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Digital Procurement Trends – Part One: The Complexities of IT Decision-Making

21 November 2019
digital procurement

Cloud-based systems. Virtual conferencing. Remote working. The Internet of Things. Most day-to-day activities for the modern enterprise depend on the internet. Let alone the more complex networking strategies that come into play with future-proofing your business. 

Take one of the most prevalent IT trends today – digital transformation – for example. Undergoing digital transformation can mean completely reimagining the way your organization’s processes, culture, and customer experiences operate through the implementation of digital technology. 

Whether you’re opting to apply fundamental changes to your organization in this way – or even simply spinning up a basic cloud strategy, a huge amount of IT decision-making and procurement management goes into putting these in place. 

What’s more is that the demand for IT services, cloud, and enterprise technologies is increasing. Gartner sees demand for infrastructure as a service (IaaS) more than doubling between 2019 and 2022, as more businesses move from a cloud-first to a cloud-only strategy.

So why is it that, even when most companies need these technologies – both to run their everyday business applications and to stay ahead of the game in a digitally-focussed enterprise market – the process of finding, comparing, and procuring IT services is as complex as ever?


What goes into IT decision-making and procurement?

IT decision-makers and procurement team members, such as network planners, architects, and engineers drive the acquisition of IT resources.

Not only are they responsible for the performance, compatibility, and reliability of the services and applications needed to put in place to drive a successful strategy for their company, they also need to keep their size of expenditure, return on investment, and time spent in check. 

Typically, the scope of work associated with IT procurement involves: 

IT Procurement Task What’s Involved?
Researching existing and new markets, and products  Staying across new applications / service releases from providers and also taking into context the industry’s movement as a whole.
Identifying relevant suppliers and resources Searching for colocation data center providers; connectivity fabrics and networks; cloud services; fiber carriers; ISPs; hyper-converged technologies; last-mile connections; and comparing these resources post identification
Negotiating supplier contracts and terms  Negotiating with individual suppliers on commercial and legal terms in an effort to control time and spend on the complete strategy.
Evaluating suppliers and performance Ensuring the performance of suppliers and resources aligns with the IT strategy and business goals. Considering any potential changes and risk across the digital supply chain.
Resolving supplier issues and performance Resolving any problems at any stage of the digital supply chain that might impact business workflow and resiliency of the service.
Maintaining supplier relationships  Ensuring a consistent partnership with all suppliers across the digital supply chain and  maintaining the best economics during future transactions.
Procurement reports and corporate governance Delivering the results of KPIs and supplier performance to senior management.

 

Why is the traditional IT procurement process so complex?

While IT decision-makers and procurement teams ultimately have the power to influence technology purchases, they also bear the burden of what is arguably an outdated and manual procurement process. For this reason, their expertise in analysis, assessment, and research into solutions and vendors is critical.

Let’s focus on two of the initial stages of the typical process, for example:

1. Identifying relevant suppliers
2. Negotiating supplier contracts and terms

Executing on the above stages is, traditionally, not easy. Identifying, evaluating, comparing, selecting, and engaging services and vendors are tasks that are fraught with old-school methods.

To date, there has been no easy way to find out which carriers can service your building or connect you to the nearest cloud on-ramp. Long and often painful phone calls with telecommunication companies, as well as mountains of paperwork, are involved. When you’re procuring the most forward-thinking digital and cloud services, it’s almost ironic that the only way to do this is manual and laborious.

When it comes to negotiating with suppliers, the complexities continue. Long lead times for buying connectivity is perhaps the most frustrating and costly issue that IT decision-makers have to face. The 60 to 90-day lead times that typically come with deploying cloud connectivity is simply not a delay that today’s enterprise can afford.

For service providers, it can take time to produce quotes for customers which, unfortunately, can have a knock-on effect for procurement teams. Making things worse, teams have become used to not having access to reliable market intelligence and comparison data, as traditionally there has been a lack of unbiased information available to support IT decision-making.

On top of this, it’s difficult to manage so many moving parts. Any one IT or cloud strategy entails different services, vendors, and contracts and, more often than not, you end up with a multitude of emails, spreadsheets, and agreements across many different platforms and papers. It can seem impossible to get everything in one place, working together seamlessly.


Technology trends to revolutionize IT procurement 

A shake-up in the way IT decision-makers source and procure colocation, cloud, and connectivity services has been needed for some time, to empower businesses to succeed and innovate in today’s enterprise world.

It’s not only small to medium-sized businesses that have needed an easier way to find and engage with the IT services they need; even the largest global corporations are always considering how they can implement efficiencies across their IT and procurement teams.

In part two of our ‘Digital Procurement Trends’ article series, we’ll introduce the progressive technology trend that’s solving the pain points associated with the IT procurement and buying process – and revolutionizing the industry as a whole.


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References:
https://www.codelessplatforms.com/blog/procurement-process-flow/
https://www.spiceworks.com/marketing/resources/reports/itdm-bdm-it-purchasing-emea/

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