approaches:
- My name is Matt. I’m the new procurement manager. We are establishing a policy that requires IT to consult with us when making decisions about software or hardware purchases. IT will also pass through additional finance reviews, because it’s a large portion of our spend and we need more control.
- My name is Matt, the new procurement manager. Can you help me understand the challenges IT faces when purchasing software and hardware? How do you feel about the current state of procurement? We are here to help you in any way possible.
Which approach is more likely to lead to a long-term, mutually beneficial collaboration? I write frequently about empathy – truly understanding a situation from another’s point of view. Consider asking your leadership team to allow you to sit with the IT group and “report” to an IT director or manager for 3-6 months, fully embedding yourself in their world. Young procurement teams can maximize what I call the “empathy impact” by:
- Frequently meeting with IT face to face
- Using a consistent “how can I help?” attitude
- Consolidating IT and procurement policies into one cohesive policy, especially when employees are impacted. Less is more when it comes to policy!
- Eliminating redundant work and leveraging training to empower IT so they can make independent purchases in alignment with procurement standards and priorities.
Aligning on Strategy and Responsibilities
IT is tasked with managing enterprise infrastructure. Procurement works with stakeholders to source and purchase hardware or software that interact with or potentially directly alter that sensitive environment. Imagine someone coming to your house and secretly planting a tree in your front yard. It might be a nice oak tree that provides shade and raises the value of your home, but it could also be an ugly tree that gets leaves and sap everywhere. Either way, it’s not your yard. If you want to buy a tree for someone, meet them at the nursery and choose together.
IT and procurement should work together to qualify prospective vendors. IT deserves to have insight into vendors that are entering into their domain well in advance of a purchase request, and procurement can offer that. In return, procurement should leverage IT’s knowledge of market pricing, previous experience regarding specific vendors, and of help facilitate IT-directed security reviews. Creating a joint strategy for software or hardware purchases and spending time together educating stakeholders is an excellent use of your first 6 months. Consider making use of an automated tool to manage approval flows for any IT related purchases company-wide.
I like to think of the transformation of the relationship between procurement and IT as a wagon wheel vs. a series of gears. The spokes of a wagon wheel are like independent business units, working from the hub to turn the outer rim of the wheel. The longer the spoke, the more effort and rotation are required to move the wheel. Compare that to a series of gears with teeth that fit perfectly. If one gear turns, so do all the gears engaged with it. Large gears can be used to move smaller units much faster, leading to efficiencies and greater torque (power). The longer you operate independently, the more difficult true forward movement becomes.
Most IT departments manage the governance of systems/architecture/networks as well as physical infrastructure, operational applications, and end-user support. Procurement can impact IT while qualifying vendors, running sourcing events, and managing ongoing supplier relationships and contracts. Don’t wait for IT to approach you. Initiate the conversation today, and start by establishing that both teams are already linked to each other by default. Everyone might as well make the best of it! Learning about the challenges IT faces, and designing procurement processes that support them, will mean a large portion of spend that’s open to your impact – that’s a win-win situation.
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