Information technology is an unusual beast when it comes to procurement and acquisition of material. This can create challenges within your organization that aren’t always easy to spot, but that can be detrimental to the bottom line.
IT teams typically develop the tools that people use to request an IT purchase. Then, once the equipment arrives, they’re responsible for installing or maintaining it. However, they don’t own the process in between. Instead, IT groups are usually beholden to their counterparts in Supply Chain Management (SCM), who are responsible for obtaining price quotes, placing orders, receiving the material, and ensuring that the company receives what they paid for.
Here is a simple process diagram that illustrates a typical acquisition process for IT materials.
Flipping the acquisition coin
As you can see, there is a lot of interaction between IT and SCM. This can be advantageous if the right policies, processes, and people are working together toward a common outcome. From my experience this is not usually the case. Most often, there is an unhealthy tension between these two groups that needs to be carefully managed. Here are the two sides of the acquisition coin:
Heads — IT Side
As technical experts in their field, IT sees most material as commodities that just need to be sourced by their SCM group. IT provides part numbers or identifies specific contractors they know can perform the work. An SCM buyer once told me, “IT wants what they want and they want it when they want it.” It is illustrative but accurate description of how IT interacts with their SCM counterparts.
Tails — SCM Side
As buying experts, SCM is interested soliciting competitive bids to make sure that the organization gets the equipment or expertise it needs at the best price. When IT identifies a need, SCM wants to vet things to make sure that the contract doesn’t create additional risks for a company, and that the vendor is capable of delivering on their promise. SCM also wants make sure that the tender process complies with any legal requirements. IT usually sees SCM as an additional layer of bureaucracy that creates an unnecessary barrier to purchasing.
Rigging the coin toss
The challenge is that both groups have an equally important role to play in acquisition. Unfortunately, most groups within organizations struggle to collaborate effectively when no single group has direct control. In other words, when there are two masters — or in this case, two chains of command — people get disoriented. As a result, they either try to be everything to everyone, or they entrench themselves in their own specific function.
Our experience suggests that when an employee tries to be everything to everyone, they don’t succeed in creating value. Instead, they end up creating confusion within the organization by trying to please too many people at the same time, without achieving anyone’s specific goals. And when people become entrenched, they spend their energy trying to show that they’re more “right” than their colleagues down the hall, rather than on achieving the best overall outcome.
For example, if there are savings to be had, both IT and SCM want to take the credit. So if SCM says they can source equipment from a different supplier for less, IT will point out that it takes more effort to install and maintain. From an organizational perspective, the infighting doesn’t help anyone. The senior leadership just wants to see the right thing done, regardless where or how it happens.
The winning solution
To make IT acquisition work to support the overall goals of the company, it’s important that both teams work toward a shared and aligned goal. This sets the tone for consistent communication and collaboration.
The best relationship between IT and SCM is built on an appreciation of what each team brings to the table — where IT recognizes the value that SCM adds to the process, and where SCM focuses its energy in their areas where they add real value.
Extensive sourcing activity might not be necessary for small equipment purchases; in these cases, it might be most effective for SCM to simply broker the request. However, for large pieces of equipment or contracts for professional services, IT staff should take advantage of the value the SCM adds by working with them as partners in the process.
To make this work effectively, organizations should identify metrics and key performance indicators that promote this behaviour, rather than inadvertently generating competition between groups. When everyone knows they are working towards the same goal, and the policies and procedures are designed to support that goal, you generate real IT value for your company.