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Conclusion: In today’s marketplace, a successful business needs to position itself strategically to be a leader in the market by either delivering services better and cheaper than the competition, or by disrupting the status quo to deliver services in a different way that empowers the consumer. To achieve this, organisations need to ensure their procurement plans are aligned with the business strategy and, where appropriate, identify in the ICT sphere where procurement is important strategically.
Organisations therefore need to identify the value a supply chain delivers to the business strategy. In doing so, the executive needs to understand the procurement activities that provide an advantage to the business in the marketplace, and which procurements may lead to a broader alliance with the supplier where mutual gain is possible to all parties involved.
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Conclusion: All organisations need to identify the value of their procurement portfolio. That is, to document and regularly review the portfolio to understand both the criticality of the contracts to business and the triggers that decide whether the technology is meeting the need and when actions need to be put in place to limit the risk to the business in the acquisition process.
With an improved situational awareness of the procurement portfolio, organisations then need to ensure alignment with the business strategy. The alignment can only be achieved with regular independent reviews, and by effective governance processes to ensure that the risk associated with procurement planning is contained.
Conclusion: In the modern world, no organisation has ICT entirely in-sourced. As a result, procurement, contract and vendor management have become strategic processes that allow organisations to align their ICT capability with the business strategy to achieve the desired outcomes, both now and into the future.
It is often the case that effective planning for the procurement of technology capability is compressed or constrained such that procurement is not able to effect ‘big step’ change. Or the commercial approach means the agreement is based on a fixed term, which results in the procurement not being a strategic exercise. More often than not, the procurement delivers constraints that limit the business’s ability to achieve the desired outcomes. These constraints limit the business’s ability to be agile in terms of elasticity, or how well it can respond to disruption in the market.
The technology options to meet business demand are not the same today as they were yesterday, and they will undoubtedly differ tomorrow. The challenge is to ensure ICT procurement is responsive to the business strategy, and that vendors share in the advantage a strategic alliance brings to the business. Procurement needs to be effectively planned and clearly aligned to the business strategy to ensure the strategy is delivered effectively.
This paper is the first in a four-part series on how to ensure procurement meets the business need, gain an understanding of strategic versus tactical procurement, and will define the steps necessary to avoid the pitfalls that cause procurements to under-deliver.
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