What is IT Procurement?
IT procurement refers to the process of sourcing, acquiring, installing, and configuring software for procuring purposes. It’s the process of gathering information and assessing the pros and cons of IT products and services to make the IT system more efficient and effective.
The IT procurement process is not limited to just the procurement of hardware and software. IT procurement can include the installation of systems (such as databases), the provision of IT services (such as e-mail and web hosting), the management of IT (such as setting up e-mail accounts), and the management of external contractors (such as IT service providers). For example, you could have a procurement strategy in which you acquire IT services and manage them in your IT procurement business. In this way, you keep your IT systems separate from your business operations and optimize the use of your time and resources for your business purposes.
IT procurement as evaluation focused process
IT procurement is a process of evaluating the business case for purchasing an asset. The evaluation process is an integral part of all major IT procurement programs. The process includes such tasks as
- Finding suppliers;
- Obtaining necessary approvals to proceed with the procurement life cycle;
- Determining need;
- Forming contracts;
- Expediting of orders;
- Accepting products;
- Contract administration;
- Management of post-installation services;
- and lastly, ensuring system stability.
There are two major types of IT procurement: internal and external
Internal IT procurement
The former type of IT procurement includes internal discussions and workshopping to ensure the project is carried out with the minimum of disruption. For example, an IT procurement specialist could plan a training course for employees to be ready for any eventuality, such as a change in the business environment. This type of IT procurement is more focused on the short-term versus the long-term goals, and is more focused on meeting the needs of the moment.
External IT procurement
… is concerned with procuring hardware, software and services from a variety of online sources. The focus is on supplying the customer with a high-quality product/solution that meets their existing needs. The latter type of procurement is more concerned with the long-term strategy of the organization, and strives to acquire solutions that keep pace with changing requirements.
The role of the procurement manager
… is to ensure that all the necessary approvals are received to proceed with the procurement life cycle. This life cycle includes 1) Selection of suppliers; 2) Contract administration; 3) Contract signing; 4) Expediting of orders; 5) Acceptance of products; 6) Installation of systems; 7) Management of post-installation services; 8) and lastly, 9) Management of warranty and maintenance services.
The IT procurement process
… is not designed to be a monolithic process. Instead, it is designed to provide a foundation for many smaller activities. For example, an IT procurement specialist might consider monitoring the market trends, evaluating the cost-benefit ratio, and determining the optimal pricing for an asset. The procurement specialist might also consider measuring the relative risks of new technologies versus existing ones.
The IT procurement process should not be confused with the acquisition phase, which is a series of meetings with suppliers, signing contracts, and following through on the procurement. Instead, the procurement phase is more appropriately described as the engagement phase.
IT spending and IT procurement
The key to managing your IT spending wisely is to keep your spending under control and to leverage the power of the existing IT infrastructure. In other words, you have to invest as much as is needed to stay competitive in the information technology industry.
Learn more on our procurement management services. You may also be interested in the importance of a procurement strategy as well as in other topics in our IT blog written by our IT managers. In our IT blog, we post articles on related subject matters each month. It contains a mix of in depth analyses, as well as suggestions for how to make the IT processes in your company more efficient.
- Ask our IT managers why it’s important to keep your procurement strategy in mind.
- Also, ask us how to keep your IT budget under control.
- A new upcoming IT procurement management guide gives business leaders a roadmap for best practices in implementing IT procurement. We’ll examine the IT procurement process in an IT procurement framework, called STM. The STM framework provides a set of design patterns and tools to help you.
- An upcoming blog post will examine the IT procurement process in detail, including how your industries IT procurement models stack up against each other. Stay tuned for an in-depth look at the key issues.
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