It was nearly two decades ago when conventional techniques of procurement were more prominent. The entire procurement procedure was time-consuming and exorbitant. Not only that, but the error percentage in the operations was high, as was the workload.
And today, technological breakthroughs have a significant influence on projects and businesses and how they accomplish their procurement processes.
Technology procurement is vital in business since it ensures that all essential infrastructure, software, and networks are deployed and in service for the company. E-procurement, contract repository, supplier performance management, AP automation, and other features are some of the examples.
The more the advancement of technology, the more the reliance on technology. But the issue is, what precisely is technology procurement, and how does it improve the entire operation of businesses?
What is Technology Procurement and What Steps are Involved in it?
Assume you are the proprietor of a marketing firm and you want applications to assist you in gathering information on the dietary habits of university students in Delhi. Of course, there will be different application solutions available to you, but choosing the suitable solution and implementing the very next steps would be complicated.
The product team investigates and finalizes the technology that must be acquired globally in order to produce their end software output. Following that, they create a Bill of materials (BOM), which includes a thorough inventory of all the tools required to manufacture a product.
Ultimately, once the technology is finalised and a BOM is drafted, your team has to choose from three types of software:
Freeware: The software that is supplied for no monetary cost to the end-user and does not have agreed-upon sets of permissions or licenses.
Commercial: This type of software is produced for sales.
Open-source: This software is distributed under a copyright license, which provides users the ability to use, study, and modify it for their purposes.
The BOM is then presented to the sourcing team, which begins the purchase process. This action results in the acquisition of strategies and organizational competencies to increase productivity in the long run.
The stages required in technology procurement are comprehensive, and the sourcing team conducts them following global technological upgradation.
The process begins with comprehending the component specs that are researched and evaluated by the Product team. This incorporates the software program to be utilized, the suitable technology, cost-of-procurement, and any other important aspect.
Following that, the sourcing team examines their network for vendors who are already accessible, and if not, they seek their worldwide market.
After obtaining quotations containing EULAs (End User Licensing Agreements), the team thoroughly evaluates them.
The EULA outlines the rights and restrictions that apply to the usage of the application. It contains information such as definitions, license grants, usage restrictions, a copyright notice, and a limited guarantee.
The team must pay close attention to the EULA terms and conditions, which define what they are and are not permitted to do with the program. If you work for a firm that has special access and expectations, an EULA is required.
Assume you work for an IT firm that specializes in ethical hacking and other varieties of cybercrime. The software required for this type of operation might be disastrous if not properly maintained. As a result, the EULA protects the right of users and other all involved parties. The terms and conditions would be set in accordance with the software, which the company is required to use.
The team also looks over the EULA to see if any of the clauses are inhibiting their development. If such an impediment exists, they must repeat the preceding approach and seek an alternate solution.
Following that, they negotiate with suppliers based on the demands of the business and select the greatest value for the company. Furthermore, they review it with the product team to ensure that no disparities develop in order to avoid future issues.
How Technology Procurement Benefits the Business?
Technology procurement benefits the business in various ways:
- Global Procurement: Assume your organization is in Asia and you require support from the Americas. Well, the process would be less challenging than it was ten years ago. You may quickly obtain products and services anywhere in the globe with the use of technology procurement. In addition, you have access to a massive variety of markets, resources, and vendors from which to choose.
- Operation performance: Since technology procurement is expanding, many internal business procedures may now be substantially automated. Consequently, there is less human intervention, which results in cheaper costs, improved accuracy, and faster outputs.
- Improved spend visibility and lower costs: Businesses benefit from technology procurement in a manner that optimizes volume while lowering costs. It also aids in identifying cost-cutting possibilities and effectively managing company risks. For example, suppose you work as a sales lead. You will have less workload since you can divide your procurement needs among providers and conveniently oversee contract compliance. As a result, you will be able to concentrate on critical activities and require your focus.
Standardized workflow: Be it an IT company or a marketing business, there is always a difference of opinion in various company departments. However, with the help of technology procurement, the system is produced with a standardized workflow and reduces the need to deviate from the process. This results in creating more process efficiency.
The Generic Model of Technology Procurement
Every organization should develop a Technology Procurement model to facilitate the exchange of information concerning managing procurement procedures and activities. In addition, the model could serve as a framework for making the process of procuring information technology simplified and thorough.
The two categories of this model include:
The activities and processes that reflect the life cycle of IT procurement that a particular product or service goes through are contained in the implementation category and comprise:
- Requirement Setting: It is responsible for assessing IT investment and business use cases and determining the business rationale, requirements, and authorizations needed to initiate the process.
- Acquisition: It comprises evaluating and identifying important vendors for the procurement of technology assets and services.
Contract Execution: It refers to the management and coordination of all operations associated with executing contract criteria.
All procedures linked to the overall governance of technology procurement are included in the management category. It covers:
- Vendor management entails responsibilities connected with optimising customer-supplier relationships, such as portfolio strategies and buying performance measurement.
- Asset management: It is responsible for the development and administration of asset management strategies and the use of all IT assets within the company during its full life cycle.
Quality management: It is the assurance and implementation of continual improvements in the procurement management process, such as product testing and quality inspections.
When a company’s technology procurement needs are properly designed, it results in efficient and high-quality procurement. As a consequence of automation, costs are reduced, and attention is focused on critical operations.
Tutelam is an SCM firm that specializes in P2P Outsourcing, IT solutions, and Non-Core Procurement Outsourcing. We allow you to concentrate on core operations while managing technical tasks such as supply chain management, expenditure analysis, dashboards, and so on, resulting in lower expenses and optimum cost utilization.