Follow These 7 Best Practices in IT Procurement

The world of IT is one that is constantly changing. From new methodologies to new technologies, IT is always changing to adapting to the needs of the businesses who rely on it daily.

Despite that, there is one constant in the evolution of technology, and that is the critical role IT procurement plays.

According to Samanage’s State of Workplace Survey, businesses waste an estimated $1.8 trillion annually due to inefficient procurement practices. A single misstep in the procurement process can result in substantial financial loss and operational disruption.

This brings us to an undeniable conclusion: IT procurement best practices are not just an option, they are a must for any forward-thinking organization.

In this article, we will discuss some of the best practices in IT procurement, and why following them is vital to your long-term success.

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Understanding IT Procurement

What is IT Procurement?

IT procurement encompasses the activities involved in acquiring IT-related products and services. This includes hardware, software, and services, and ranges from setting up cloud-based systems to managing supply chain processes.

Why is Strategic IT Procurement Important?

Strategic IT procurement goes beyond mere transactions, turning them into tactical decisions contributing to the success of your business. It’s about understanding the total cost of ownership, not just the price tag.

The IT Procurement Process

IT procurement generally follows a process that includes the following steps:

Step 1: Identifying Needs

The initial and arguably one of the most important steps in the IT procurement process is identifying your organization’s specific needs. This involves a deep understanding of its strategic objectives, existing infrastructure, and future plans.

During this phase, it’s crucial to analyze your current systems, processes, and equipment to identify gaps or areas for improvement. Consult with key stakeholders and IT staff to understand their needs and challenges and ask these questions:

  • Are existing systems outdated or struggling to meet user demand?
  • Are there new technological developments that could increase efficiency or productivity?
Step 2: Supplier Evaluation

To avoid complications later on, thorough supplier management is crucial. This means researching potential suppliers to ensure their reliability and the quality of their products or services.

Evaluating different suppliers and doing market research can be a long and arduous process, but its benefits are clear. The better your research is, the easier it will be to pare down your list of potential suppliers and find one whose products or services align with your business’s needs.

Step 3: Bidding or Negotiation

With your shortlist of suppliers in hand, the next step involves bidding or negotiation. The aim is to strike a cost-effective balance between quality and price.

Successful bidding and negotiation involves several key elements, such as communication, emotional intelligence, planning, value creation, strategy, and reflection.

Step 4: Contract Management

Following the negotiation phase, contract management becomes essential. A well-structured contract will outline the responsibilities of both parties and pave the way for a smooth procurement cycle and workflow.

Best Practices in IT Procurement
Source: Simfoni

7 Best Practices in IT Procurement

Now that you understand how IT procurement works, let’s discuss the six IT procurement process best practices. Following these best practices can lead to significant cost savings, improved efficiency, better risk mitigation, and strengthened supplier relationships.

1. Establish Clear Requirements

From cloud storage to database software, clearly defining your business’s requirements is an essential part of best practices in IT procurement.

This is a crucial IT procurement best practice, as a Gartner report stated that 70% of senior business leaders recognize that technology is vital for revenue achievement, product development, customer engagement and the advancement of strategic operational processes.

2. Perform Supplier Due Diligence

An important aspect of supplier management is performing thorough due diligence. Understanding the supplier’s track record and industry reputation is key to preventing future issues and avoiding misalignment.

3. Adopt a Value-Based Approach

Rather than focusing solely on cost, consider the overall value that a product or service can provide to your organization. This includes supplier reliability, product quality, and post-sales service.

4. Promote Transparency

A key element of the digital procurement processes is transparency. Honest, open communication, both internally and with prospective suppliers, fosters trust and mitigates risk in the procurement cycle.

5. Implement a Risk Management Strategy

Every procurement strategy carries potential risks. Implementing a risk management process can help your procurement teams identify, assess, and manage these risks.

Failure to identify risks upfront can prove costly, as 77% of businesses suffered from operational surprises in the past five years as a result of unidentified risks.

6. Promote Supplier Diversity

Relying on a single supplier is certainly acceptable. However, there may be instances where you might want to explore other suppliers, especially if they offer innovative solutions. Having a diverse supplier base not only improves your innovation but also reduces risk.

7. Continual Performance Evaluation

Once the agreement is signed and the new products are in use, it’s important to regularly assess supplier performance to ensure they meet your organization’s evolving needs.

Overcoming Common IT Procurement Challenges

Despite its various benefits, the IT procurement process is not without its challenges. Lack of expertise, complex procurement processes, and rapidly changing technology landscapes are just a few of them.

However, by staying updated on industry trends, investing in continuous learning, and integrating automation into your procurement processes, you can easily overcome these hurdles.

A Quick Look at IT Procurement Best Practices and Their Benefits

Best Practices Benefits
Establish Clear Requirements Prevents unnecessary purchases
Perform Supplier Due Diligence Avoids unreliable suppliers
Adopt a Value-Based Approach Provides better return on investment (ROI)
Promote Transparency Provides contingency plans
Implement Risk Management Strategy Reduces risks and builds trust
Promote Supplier Diversity Fosters innovation and reduces risk
Continual Performance Evaluation Ensures ongoing supplier quality



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Choose a Trusted Partner That Follows Every IT Procurement Best Practice

The power to propel your organization’s success forward begins by following IT procurement best practices. These are more than just guidelines; they are your roadmap to increased efficiency and cost-effectiveness.

For over 39 years, NetGain Technologies has proven itself as an industry leader by integrating these best practices into our operations, offering top-tier IT procurement solutions for businesses like yours.

Experience the transformative power of strategic IT procurement. Take the first step towards unleashing your business’s potential by contacting us today for a free consultation.

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