Information Technology Procurement as a Service – Added Value to Internal Procurement Teams
The Procurement as a Service (PaaS) model, which utilizes outsourced human talent, technology, and industry-specific knowledge to enhance or – in some cases for SMB companies – replace the buying process for companies is expected to grow from $5.4 billion in 2019 to $7.8 billion by 2024, according to new market research by MarketsandMarkets™. Major factors of this projected growth are due to increasing demand to introduce efficiencies in the procurement process and to reduce costs.
As PaaS relates specifically to the Information Technology (IT) vertical and medium- to enterprise-sized organizations, these companies can be a vital resource to internal procurement and sourcing teams by offering industry-related guidance in making significant IT purchases. The need for IT PaaS companies has emerged as IT purchases have become more complex and much-needed checks and balances have arisen to ensure that the buyer is protected, well informed and has solid data in which to make these important decisions. IT PaaS companies take the time to fully understand the needs and goals of the client and act as a liaison between OEMs, and channel vendors to compare products and/or solutions on an equal basis to obtain quotes, assist to compare and contrast, and provide additional information to enable the client to make a good business decision, based on a distinct process and backed by solid data. This takes a professional organization that is deeply entrenched in working with technology and contracts daily to assist the buyer in finding the right technology solution, at the right price – all while saving time, money and valuable internal resources.
Internal procurement and sourcing professionals are typically tasked with working between executive leadership and three different departments: IT departments have their specific needs and vision; finance is watching the budget; and legal is responsible for protecting the company from risk. IT PaaS companies work in tandem with procurement and their internal process t bring a proven process that leads to the best selection of vendors with cost validations. This can range from a full end-to-end RFP, to a single legacy IT contract review. tilizing specific examples of historical data lends tremendous negotiating power with the OEMs and channel vendors. Procurement leaders appreciate and rely on this information to justify and explain these expenditures and decision-making to IT, finance and upper management. This process relieves a lot of pressure, provides full transparency throughout the organization and protects against the illusion of any vendor biases.
Another area that IT PaaS companies can assist internal sourcing groups is working with IT departments to understand requests for purchases to determine the resources needed. Internal procurement departments typically do not have these resources readily available nor are they well-versed in the particular technology to even know where to start. Traditionally, these groups would take the information and interact with a value-added reseller (VAR) or managed service provider (MSP) directly and rely on their guidance, which could be biased. When engaging an IT PaaS company, subject-matter experts can be immediately involved to reach out to several different vendors and resources, leading to a much better and efficient result. IT PaaS companies can also play an instrumental role in finding niched or obscure technology providers and equipment that cannot be purchased off the shelf, such as a specialized company that makes servers that can withstand abnormal environmental conditions of extreme heat and moisture. For an internal procurement group, this can be a labor- and resource-intensive process. The PaaS company can leverage its partner network and provide options along with enough information for the company to make an informed decision, without the additional burden.
A key advantage of IT PaaS companies is they might engage with a company that renews a Microsoft Enterprise Agreement (EA) every three years or so. The procurement department would need to start the whole renewal process during this interval with a lot of time in between. When engaging an IT PaaS company, they may have worked on several of these exact contracts within the past weeks or months. The same contacts or processes may be continued momentum used to give a distinct advantage and intimate knowledge of where opportunities may be to save money. This active involvement in several IT verticals and having an “ear to the street,” lends a huge advantage in knowing current market trends and negotiation points.
Many companies have a policy of obtaining at least three quotes prior to making a significant IT purchasing decision for anything new or renewing legacy IT contracts. This can be despite already having an existing, working relationship with a current vendor. IT PaaS companies can be contracted to help navigate this process by finding alternative providers, comparing offerings, along with providing any additional information from the marketplace to assist with the selection process. The goal can be to work towards maintaining the current vendor relationship while still validating that the pricing is in line with market standards, meets cost-saving mandates from executive management, or assists in finding a new provider and helping to facilitate a transition.
IT PaaS companies are a valuable resource available to work in unison with an organization’s current procurement process to add value. They play a vital role in utilizing their industry-specific knowledge, subject-matter experts, and relationships to find the desired technology whether it be software, hardware, managed services or cloud without overspending. Many only receive compensation for IT contract reviews or renewals when additional savings are found or from a statement of work for outlined services to be performed and delivered on. Owners and C-suite executives appreciate the transparency and rigor of their procurement teams working with an IT PaaS to support the company’s technology initiatives to move forward, but in a financially responsible way supported by a competitive and defined IT procurement process.