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3 Reasons IT Resists Procurement Software Investments — and How to Overcome Them

05/29/2018 By


For all of their outward differences, procurement and IT share many similar traits. Both serve as support functions for the business, while also offering strategic opportunities to add higher value. They share the perennial challenges to automate low-value work, so they can increase interactions with stakeholders and make them more successful. And they encounter many of the same external forces that are changing the way their functions operate, from the transformation of traditional goods into services to the rapid digitization of everything in the value chain.

Yet in spite of these similarities, procurement organizations know all too well the familiar pushback when engaging IT in software selection processes. Multiple ERP systems are already in place, so why should the business add more vendors? Do these new procurement solutions really add the additional value they say they do? How does this new system fit into the company’s long-term technology vision?

Amid all of this pushback, it’s not uncommon for procurement to simply throw its hands in the air, fed up with encountering yet another roadblock in its aim to modernize the function. But hopelessness is not the answer. Rather, procurement needs to first understand IT’s potential objections, then form a plan to bring itself into better alignment with this brother in digital arms. To help, here are three common reasons IT resists procurement software investments — and the best ways to overcome them.

1. IT Wants to Protect the Company’s Current Investments

The rise of the cloud and software-as-a-service offerings has created numerous technology opportunities for procurement. But even if a team has found a great new tool to automate purchasing processes, IT professionals know that not all new technology is necessarily a great fit for the business.

Integration hurdles are one common issue. For any software system to deliver its full value, it must be able to communicate with a company’s existing IT systems. This can rarely be done on an out-of-the-box basis, which means the software provider will charge additional fees to integrate its technology with the business’ legacy systems. These hidden costs can be substantial — sometimes higher than the price of the software itself. Thus, from IT’s perspective, procurement’s desired SaaS subscription may really be dubious investment.

Of course, IT has its own cost management challenges, too. According to a 2017 Gartner report, roughly 90% of IT spending goes to ongoing operations and enhancements, while just over 10% goes to business transformation initiatives. These older systems, which keep the business running, are necessary to maintain, yet they also drain IT resources from initiatives the function knows it should be investing in.

This is one place where procurement and IT have an opportunity to come into better alignment. When both parties take a closer look at this “sacred cow” category of legacy systems, complete with maintenance and support costs, they will begin to realize that this area offers low-hanging fruit in terms of both cost reduction and efficiency gains. By focusing their efforts on defining what parts of legacy systems can be reasonably replaced with more modern approaches, procurement and IT can identify significant savings, making the procurement cloud software proposition not dubious but savvy.

2. IT Questions the Value of New Software

Whether a new software system will fit into the business’ current technology infrastructure is not the only question IT will ask of procurement. In more adversarial circumstances, IT may question whether its stakeholders even understand what they’re trying to buy.

The procurement technology market gets more complex with each passing year. Software providers release new modules filled to the brim with features, boasting of their “innovative” approach supported by numerous digital-sounding acronyms. But while RPA and AI and ML all sound like the perfect way to give procurement an edge against the competition, IT knows that few practitioners understand the fundamentals of how these technologies work. Because of this, procurement’s request to bring on the latest and greatest in cloud software often finds skeptical ears in IT, which says procurement is biting off more than it can digitize.

In these scenarios, procurement should step back and take stock of its own organizational maturity. IT may be correct in its assessment if, for example, procurement wants to move to AI-assisted sourcing optimization-backed projects when it currently collects bids in desktop-based spreadsheets. While becoming a best-in-class organization for sourcing is a worthy goal, such a feat is rarely achieved overnight.

IT understandably wants to limit the time it spends integrating and managing new software deployments, and if a new system is destined to remain untouched by procurement after several confused attempts to use it, then resisting the purchase in the first place makes all the more sense.

Instead of keeping its gaze fixed on the distant horizon, procurement can benefit both IT and itself by building a stronger near-term technology business case. One good area to focus on initially is the automation of lower-value tasks.

By coordinating the automation of processes such as invoice sending and receiving or the creation and approval of requisitions electronically, procurement and IT can not only build a technology foundation off of which they can add more advanced capabilities but also form a more trusting relationship.

As our 2016 surveyed conducted in collaboration with the Institute for Supply Management found, the perceived effectiveness of a procurement-IT relationship correlates with the level of automation procurement had been able to realize. Those with high effectiveness had achieved an automation score of 53%, compared with a 35% score for those with ineffective relationships.

3. IT Prioritizes Long-Term Stability, Not What’s New

In addition to questioning the value of new software offerings, IT has another reasonable objection to adopting the latest hot technologies: they could threaten the company’s long-term stability.

Whether procurement is interested in working with a “disruptive” SaaS startup or insists it needs to immediately add blockchain into its supplier management processes, IT is bound to raise questions concerning the long-term implications of technology investments. Can this new software vendor really ensure organizational or supplier data will be protected, given the increased cybersecurity risks IT is facing? Will that vendor even be around in five or 10 years? And even if procurement is able to get some sort of distributed ledger system up and running, will it really have the time and resources necessary to get suppliers to adopt and use the blockchain as it imagines?

From IT’s perspective, adding yet another software tool into the mix introduces more costs, more complexity and more risk for the function to manage. This is why procurement needs to put itself in IT’s shoes and think more in terms of stability rather than rapid digital transformation.

To get IT’s buy-in to new technology investments, procurement must be able to communicate a long-term strategy for its own technology roadmap, demonstrating how such a plan will drive business success and how new procurement tools will enable this strategy. Make sure each project has a compelling ROI, and if the new investment will increase IT’s requirements for maintaining the software, ensure that procurement will be able to lend its own support.

For these and other reasons, we have seen procurement organizations recently express increased interest in suite optionality, or the ability to couple modules of a technology suite (e.g., source-to-pay suites) on a case-by-case basis. This approach can allow an organization to consider numerous variable factors in technology selection, all of which will create opportunities to ask the same hard questions IT is asking when considering the business’ long-term technology plan.

To learn more about suite optionality and how initial forays into procurement software capabilities can serve as a front-end to more complicated systems, stay tuned for a follow-up article on this topic.