IT Procurement – who owns it? IT or Strategic Sourcing

July 18, 2012

We recently reconnected with a long time client  – a senior Procurement leader from within the Public Sector (Crown Corporation), but who has also worked the other side at a strategic senior level in the Private Sector and Consulting – who told Adele Casciaro and myself that in this particular organization — IT Purchasing/IT Strategic Sourcing (procurement of hardware, networking, telecom, software, IT consulting services, licensing, interim/contract staffing and such) reports directly into and is owned by IT/CIO and bypasses Sourcing all together. Ummh, not unique at all and since this is something that comes up for us as SCM Recruiters from time to time with other organizations we source IT Procurement professionals for, Adele thought it would be really interesting to run a poll amongst our other Procurement clients asking them this.

Where do you think IT Procurement should sit? With Information Technology under the CIO or squarely in Strategic Sourcing reporting through to the CFO?

Personally speaking, from our narrow focus as expert Recruiters to the SCM vertical, our experience dealing with a wide variety of companies (big and small) in many different industries and representing many candidates at different levels from Category Specialists in IT to Purchasing Managers for Telecom through to Directors of IT Shared Services and VP of IT Procurement, I believe that it should sit within Procurement as a reporting function to Finance – Sourcing specialists are the experts at finding the best opportunities for cost savings through economies of scale and working collaboratively with IT as a business group to achieve their joint interests. Additionally, IT Sourcing has very much made a strong move towards services (less actual buying of hard goods and more to procuring consulting, outsourcing and professional contract staffing for example)

Here is what some of the Procurement professionals from the poll had to say. Gary Lajoie, an executive in Supply Chain interestingly took an opposing view to most in our poll with this comment: “I would keep it with the CIO. The technology changes so rapidly that they are the best ones to keep up with what’s going on in the market place in terms of software, hardware and with the supply base. Procurement can provide a service in terms of developing negotiation strategy, supplier performance planning and procurement policy development. A procurement executive can be very influencial without always being in charge of the budget”

Mohammed Faridy who currently is an independent contractor in Strategic Sourcing said “I’ve worked with organizations that had it in IT and others where it sat under the traditional Finance/Procurement departments. In both cases, I found that the success or failure of these groups had more to do with their mandate and executive sponsorship, and less to do with their effectiveness as a procurement group. An organization that embraces a strong Strategic Sourcing discipline could benefit from a focused IT Procurement team that works closely with the CIO, either through a direct reporting structure or as a dedicated support team.”

I think that overwhelmingly the consensus has been that IT Sourcing has always had a bit of a rogue image within procurement for doing their own thing but the client comments seem to be unanimously in favour of IT Procurement firmly sitting under the overall Procurement umbrella

Stirling E. Munro, a Sourcing Executive from within CPG, feels that “This role should report within Procurement. The Procurement team would then work with their internal client, the IT department to provide input on specifications and functionality. As a team, they would bring both their expertise to make a strong team sourcing the IT requirements”

Brenda Sharp, Director Procurement Financial Services also said “I share similar views as Mohammed that the success or failure has to do with the leaders of these groups and the clarity of goals. When reporting into Strategic Sourcing/Procurement one area I know will excel is that of ensuring IT suppliers adhere to contractual SLA’s and scorecard methodology is implemented. IT procurement, which can be one of the largest spends is the least established in regards to the rigor associated with SLA compliance and scorecard development. I believe IT procurement should report into the Strategic Sourcing/Procurement department, but this can only be successful with the full sponsorship of the CIO. These two teams need to work closely together to achieve success.”

And thanks to Jason HildebrandtThe position that these responsibilities reside with procurement hinges on an assumption – that there is centralized resources with authority for the procurement function. This is not always the case in public sector procurement. You should also consider that in the public sector IT is given dedicated executive leadership and support while procurement too often gets lumped in with finance and other responsibilities. As a result, what should be done gets trumped by who has the executive champions to lobby for their perspective and these responsibilities land in IT.”

So in summary, this continues to be an issue on ongoing debate and some confusion within Strategic Sourcing. It’s really ultimately about who is steering the ship and who is supporting the IT Sourcing initiative as to the ultimate success of how well IT Procurement does if it remains within Sourcing or continues on its own within each individual company. As for the success of IT Procurement’s ability to staff with top people, IT Procurement professionals will always be a challenge to find – the demand is high and there is not a lot of opportunity to attract people to move . The onus is on the individual good reputation of each company for committing to doing real leading edge stuff in IT sourcing to be able to attract this high demand talent for the future.

Thanks for all the comments so far – What are your thoughts on where IT Procurement belongs?

Over and out for now

Bronwen

 

 

 

 

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