Optimizing IT Procurement for future growth

Objective: Establishing robust IT procurement foundations

Indirect Procurement has long been an important function within our client’s organization and the department was well established. The IT Procurement team had a clearly defined mandate to manage the entire process from sourcing to contracting, working closely with the IT department. However, the growth of the IT department and its increased relevance, resulting in a significant increase in demand and spend, meant that our client needed to completely re-evaluate its structures. As part of this reassessment, we focused on the resource capacity, key roles, enablers and capabilities required to fully utilize the levers of procurement in the future.

Over the course of the project, the economic landscape changed dramatically. Geopolitical crises changed the economic environment and created unforeseen cost pressures that required immediate attention. To cope with this, we also carried out a cost optimization project together with the client, which required extensive tendering and demand right-sizing procedures.

Methods: Developing from transactional to value-focused procurement

As part of the project, we supported the shipping company in developing IT procurement from a transaction-driven unit to a more strategic IT Procurement unit within the company.

Procurement Excellence – Building a Future-Ready IT Procurement Organization

• “Fix the basics” – To optimize the IT procurement organization, we carried out several strategic initiatives. First, we right-sized the team through a detailed business case analysis. With our target operating model approach, we ensured that we have the optimal number of resources. In the next step, we defined a future service portfolio for the department that is in line with the company’s goals and market requirements. In order to manage procurement activities, we have also drawn up a comprehensive IT procurement guideline. By updating skill profiles, developing target processes, roles & responsibilities and creating a solid induction plan, we have ensured that new and existing team members are well equipped for future challenges. In addition, we established KPIs to accurately measure the value and effectiveness of processes and set up a performance management framework to monitor and drive continuous improvement.
• “Build Excellence” – To embed the defined new processes into the organization in a sustainable way, we conducted IT category strategy training workshops to define a strategy for IT services that gave us a clear direction and focus. To improve spend transparency, we redefined our category structure and cleaned up the key contracts in the database. A recap session on processes helped refine our client’s operational procedures. We also developed an IT procurement training and ran workshops focused on inducting category leads, team building, setting working standards and exploring next generation ways of working.

Tailored large-scale global RPFs and exclusive, strategic supplier negotiations tripled the initially setsavings target to reach double digit million savings.

In the current economic climate, our client has been under tremendous cost pressure, requiring effective cost optimization strategies, particularly through tenders and negotiations, which can be extremely complex in IT procurement. As part of an extensive co-sourcing initiative, we tailored the tender packages to the client’s individual needs in order to minimize the actual spend on cost blocks such as hardware, services and infrastructure & telecommunications.

In the area of hardware, we carried out a global RFP for >20.000 devices. For the first Requests for Quotation (RFQ) phase, we defined standard requirements such as demand, and type of devices. We furthermore detailed outspecifications on device level and embedded sustainability and performance criteria. Based on first offers and discussions with suppliers, we refined the specifications, made a first downselect and planned first negotiation rounds. As part of the subsequent negotiations and contracting process, we were able to ensure that the new conditions were optimally suited to our customer’s requirements and were also scalable for the future.

In the area of infrastructure & telecommunications, we have negotiated an exclusive contract agreement for a global SD WAN contract. We have supported SD WAN Design workshops with IT and right-sized the infrastructure requirements of the future together with our client. Based on this ‘to be’ SD WAN Design we re-negotiated a new framework agreement with service levels, SLAs and new pricing schemes. Our finally negotiated prices were benchmarked by Gartner and our client was satisfied in reaching the top quartile price corridors for the respective quality of services. This had led to tremendous double-digit savings.

Over the whole project, our cost optimization efforts have exceeded the original savings target by a factor of three, resulting in savings of over eleven million euros. Through careful planning, strategic negotiations and cross-functional collaboration, we have achieved significant cost reductions with fit-for-purpose specifications, demonstrating the effectiveness of our project delivery and the potential for further success in IT Sourcing cost optimization.

The journey continues

The next steps in optimizing our client’s IT procurement include supporting the IT infrastructure project, with a focus on the Cloud & Services project. This initiative aims to migrate existing Mainframe environment to the cloud in order to improve scalability and efficiency while reducing costs. By moving to cloud-based solutions, we expect to achieve improved resource management and greater flexibility to meet the evolving needs of our customers. This strategic move will not only streamline operations, but also meet long-term goals of innovation and sustainable growth in IT services.

Results: IT Procurement program exceeded expectations

• IT Co-Sourcing program exceeded expectations – over 11 Mio € savings delivered
• Creation of a solid IT procurement foundation & team
• Reassessment of structures & optimization of the IT Procurement organization
• Definition of service portfolio & processes
• Introduction of category management & Optimization of specifications
• Introduction of KPIs and a performance management framework
• Implementation of training & enablement of employees

Get in contact with our experts

Sven Brüggeboes

Principal

sven.brueggeboes@inverto.com Contact

Niklas Wagener

Principal

niklas.wagener@inverto.com Contact