The phrase ‘digital transformation’ is among the most used in IT circles this year, and for good reason. As organisations strive to strike back against the Uber and Airbnb-style upstarts, or to stay relevant in a digitised world, the pressure is on to reinvent. The response is changing the IT department’s position in the business.
Why IT Departments are Becoming Service Providers
There are two key factors at play. The first, not surprisingly in the brave new digital world, is the way businesses are turning to those with technical understanding to forge a path into the future. The IT team, with their grasp of emerging technologies alongside their knowledge of the business and its processes, are expected to save the day.
At the same time as acting as digital superheroes, though, the IT department is increasingly seen as a service provider, expected to meet certain service level agreements to the rest of the organisation. This may be in terms of time taken to roll out new services, provide capacity, or business continuity provisions.
The As-a-Service Revolution
Not surprisingly, IT teams are turning to an array of as-a-service models to help meet service levels. From software to pay-as-you-go platform as a service (PaaS), the trend is gathering pace. There is one every-day aspect of IT that has until now been largely overlooked, though – in spite of being both time consuming and high on administrative overhead. When IT departments are time poor and frustrated, procurement frustrations are often the cause.
Enlisting help to fulfil procurement service levels is a necessity for many busy IT departments. After all, when the IT department is working flat-out on digital strategy, it is one of the easiest and most practical elements to offload.
Typically, acquiring equipment such as desktops, laptops and point of sale (POS) machines involves a lengthy process. The HR department or a line of business makes a request; the IT department assigns a task, and a (usually over-qualified) team member researches appropriate machines, then negotiates with vendors or IT partners to agree a price. Approval may be needed from the finance department, a purchase order is raised, and a few weeks later, the IT storeroom or warehouse receives the machines. The team member collects boxes, loads a standard operating environment (SOE), asset tags the machines, then if the machines are needed at another location, returns them to the storeroom or warehouse to be sent out.
That is an awful lot of touchpoints for a busy IT department. Aside from the resource drain, not every IT member is equipped to negotiate prices, so outside the major purchases, it is simpler to just order more of the same from an existing partner. Margin creep sets in, though, so from that initial order at maybe a 5% margin to win business, you can expect that margin to creep up over time to 10 or 15%, the ‘cream’ for the supplier. That, of course, is invisible to the purchaser.
How Procurement Services Work
Like any as-a-service option, procurement offerings are not all created equally. It is worth doing your homework. When we designed the building blocks of our Procurement Transformation Framework, we wanted to give control and transparency, with minimum effort involved from the customer. Our Transact program is built on a consistent low margin, with transparency for customers.
That consistency means that the same deal is on offer for small orders as for large. It also means there is no agenda based on hidden commissions, so you get the best option instead of the one that will help a salesperson to meet a target. We added in our Techflow portal, so that it would be easy to set up standard product and bundle options, all in a portal branded for each customer individually. Our Techflow portal is designed to be an asset for each customer – something that IT can deliver to the rest of the business.
Our third building block, Zerotouch, handles the SOE and asset tagging tasks involved. Instead of taking hours per machine, there is a very low charge – lower by far than the cost of using skilled staff to carry boxes to and from the warehouse.
Addressing Time Pressures
With the pressure on to meet service levels, it is near-impossible in a busy IT department to consistently procure machines quickly enough in-house. In our own model, we wear the cost of keeping a number of machines in stock for time-critical needs.
The right procurement model will allow you to confidently promise machines to your lines of business within days – fully configured, asset tagged, domain joined and ready to use. And they can just create equipment requests on a fully branded portal, complete with pre-agreed low margin, so the IT team doesn’t have to get involved. Just a report when you need it.
As skilled resources are at a premium, and the service model becomes more entrenched, your as-a-service choices will play a part in defining your level of digital capability. Seeking options that save the most time, while retaining most control and causing least disruption, will be key. Those that promote the IT department as a service provider will be especially prized.
To assess whether a procurement service is right for your organisation, or to learn more about how it works, contact our friendly procurement experts.