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• Did you know that the average business is using up to 80 IT-sanctioned Software-as-a-Service (SaaS) apps? This is a 10-fold increase since 2015.
• And, according to Gartner’s 2020 I&O Leaders Survey, SaaS solutions are here to stay. Prominent data bureau Statista agrees and predicts the SaaS global market to reach $138 billion in 2022.
• So, with organizations clearly relying so heavily upon IT, how are they going about sourcing solutions in the most efficient manner?
Enter IT supplier strategy.
What is IT Supplier Strategy?
An IT supplier strategy is simply a plan of action, an approach, a procedure that a procurement team adopts in order to source, identity, and qualify information technology vendors.
Seeing as IT solutions are now an integral part of business operation, it has become necessary for procurement teams to develop sound IT supplier strategies.
It’s quite an undertaking trying to find qualified IT suppliers if you think about it. There are so many IT requirements within organizations that without a carefully curated plan, it’s very easy for costs to accumulate. And with some technologies requiring additional licensing fees, it becomes evident that procurement teams cannot afford to be negligent in this area.
The Purposes of IT Supplier Strategy
We have seen just how central IT is within organizations and as such, having a strategy for IT procurement is of absolute importance. Here are some of the purposes fulfilled by an IT supplier strategy.
1. IT Supplier Strategy Helps to Achieve Cost Savings
Ensuring IT sourcing and procurement costs are kept at a minimum is good business practice. An IT supplier strategy promotes strategic IT sourcing by helping to identify and select those vendors that can provide the best value at a reasonable price.
And, according to Deloitte’s 2021 Global Chief Procurement Officer Survey, the “high-performing procurement teams” are those that are able to realize the most cost savings.
2. IT Supplier Strategy Facilitates Alignment of Sourcing and Enterprise Goals
One of the goals of strategic sourcing, and thus, of having an IT supplier strategy is being able to correctly align the entire sourcing process with the organization’s goals. Alignment allows the company to meet its KPI metrics and objectives. Alignment opens the door to reducing supply chain risk while promoting higher business performance when sourcing in supply chain.
3. IT Supplier Strategy Enables Creation of an Optimized Vendor Database
A major lesson organization learned from the COVID-19 pandemic is the vulnerability of global supply chains. We saw in real time the need to have an optimized, up-to-date vendor database of qualified suppliers. Regardless of whether you’re dealing with physical raw materials or cloud-hosted software, the bottom line is the need for an optimized vendor database.
4. IT Supplier Strategy Dictates How to Build and Nurture Vendor Relationships
Building and nurturing long-term IT vendor relationships is in the organization’s best interests. Provisions about how to practically achieve this must be made and written in the IT supplier strategy documents. Vendor management should be treated as best practice. Fostering a good relationship will pay off in terms of favorable service and licensing fees, discounts, and credit extensions.
5. IT Supplier Strategy Increases Productivity
Following a pre-determined modus operandi allows new team members to quickly get the hang of how business is done within a particular organization. Having an IT supplier strategy makes it easier to onboard new team members, talk to vendors using the company script, and so increase productivity.
6. IT Supplier Strategy Encourages Data-Driven Decision Making
When sourcing in supply chain decisions cannot be made without analyzing data. The very nature of an IT supplier strategy encourages data-driven decisions to be made. In order to select the best vendor, certain metrics are needed. There can be no qualification of suppliers without data.
Establishing an IT Supplier Strategy
We’ve seen the role of an IT supplier strategy in the sourcing and procurement processes. But how do you go about building your own IT supplier strategy?
Well, first things first, there is no perfect IT supplier strategy out there. The approach used by one company might not always be best for the next organization. Hence the need to test different approaches, keep the elements that work, discard what doesn’t, and keep refining over time.
Secondly, look at what has worked for other enterprises. What are some of their best practices when it comes to IT supplier sourcing?
Allow your strategy to be flexible and scalable. As your company grows and IT needs increase, it might happen that you need to also adjust your IT supplier strategy.
Lastly, one underrated way of building a fool-proof strategy is to simply sit down with seasoned procurement consultants. This is probably the fastest way to devise an approach that is best suited to your individual enterprise needs.
The Bottom Line
Sourcing and procurement teams have a lot to benefit from having an IT supplier strategy in place. This seemingly simple plan of action can greatly reduce organizational spending, and boost productivity and efficiency while promoting good IT vendor management.
If you’re ready to invest in supplier management software and need reliable, robust, and innovative solutions then look no further than ProcurePort.
Trusted and used by businesses and organizations such as UNOPS, HUD.GOV, and conEdison, consider your procurement software needs covered.
To discuss supplier management software with a consultant or to schedule a demo of our solutions, contact us today.