Were procurement steps skipped in the rush to home working?

posted by Sherry Irwin
4 October 2021

The start of the Covid-19 pandemic saw organisations rushing to deploy new technologies to enable home working.

In most instances the usual due diligence process was either reduced or bypassed altogether.

Companies must now look back at the decisions that were made in order to find and address any potentially excessive commitments or supplier risks that might have been introduced at the time.

IT Asset Management (ITAM), a division of IT which focuses solely on the management and optimisation of an organisation’s IT assets, is one of the business functions that is poised to play a big role in this post-Covid audit, and thus, in our post-Covid recovery.

With its role in the due diligence of IT spending both before the purchase and throughout its lifecycle, ITAM is well positioned to help supply chain managers and procurement professionals expose and mitigate inadvertent supply chain risks.

Where are the risks?

The risks are most likely to be found in the following four areas:

1. Associated contracts. Contracts may not have gone through the typical assessment/analysis, and comparison against the organisation’s standard and mandatory terms (business and legal) – particularly for new suppliers; and, may have been accepted rather than negotiated, without the customary reviews and approvals. 

2. Supplier viability. Customary evaluation against standard criteria may have been missed or done on a limited basis for new suppliers, such that not all risks were identified, let alone mitigated, with indeterminate consequences. A similar situation may exist for additional business with existing suppliers, particularly if also impacted by the pandemic.

3. Overspend. The organisation may be paying too much for software, hardware or services purchased in a rush at the start of the pandemic, possibly without the benefit of available or negotiated discounts; or, which may not be needed post-pandemic.

4. Overcommitment. Many organisations purchased excess software, hardware or services, uncertain of future demand or supply; in some cases, that excess proved unnecessary, with the result that the organisation has unused (and unusable) inventory. ViacomCBS for example recently saved over 32% on Zoom licenses after an internal ITAM audit found many licenses were being unused. That is just one piece of software. What other savings could be out there?

The overall objectives of ITAM is to control the cost, reduce risks and maximise the value/return of IT investments, so it is the best placed to conduct or lead these assessments in partnership with procurement.

ITAM oversees the business aspects of all IT investments, including contracts, suppliers and financials, with consideration for the entire lifecycle, as well as total-cost-of ownership. As a result of this, it is one of the only organisational functions to already have the necessary reach across all other organisational departments, combined with oversight of the entire IT portfolio (estate).

Procurement professionals would therefore be well placed to reach out to their ITAM colleagues today in order to evaluate any risks inadvertently added to the supply chain during the Covid lockdown periods, but also to maintain the resilience of their IT supply chains going forward.

☛  Sherry Irwin is founder of Technology Asset Management Inc and trustee of the ITAM Forum.

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