IT Procurement

What is IT procurement?

The eight steps in IT procurement

IT procurement challenges and opportunities

IT procurement FAQs

Information technology (IT) procurement is a business process encompassing both the purchasing and implementation of the IT products and services an organization needs to operate. 

In line with organizational strategy, the IT procurement process begins by identifying technology needs before researching, shortlisting, selecting and eventually purchasing the required products. For business-wide procurement, the organization’s centralized IT department will oversee the process, typically headed by the company’s Chief Procurement Officer (CPO).

Robust IT procurement practices are essential for cybersecurity, employee satisfaction, productivity, optimizing costs, and for achieving business objectives. IT procurement best practices also help to combat shadow IT. 

The rest of this page will explain the eight steps of technology procurement, some of the challenges and opportunities it presents, and how the Vertice platform can play an essential role for procurement managers.

An effective IT procurement strategy can be distilled into eight steps, as follows:

1. Identify business needs

You’ve identified an area of your organization that’s not operating as efficiently as it could, but what does the team require in order to improve?

The first stage of the process is for the procurement team to meet with end users in the relevant departments to discuss the kind of technology solution they need. If, for example, business needs are for a CRM platform, the IT procurement manager should meet with marketing and sales teams to discuss the requirements. 

How will the software be used? How often will it be used and by how many people? What are the key features the team needs from a platform like this? These are the fundamental questions to ask during this first step. 

2. Review your existing stack

It’s possible that one of your software providers already offers the solution you need. For instance, the CXM platform Sprinklr is predominantly known for its Social, Marketing, and Insights capabilities, but the company also offers a CCaaS solution. Conduct an audit of your existing stack to see if you can simply upgrade a current solution and potentially save considerable amounts of time and money.

3. Make or buy analysis

This step is a luxury limited to companies that have the budget and expertise to develop their own software solutions. The question here is whether a bespoke, in-house tool can be developed and, if so, whether it would outperform an out-of-the-box product in terms of function and cost. In cases where IT requirements aren’t met by the current market, custom-made technology solutions could be the answer.

4. Market research and shortlisting

For most businesses, the step above is a quick process, with the dial falling on the option to buy in most cases. If it’s the case for you, the next step is market research. Create a shortlist of suitable service providers operating in the space you’ve identified as a need and compare pricing (if available), platform features, integrations, shortfalls, and peripheral costs to consider. 

5. Vendor vetting

Once you’ve whittled down the shortlist to a handful of potential vendors, conduct risk analysis on each one. Look at customer reviews, financial stability, and the supplier’s reputation to determine each vendor’s suitability. Are there any security concerns you should know about? Does the vendor share the same values as your business? This last question might not be high on your list, but strategic sourcing means staying aware of current news stories and vetting potential partners responsibly.

6. Prioritization

Organize your potential suppliers into a Top Three list, ranking them all in terms of preference. Once the list is finalized, hand it over to your IT manager or CPO and let the negotiating team head to the table. 

7. Negotiation 

Negotiating procurement contracts is a key feature of IT purchasing. Set out your stall early, committing your supplier on assurances of customer service, technical support, KPIs and product uptime requirements. Establish the metrics through which both parties can fairly determine the success of the partnership and agree on dates for performance review.

Negotiations also afford buyers the opportunity to try and customize their subscriptions, specifying the features they want from the platform — it might not always be possible, but look for negotiation leverage here. 

For example, the platform you’re procuring might come with three subscription tiers; your business requirements mean that the middle tier will suffice most of the time, but there’s one feature included in the premium package that your stakeholders really want. This is the time in the procurement process to ask. 

What’s important here is that you strike the right balance. Developing and then managing vendor relationships is essential — you don’t want to push too hard during negotiations with unreasonable requests, particularly if the platform is vital for your ongoing IT needs.

8. Contract signing

Decide whether you want to commit to a monthly or annual subscription. Once both parties are happy, all that’s left to do is sign the contract.

IT procurement presents a list of challenges and subsequent opportunities. When these challenges are approached carefully, resolving them will not only enhance your IT infrastructure, but help to improve wider business operations too. 

1. Challenge: Your organization is becoming overwhelmed by its customer touchpoints.
2. Opportunity: Procure a CXM platform and gain greater visibility of the customer journey.

1. Challenge: Shadow IT is making asset management more difficult and generating new security threats. 
2. Opportunity: Implement a robust IT procurement process to gain better insight into your overall IT infrastructure. 

1. Challenge: Vendor management is becoming increasingly hard to maintain as services are added to your IT stack. 
2. Opportunity: Invest in a vendor relationship management (VRM) platform to develop supplier relationships and improve the vendor lifecycle.

1. Challenge: Vendors obfuscate pricing to set the parameters of negotiation during purchasing discussions.
2. Opportunity: Utilize the Vertice platform for better transparency on vendor pricing and purchase orders.

The last challenge in the section above leads nicely into the benefits that arise from using the Vertice platform. Our platform helps optimize SaaS management and spending across your entire supply chain, making it easier to procure, renew and streamline your entire stack.  

By working with us, IT procurement teams are given access to pricing insights across myriad software vendors, uncovering precedents for better pricing than what’s listed on their respective sites. Armed with this information, we’re able to negotiate bespoke deals at optimized prices, generating buyer leverage often absent in IT procurement. 

Once we’ve secured the best deal on your behalf and the service is up and running, the Vertice platform provides real-time feedback on product performance. Users will receive notifications when KPIs are — or aren’t — being met, and the system will provide plenty of forewarning of contract renewal dates. 

The Vertice platform is the only integrated platform for SaaS and cloud cost optimization. The aim for both of these products is simple: reduce the amount companies spend on IT procurement and management. 

Our cloud service uses automations to constantly monitor your cloud environments for cost-saving opportunities; working with Vertice can save your organization 25% or more in IT spending.

For more information on our SaaS Purchasing and Cloud Cost Optimization products, click on the relevant links and get in touch.