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How IT buyers can digitalise procurement sooner rather than later

Ian Nethercot, MCIPS, supply chain director, Probrand

While this might seem a compelling proposition, most IT procurement teams find themselves some way off being in that position. New research has revealed that fewer than one in five (18%) believe they are at the point of full digitalisation – while 28% are yet to make any plans to move in this direction.

The data, compiled by Probrand in collaboration with CIPS, revealed that this slow movement towards digital transformation is having real world consequences for IT buyers. For instance, a quarter said they were still spending the equivalent of one day each week researching IT purchases – while almost two thirds (63%) are still relying on manual systems as their primary method for placing orders. Furthermore, most (51%) are still waiting at least three days on average for a simple PO number before they can buy – restricting their ability to make timely purchases.

These cumbersome processes are a huge drain on businesses which could be reaping the rewards of the operational efficiency brought about by digitalisation. Procurement professionals already know this, but they point to several obstacles that are holding them back. This includes limited budgets, dealing with legacy systems and not having the support of management.

So, how can IT buyers digitalise their operations in a way that doesn’t cost the earth, that will work with existing systems and that gains the backing of business leaders?

The value of live data

To do this, IT buyers must first help the executive team understand the value of real time data when making purchases. Given the volatility in the IT market over recent years, access to live information has never been more important. IT is the largest category of indirect spending within organisations and, if buyers are going to identify opportunities and manage their budgets better, ready access to accurate product, stock and price information is critical.

Probrand’s research revealed that access to live data is far from the norm, however. Despite there being around 60,000 product price changes in the IT market every single day, just 15% of businesses are keeping prices up to date daily. Nearly one in five even said they either never update this information (4%), and only do it on a yearly basis (15%). The picture is similar when it comes to updating stock availability and product information – with just 21% and 10% updating these details daily, respectively.

Given that a lack of accurate data severely inhibits the ability to acquire the best equipment quickly and at the lowest prices, it’s little wonder that 81% fail to achieve value for money on their IT purchases.

If orders were processed through digitalised systems, key information would be automatically available. This would allow for a careful analysis to be made on every purchase, instantly. This would help to streamline operations, free up budgets and give procurement professionals more time to work with suppliers, to meet the organisation’s needs.

Seven steps to digitalisation

While some resources may be needed to drive this transformation, here are seven steps procurement teams can take to build out their digital processes without incurring major costs – or disrupting the existing digital infrastructure.

  • The first step is to analyse your most time-consuming tasks. Identify the processes that can and should be automated.
  • Assess which suppliers are offering digital platforms and portals. This can help you gain access to the live data you need.
  • Manage risk by incorporating multiple data sources, from various suppliers. Do your due diligence too. Ask whether information is coming from authorised sources – and check if you are getting full supply chain transparency.
  • Integrate your IT systems with supplier platforms and portals where possible. Check if suppliers can feed data directly into your ERP system, as this will enable digital workflows.
  • Create a digital approval workflow to reduce unnecessary delays where possible. These can be developed in a way that aligns with your organisation’s delegation of authority (DOA) policy.
  • Establish a digital ordering process that will reduce the manual work involved for you and your supplier. This is not about distancing yourself from suppliers. It’s about reducing administration so you can spend your time building more meaningful and strategic partnerships.
  • Enable digital data management. When data is stored and processed digitally, it will enable better analysis and reporting to take place.

In a time of flux, no-one can afford to take chances – but standing still on digitalisation for too long, while others get ahead, is also risky. By building internal support and following this seven-step plan, however, procurement teams will be able to drive forward an affordable digitalisation strategy sooner rather than later.