Jul 01 2006

Centralize IT Buying

Procurement professionals tell how to take back control.


Four years ago, the boutique Congress Hall Hotel in Cape May, N.J., managed its property and guests with a few dozen staff members and three desktop computers. By early 2006, after an extensive renovation, the historic hotel's business had grown to about 150 off-season employees (300 during summer months) utilizing 100 PCs from various vendors, myriad peripheral hardware and dozens of software programs. That's when controller David Elko realized that IT procurement processes were getting out of control.


"When I first came here [in 2004], I knew who had what and where everything was," Elko explains. But when the business reached its current size, "I realized that no one [business] area knew where all their IT stuff was. We were just patching things into the network and systems. We had this hodgepodge that we didn't exactly know how to handle."


Sound familiar? For many small but growing businesses, five desktop PCs can quickly become 35. Employees suddenly clamor for that cool 19-inch monitor in the newspaper ad, and the graphic designer wants to download some slick new graphics software onto the network that he swears won't hurt a thing. Yet growing businesses need to regain control of deployment. Procurement professionals offer these tips for developing and formalizing an IT purchasing process:


  1. Choose an approver. Procurement professionals agree that an executive who is most committed to monitoring costs should lead the change process.
  2. Hold a buy-in meeting. Communication is the key here, Elko says. Hold a meeting at an off-site location or other neutral territory to discuss the plan with a representative from each department, including the CFO and IT team. Discuss the current purchasing situation and why the company would benefit from a procurement process, including lower costs, faster maintenance and quicker purchases. Play up the benefits.
  3. Assign point people and vendors. Set up a preferred purchasing agreement with one or two suppliers and designate a staffer as the point person for purchasing. The point person evaluates the need and grants approval. If the request comes from the individual who wants the new hardware, it may also require additional management approval.
  4. Lock down those desktops. A few employees may still be tempted to purchase software on their own and put it on their desktop, which might corrupt their system or the network. Put security measures in place to restrict those installations.
  5. Deal with the life cycle of equipment that you already have. Companies usually have a three- to four-year life cycle for PCs. When you need to update, turn that into an opportunity to standardize. Provide access to catalogs and Web sites that offer only approved brands and products.
CEO takeaway
CEOs should ask these key questions before approving a centralized IT purchasing process:
• What are the benefits? Make sure the new process provides value to the organization without creating needless bureaucracy or red tape.
• What can you do to leverage consolidating buying with your vendors? If you’re putting more eggs into one basket, you should be reaping some benefits in terms of better reporting from vendors, improved licensing tracking and volume discounts if your purchases hit a specified threshold.
• How are you going to convince all parties involved that this is the right way to go? Do you plan to simply mandate it from the CFO’s office, or try to get buy-in from everyone? It’s hard to wrest control from internal groups, so look to motivate people by including their perspective when establishing the centralized process and allowing them to offer constructive feedback on how to improve it.

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