IT system procurement process – why do I cover this topic so often in my publications? Because the list of benefits of digitization is long, including better security, improved efficiency, opportunities for savings, optimized use of personnel, and increased flexibility and resilience of the organization to change. Not surprisingly, according to the survey “Procurement in a post-pandemic world” conducted by EY, two-thirds of those surveyed are planning an IT purchasing process in the near future to better adapt to evolving conditions.
However, when introducing technological innovations, both customers and IT providers face numerous challenges. On the one hand, how can they digitize to better meet the needs of their customers, implement the system effectively and not expose themselves to unnecessary costs? On the other, how can suppliers better understand “non-technological” customers and deliver solutions that will be of value to them? About this in today’s article.
The current pace of technology development can make one’s head spin. Innovations that were recently impressive are quickly being replaced by newer solutions. As a result, among other things, the IT system procurement process faces a number of challenges at the initial stage. This is because technologies evolve much faster than the adaptability of businesses. As a result, companies are unaware of the existence of capabilities that could support their development and optimization. No wonder, after all, it is very often not their core business. In addition, few companies have the resources to create special units within their structure for talent acquisition, ensuring their ongoing development and the right conditions for continuous learning.
The report “Procurement 2025: Equipping a Multigenerational Workforce With the Skills for Success in a Digital Environment” published by The Hackett Group (a firm specializing in benchmarking and digitizing business processes) confirms this situation. According to the survey, only 17% of procurement leaders are confident that their teams have the skills necessary to meet future business challenges.
Noteworthy, according to the EY survey – 44% of respondents face significant difficulties in attracting new talent for their purchasing departments.
It is not uncommon for organizations to try to apply verified purchasing methods, typical of tangible products, to the acquisition of digital solutions, including software or technologies based on artificial intelligence, Internet of Things (IoT) or data analytics. This is a huge mistake.
When facing the challenge of matching standard procedures with advanced technology, expertise is invaluable. Lack of access to professional advice to help link business challenges to the best available IT solutions can result in an IT purchasing process that ends up acquiring a solution that does not meet the company’s expectations.
Research shows that companies increasingly prefer to conduct the purchasing process themselves, using articles, videos, webinars, among others. They also rely on referrals from friends and business partners. This phenomenon was confirmed in detail in “The B2B Buying Journey” report published even before the pandemic by Gartner. The analysis shows that customers spend only 17% of their time interacting with sales representatives. Moreover, when they want to review offers from several suppliers, they divide their time between them. As a result, a very small part of the purchasing process is devoted to direct dialogue with the software vendor.
This approach tends to make the salesman focus on promoting his product in a way that is meant to convince the customer to buy, regardless of his actual challenges.
The project was carried out according to the requirements presented, however, the company is not satisfied. Why? Limited expertise did not allow the company to precisely define its needs. The company assumed that the technology supplier would tailor the solution to the actual requirements of its brand, based on professional experience. The supplier, on the other hand, with detailed but selective knowledge focused on its own products, offered an available solution, but one that did not necessarily fully meet the customer’s expectations.
The purchase of software by companies is often treated analogously to the process of purchasing an appliance or machine. At the planning stage, the company tries to determine all the functions, without knowledge of current market opportunities. Although the intentions are noble – the lack of preliminary analysis of available solutions and assessment of which functions best suit individual needs often leads to a proposal to develop a project “from scratch” (dedicated system). Such a situation is usually associated with difficulties in accurately estimating the cost and scope of work. And this means that initial calculations may have a low probability of realization.
IT system procurement process in 15 steps
In the book “15 Steps to Buying a Good Industrial Information Technology System” I describe how to optimally carry out the purchasing process of new technologies. You are cordially invited to download the free e-book. The attitude described in the book to build a purchasing process makes it much more likely that the project will be successful, while minimizing costs. It also eliminates the situation in which a system is purchased by mistake and has not met the expected needs.
Do you want to digitize your manufacturing facility? Need to implement a solution to support your manufacturing processes? Do you have questions or are you looking for a consultant who will help you implement your project effectively with his knowledge and experience? You are cordially invited to contact us.
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