IT Procurement Practices - Term Paper Example

Research, Computer Science and Information Technology 31 March IT Procurement Best Practices IT procurement is simply defined as the series of all activities and procedures involved in acquiring of information technology services or products. This concept entails the involvement of both administrative and strategic functions. Some of the key features of IT procurement include the formulation of Request for Quotations (RFQs), Request for Information (RFI), management of supplier relationships as well as Request for Proposals (RFPs). Other additional minor tasks in IT procurement include price negotiations, market research, the establishment of terms and conditions (ToCs) and communicating with internal customers regarding statuses of purchase (Ordonez 226). In today’s competitive economic environment, every business strives to keep their costs as low as possible while improving the output despite all the challenges available. In order to achieve this, one of the areas of focus is the supply chains and procurement methods which have to adopt philosophies and processes that enable the business to compete appropriately. In order for the procurement processes and the department in entirety to perform at its best, various best practices have to be employed which, in essence, makes use of information technology. Implementing these best practices in an organization will provide a strong foundation for the organization’s supply chain excellence. The aim of this paper is to outline the current best practices that IT procurement employs in an organization in an attempt to achieve efficiency in the organization’s project procurement of software and hardware. The discussion will additionally outline some of the common procurement practices used by the US Government in its systems. 1.0 Best Practices for IT Procurement 1.1 Planning the IT Procurement Process Like any other process in an organization, good planning serves as a recipe for a successful IT procurement process. The level to which the planning process takes, however, is dependent on the complexity of the procurement as well as its size. For example, purchasing lesser stationaries and hardware in an organization such as printers and personal computers may not demand a very comprehensive planning process. On the contrary, procurement of complex systems such as infrastructure and software for use in large operations in organizations demands better planning. The planning process is a very important practice and step for the success of any IT procurement process. Typically, a good planning process in IT procurement entails various steps. First, the process has to define a clear description of the expected outcome in the IT procurement in that, the organization is able to define the purpose that the procurement process is supposed to meet. Secondly, the planning process should outline the specifications that clarify the details regarding the expected outcome of the IT procurement. This is especially important to allow the bidders in the process to include all the necessary services and products. Additionally, the planning process entails researching the target market in order to best understand how the market operates. This facilitates knowledge of various market variables such as the competition, innovations, price ranges, key players as well as potential vendors, specifications updates among others. It is also at this stage that the Request for Information (RFI) takes place. However, this method is only employed in large procurements processes, serving the purposes of obtaining more information regarding the unknown technology that helps to better define the specifications or the requirements of the IT procurement outcomes. Lastly, another practice observed during the planning stage is the identification of risks. This entails identifying and managing all possible risks that make the IT procurement more prone to risks. For example, in IT procurement, possible risks could include the obsoleteness of the existing technology, high prices of the required technology and security of sensitive information such as the configuration of the IT assets in the organization (Sollish and John 25). 1.2 Acquisition This is a deployment process that involves evaluation and selection of the suppliers and all other completing procurement arrangements for all the services and products required by an organization. This process also includes the processes of identifying and sourcing any available alternatives as well as generating the necessary communication tools such as the Request for Proposals (RFPs) and the Request for Quotations (RFQs). In regard to the IT department’s involvement in the procurement process, the acquisition process has to consider several factors such as the budget allowance availed to the procurement process by the organization. This provides three scenarios based on the budget allowance; acquiring (buying the item), hiring or leasing. This brings up the issue of the Total cost of Ownership (TCO) which is a very important tool for use in estimating the cost of acquiring any IT asset in an organization. In most cases, TCO is used to determine whether the organization is best suited for acquisition, hiring or leasing an IT asset. Under this practice also is the IT strategic sourcing which entails the outsourcing of the required assets or services which is sometimes regarded to be a strategic direction that organizations can take for a variety of reasons (Nickson 38). 2.0 Managing the IT procurement process A procurement process entails various steps such as the selection of the procurement method to use in procuring both the software and hardware in an organization. For example, an organization or Government can settle for methods such as public tendering, special tendering or direct contracting. In attaining this processes, the organization or the Government observes various important practices. 2.1 Contract fulfillment In this process, practices involved include the management and coordination of all activities that are involved in the contractual agreements involved in the tendering award processes. It is important to observe practices such as expedition of the orders, accepting the products and services, administration of contracts and management of post-installation services that come with the IT Procurement process such as maintenance and warranty (Parente 97). 2.2 Management of suppliers The organization responsible for the IT Procurement is liable for the optimization process of the customer-supplier relationships that are targeted at adding value to the business. The process of managing suppliers is very essential and entails various activities such as development of the respective supplier portfolio strategy, development of strategic processes regarding the relationships between key supplier to an organization, and the management of the communication avenues with the suppliers. Optimal management of suppliers leads to an increased performance of the supply chain (Turner 102). 