There is a pressing need for purchasing teams that can understand and respond to the specific challenges facing chief technology officers in both mid-size and large corporates.
It has never been harder to differentiate enterprise technologies from the countless IT vendors I meet each month. I’m bombarded with ‘me too’ technology solutions and offers and frustrated by IT vendors who arrive with generic solutions expecting generic business problems. Worse still are those that re-badge previous products as ‘cloud’ or ‘big data’ offerings. I also have to contend with vendors’ quarterly investor cycles, which results in short-term behaviour that negates any value creation and any sense of partnership. It can be like meeting someone who wants to date, get married and have children, within three months.
At A&N Media, owners of the Daily Mail, Mail Online and Metro, we are rationalising our supplier base and have evaluated IT vendors based on economic, strategic and partnership criteria. It is here that procurement has played a major part and changed my perceptions as to the role they can play in transformation. Our business relies on us keeping everything operational while finding new ways to innovate, drive down costs and improve performance. However, we can’t do everything ourselves and we rely on an extended network of IT suppliers who help us to support the business and achieve objectives.
We want suppliers that can evolve into partners. Procurement can make the difference by translating this spirit of intent and baking it into our requests for information and how we contract. It can extract more value from vendors, happy to make investments in their own product portfolios, to make the same investment in understanding how these apply to their customers’ businesses.
For the first time, procurement has analysed historic spend data, carried out benchmarking, forecasted future scenarios and agreed a prioritised action plan to remedy poor vendor performance and introduce new strategic vendors. One consequence of this improved relationship is fewer vendors visiting me with poorly defined presentations that bear only passing relevance to my challenges. I believe there is a lower cost of sale for vendors that engage fully with procurement and take the long-term view.
Technology is moving to the cloud and good procurement helps prevent data and vendor lock-in while robustly challenging vendors that claim service levels and contractual conditions are the same across all clients. We jointly worked on our own private cloud hosting deal where the domain expertise of the technology and legal teams was complemented by a procurement team that was able to drive better commercial terms, maintaining our focus on the key clauses and areas to negotiate.
Risk aware, not risk averse, is an approach we have taken and good procurement practises pragmatism, communicates constantly and operates to the rhythm of business necessity. Procurement teams that understand these challenges and can stay focused on delivering business value in this agile, pragmatic and insightful manner will thrive in the long term.
What procurement can offer IT
1. Prevent technology
officers being bombarded with irrelevant and generic IT offerings
2. Help find and assess suppliers that can innovate, reduce costs and improve performance
3. Evaluate possible IT vendors based on economic and strategic partnership criteria
4. A pragmatic and communicative approach and working for better commercial terms
☛ David Henderson is chief information officer at A&N Media