The Three Stages of Technology Procurement
The Three Stages of Technology Procurement

Technology procurement is quickly evolving from a tactical, organization-wide undertaking to one that is more strategic and catering to multiple units within a company’s infrastructure. More businesses are taking advantage of things like Bellwether procurement software as a way to improve their procurement process. As a result, the skill set of the CTO, CIO, General Counsel and other members of the procurement team must follow suit. Upgrades used to be about minimizing costs and lowering risks. But those were the old days. Now, the procurement team responsible for software, hardware, and data security upgrades are being asked to select and implement technology platforms that drive innovation and efficiency, better service a wide cross-section of their customers, and even find new ways to generate revenue. In order to be successful in procurement decision making, a company’s procurement leaders must not only understand the high-level business plans and goals of the organization, but also the objectives of the specific units within that organization. Marketing, HR, customer service, document management, communications, business development and sales may each have their own nuanced and materially different needs when it comes to technology; and the procurement team must learn how technology products and services can benefit and support each and every department within their corporate hierarchy.

Typically, there are three stages to a successful procurement process: (1) Planning, (2) Research & Evaluation, and (3) Negotiation & Implementation. In the planning stage, the procurement team must collaborate with one another to define the company’s business objectives and needs, and determine the scope of the upgrades necessary to achieve the desired outcome. At this stage, it is prudent to sync up the identified business needs with specific procurement-related metrics in a procurement plan including: estimated costs for the upgrade; quantifiable financial and non-financial benefits; and intended outcomes. A procurement plan should also outline the technical aspects of the upgrade, address any scheduling challenges, and identify potential risks, all of which should be shared with the technology vendors. Armed with these details the vendors can propose mitigation techniques and share escalation procedures as part of their response to your solicitation. Obviously, the procurement team should try and allocate risk through contract negotiations, and robust service-level agreements, clearly defined acceptance criteria, and financial consequences for material breach are all crucial.

Stage two of the procurement process is market research and evaluation. The procurement team must understand not only the technical marketplace and competition within that marketplace, but also the latest innovations available and the types of services and support provided by various vendors. Only through adequate market research can the procurement team develop a detailed statement of work with its vendors including the purpose of the upgrade, the scope of products to be purchased and services to be rendered, a list of deliverables and corresponding schedules, the standards to be adhered to by the vendors, and other criteria applicable to the engagement. Once market research is complete, the solicitation process can begin and prospective vendors can be given the opportunity to respond directly and in writing to your company’s needs. Vendor experience, proposed solutions, and cost-effectiveness of those solutions should be carefully analyzed.

The third and final stage of the procurement process is negotiation and implementation. When defining areas of responsibility be detail-oriented and specific. The same is true when fleshing out the performance standards and compensation structure for the procurement transaction. Once the agreements are all executed and implementation begins, the procurement team should continue to use the contracts as a reference tool to ensure that vendors stay true to the obligations created therein. Procurement teams and their counsel should actively measure progress on a regular basis, compare actual deliverables to those outlined in the agreements, and vendors should be held accountable for unforeseen costs and time overruns. Performance deficiencies should be documented and remedies discussed as schedules and corresponding milestones come due.

Ultimately, success of a large-scale technology upgrade can be measured based on the effectiveness of communication and coordination by and among the procurement team and vendors; determining whether both technical and business needs and objectives of your company were adequately met; and confirming that the procurement was cost-effective and that deliverables were achieved in a timely manner all as specifically outlined in the procurement plan, statement of work and corresponding contracts.

Tags: IT


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