The following is a summary of some of the key ideas and discussion topics from the ProcureCon IT Europe conference, organised by Worldwide Business Research (WBR) on 24 and 25 November 2015 in Amsterdam, The Netherlands.
5 Prominent Ideas and Themes
- Providing your customers with information so as to be able to concentrate on more high-value work. The low value stuff should run itself. Develop catalogues, publish information on how to obtain quotes, list the key contacts at suppliers, provide contract summaries and information on purchasing channels. By doing this you can focus on important tasks of negotiating savings, developing category strategies and bring more spend under management.
- Audits are on the rise and the big vendors show no signs of stopping this lucrative practice. All of the big software vendors have a policy of auditing their customers at least once every three years. One delegate claimed that one quarter of IBM’s revenues in fiscal year 2015 came from audits. This is not news to anyone, but few are prepared.
- IT is becoming such a key part of almost all businesses. Most business are now tech companies who happen to sell insurance, or seats on planes, or whatever. Digitalisation and eCommerce is everywhere. The app or the website (and everything interacting with that app or website) is now fundamental core business. No modern business can keep up with the tech, so supplier selection and managing the IT purchasing process is key. Procurement people have to be able to think with the business people and with the technologists, and then add value through traditional purchasing capabilities. The importance of having high-calibre people is critical – “its the people stupid”.
- Many delegates complained that software vendors are publicly marketing cloud as “flexible – scale up scale down” and “only pay for what you need”. However, old habits die hard. When it comes down to doing the deals, commitments are king as usual. Software vendors are expecting 3 – 5 year commitments with minimum volumes etc. Same old same old.
- As usual when you get over 100 software procurement professionals in one room, there was a general distaste for the behaviour of the big software vendors. Mention Oracle, Microsoft, IBM or SAP and everyone has a story to tell about how manipulative their sales tactics are. However, one delegate suggested that we (i.e. procurement people) need to realise the importance of ensuring that our buying power does not crush the smaller vendors. SME software vendors need to be in healthy financial shape if they are to be viable long-term partners. This point was met with general agreement from around the room. One delegate agreed, adding that the biggest risk of doing business with a smaller vendor, is the low priced deals that the vendor might be doing with other customers which might result in financial weakness.
5 Top Tips
- Propose an audit clause in your agreements with software vendors – especially if your data is going to be sitting in the cloud. Even if this is not especially a concern, you could use it as a bargaining chip to remove or soften their audit clause.
- When examining a software licence agreement, look at the licence grant and focus on what you are not allowed to do with the software. Ask yourself if you can live with that.
- Find out what the vendor is being measured on. For many vendors, at the moment, it is selling more cloud hosted solutions. With some of software vendors, you can get additional discount on traditional on-premise software deals by merely displaying an interest in their cloud solutions.
- As a procurement organisation, do not limit your KPI measurements to only savings. The old Peter Drucker quote is as relevant as ever: “what gets measured, gets managed”. Measure things like innovation brought to the business by the procurement department. Firstly, this will encourage procurement staff to suggest innovative solutions. Secondly, it will get people in the business thinking… “is procurement supposed to do that?” opening their eyes to the value we can provide. Another measurement which was recommended was to measure customer satisfaction with a survey sent after an interaction with procurement.
- Stories are important to building the identity of the procurement department. They can make procurement staff feel proud, and they can foster a positive attitude from business units towards procurement. It was recommended to have a stock of these stories ready to present /publish when appropriate. These could be a mix of lessons learned, case studies, success stories, white papers etc. Doing this well propels the procurement department along the journey to becoming a trusted advisor to the business.
3 Inspirational “Tweatables”
Three quotes from Alastair Henderson-Begg, Global Head of IT Procurement at Hoffmann-La Roche, whose presentation got a standing ovation.
- “Customers do not care how much you know until they know how much you care.”
- “It’s the people, stupid.”
- “Be humble – humility goes a long way to winning the BU’s trust.”
Image credit: Humility by BK, Creative Commons, Flickr.com