2.3 Management of the IT assets in an organization This practice entails the process through which the utilization of the IT assets within the organization is optimized in order to meet the needs of the business. This involves various activities such as developing and the maintenance of asset management information systems, evaluating the cost of owning the IT assets required by the organization, and the strategies and policies development regarding the management of organizational assets. In some cases, the practice of managing various IT assets involve the process of redeployment of the assets as well as the formulation of disposal policies where need be. 2.4 Formulating IT Procurement Performance Metrics For a successful IT Procurement process, there is a need for the establishment of appropriate performance metrics in an organization. Various performance metrics used in organizations today are useful in enabling the benchmarking process of various IT Procurement practices in an organization. There are numerous metrics that are available for this process today and includes metrics such as quality metrics, effectiveness metrics, efficiency metrics and cycle time metrics (Nickson 72). 2.5 Assigning of roles to respective entities within the procurement process It is common knowledge that procurement process in any organization continually depends on the effective collaboration of various actors within the organization. It is a cross-functional process that entails the participation of various organizational entities such as the legal experts, representatives from the information and technology departments, purchasing and finance among other entities. Additionally, the procurement process also involves external entities such as suppliers and other organizations as involved in alliances and partnerships. For this course, there is always a need for structuring and managing all the relationships involved in this linkages. For the efficient management of the internal relationships, the roles, policies, standards and the general organizational structure need to be developed in such a way that effective cooperation is achieved. On the other hand, external relationships need to employ the use of relevant contracts that enhance clarification of the expected results, as well as outline the respective responsibilities of parties involved (Nickson 79). 3.0 Management of IT Procurement Software Essentially, an IT Procurement process cannot function without good management of the sourcing and strategic procurement software. This are software types that provide the necessary learning tools for purposes of planning, organization and other related tasks to procurement. Typically, the process of managing the IT Procurement software available is necessary for various functions; It facilitates the creation of a list of items to be procured in an organization. An IT procurement software is also essential in helping to track and control the status of all IT purchasing contracts between the business and other entities such as suppliers. It should also help in establishing the IT inventory management in the organization. It also serves the role of facilitating the necessary communication channels with the respective procurement contractors. Most importantly, it assists in the organization of most of the procurement documentation within the organization (Parente 91). The availability of an effective IT procurement software comes in handy in enabling the management to track all the changes in the procurement projects being pursued by the business. Additionally, it can be of importance when providing the response strategies required as well as providing directions in regard to the available procurement opportunities to the organization. 4.0 The procurement practices used by US government today The procurement system used by the US federal government can be described as quite complicated of pretty simple, and this depends on the type of procurements involved or the level of the authorized procurement thresholds. The governing body of the procurement practices is referred to as the Federal Acquisitions Regulations (FAR). FAR is responsible for grouping the procurements into five major categories such as constructions, rental/real property, research and development, supplies and services. Each of the respective categories harbors specific procurements as specified by the law. Additionally, procurements are also categorized on the basis of procurement dollars or the threshold. This categorization type classifies procurements into three major classes; small or micro-purchases, simplified acquisition threshold, and the large threshold (Thai 9). The US federal government observes various procurement practices in what it describes as an Integrated Procurement Model. The three main practices are Strategic planning and requirements generation, procurement and budgeting. For strategic planning, the practice determines the long range direction of the organization which subsequently enables the achievement of the strategy. Strategic planning entails various processes such as the definition of mission and objectives, and the outlining of the organization’s purpose and its implementation. According to the federal government, this should entail the involvement of the stakeholders by the respective agencies in the formulation of these objectives. It is also the responsibility of the respective agencies to assess both the internal and the external environments that is essential in the anticipation of the challenges and potential problems (Thai 10). The procurement process in the US federal government system is controlled and managed by the FAR body which is responsible for the provision of direction in regard to the procurement method to be employed for the respective procurements. Generally, the US procurement method conforms to standards of other governments around the world and follows phases such as contract planning, contract formulation and finally contract administration. For budgeting, the federal government demands that various factors be considered before procurement process has been carried out. First, the procurements should prove beyond doubts that they are justified in regard to the benefit-cost analysis, and this entails the life-cycle costs. All costs to be incurred in the procurement process should be outlined in advance to allow for proper planning. Additionally, the cost, expectations of achieving the project goals and the cost are all identified and submitted to the respective agency for evaluation (Thai 12). A downside of the procurement process employed by the US federal government, similar to other governments around the world, is the lack of keeping up with the changes in technology such as IT procurement. This means that the procurement processes in these governments are marred by large scales of inefficiencies and thus very slow. Works Cited Ordóñez, de P. P. E-procurement Management for Successful Electronic Government Systems. Hershey, PA: Information Science Reference, 2013. Print. Nickson, David. It Procurement Handbook for Smes. Swindon: British Computer Society, 2007. Print. Parente, Diane H. Best Practices for Online Procurement Auctions. Hershey, PA: Information Science Reference, 2008. Print. Sollish, Fred, and John Semanik. Strategic Global Sourcing Best Practices. Hoboken, N.J: Wiley, 2011. Internet resource. Thai, Khi V. “US Federal Government Procurement: Structure, Process and Current Issues.” (2003). Turner, Robert W. Supply Management and Procurement: From the Basics to Best-in-Class. Fort Lauderdale, FL: J. Ross Pub, 2011. Print. Read More