New Category Management Approaches to IT Spending (Part 2)

In fully leveraging IT category management strategies in a world where larger providers are increasingly integrating the capabilities of a diverse set of vendors, companies need to keep in mind Deloitte's perspective that there are both benefits and risk to relying on a new vendor management intermediary. Specifically, according to Deloitte, "Businesses need to remember that ... [this approach] has its own issues, as the benefits of a best of breed model are often outweighed by the additional vendor management overhead, increased integration risk and simply getting vendors to work together" even when a third-party is playing the role of "herder" (a more appropriate label, compared to the "integrator" role).

So what initiatives should procurement and IT organizations prioritize? Deloitte suggests looking at four key areas (in our words): fighting for the right talent, setting up the right model for the long sourcing haul, lifecycle-based total cost management and governance compliance. For talent, we agree with Deloitte 100% that "procurement functions will need to have the right skill-set along with senior stakeholder accountability ... Experienced and qualified sourcing staff will be required not only in the early stages of contract development, but also in the longer term vendor relationship management aspects."

We're also strongly supportive of an incremental focus on governance and active compliance. Or as Deloitte puts it, "the management of suppliers (in particular when they have to work together) will be of paramount importance to any successful transition" to a new sourcing and vendor management operating approach. But above all, the most important element of this transition to a new type of IT category management and sourcing is having the right team of "expert procurement professionals ...[and a] strong procurement skill-set at your disposal ... [to enable] an environment where your suppliers may be working hand-in-hand."

This shift to facilitator of supplier collaboration from one of IT sourcing and vendor management requires not just skills and talent, but new tools and tactics. We'll explore some of these in the final installment of this analysis.

- Jason Busch

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