This third video is about the Procurement and Sourcing role. It includes understanding how this role leverages Trustworthy Data from ITAM and what some of the key requirements from Procurement might be.
Fundamentally, the role of Procurement and Sourcing is to provision appropriate goods for the organization in a way that minimizes costs and maximizes Return on Investment. In other words – negotiate deals that deliver value for money for the organization. Paired with Trustworthy Data, the ITAM Team helps to put the Procurement and Sourcing role in a position of knowledge and power. If there is a potential risk with a software publisher, it is known ahead of time. If there is an optimization opportunity, it is known BEFORE the Procurement and Sourcing team sit down at the negotiating table. In this way, this role is leveraging ITAM data to deliver further value and maximizing the return on any investments made by taking a data-driven approach to negotiation.
In order to be effective in positioning optimization opportunities or understanding potential risks to avoid during negotiations and contractual renewals, the Procurement and Sourcing team needs to proactively communicate these requirements to the ITAM Team. A yearly calendar of deliverables needs to be developed and timelines agreed to complete important data requests. The timing of these data requests to the ITAM Team should be driven by current state maturity and complexity and risk of the associated publisher. For example, a multi-million dollar IBM iESSO renewal should be worked on several months in advance by the ITAM Team to understand the compliance position, as opposed to a smaller renewal with a Tier 2 or Tier 3 software publisher that might only take a couple of weeks. Time should be allowed for the ITAM Team to provide complete and correct analysis as much as possible – and to work with Application Owners as needed to provide further inputs on future license requirements. The Procurement and Sourcing role is therefore responsible for having a COMPLETE view of renewal dates for key software publishers, and working with the ITAM Team to ensure they have a good understanding of risks and opportunities AHEAD of the contract renewal events.
For the ITAM team to complete their analysis on time and supply Trustworthy Data to Procurement and Sourcing, the Procurement and Sourcing role also needs to agree SLAs with the ITAM team to provide complete and correct purchasing records and proof of entitlement documentation. If detailed datapoints on ownership of licenses is NOT available from a software publisher, that is a part of the Procurement and Sourcing role to follow up and hold the software publishers to a high standard of transparency. If necessary a Vendor Management function could be leveraged for escalations if granular purchasing information is not regularly available. However, if purchasing records and proof of entitlement documentation ARE made available according to an agreed upon SLA, this will allow the ITAM Team to provide Trustworthy Data in the form of Risk and Opportunity Assessment per software publisher back to Procurement and Sourcing. So it is in everyone’s best interest that siloes are broken down and the cross-functional teams are working together.
Another key component of Procurement and Sourcing is their line of communication with key decision makers in the organization. When a risk is mitigated or when a cost avoidance opportunity is realized as a result of ITAM and Procurement working together, best practice is to recognize that none of this activity ever happens in a vacuum. If Executive Leadership mandates cost takeout targets specifically for Procurement and Sourcing, for example, if those are surpassed utilizing ITAM Trustworthy Data, it is important to publicize mutual successes. This helps the ITAM team gain increased trust and visibility, and also helps to avoid a lot of the potentially charged political discussions of what is considered ‘savings’ versus ‘cost avoidance’ – typically Procurement and Sourcing already have aligned definitions for those concepts and how they are recognized.
If the Procurement and Sourcing role is proactively working with the ITAM Team to both communicate critical renewal dates for key publishers as well as leveraging Trustworthy Data to negotiate from a position of knowledge and power, they are very well positioned to drive significant value to the organization.