Many organizations maintain a highly fragmented approach and set of processes for requisition of vendor products and services, frequently using separate workflows and processes for approval by a disparate set of individuals. The lack of consolidated and centrally managed requisition and acquisition functions frequently inhibits an organization’s ability to manage spending at the point of initiation, where significant opportunities exist to shape or even avoid purchase. Additionally, the ability to implement standards as well as gain broader visibility into organizational spending is often made unfeasible under a decentralized approach.
To address these issues, organizations often implement and use enterprise-wide standardized and enhanced requisition processes. The approach provides numerous benefits to an organization, including:
- Improved visibility into the operations of the IT function, enabling improved overall decision-making.
- Lowered product spending through improved analysis and forecasting made possible by visibility into all IT vendor spending.
- An ability to take advantage of enhanced vendor relationships through better visibility into an organization’s total spending with specific vendors.
- The ability to embed product standards and other policies and business rules into the requisition system for improved standardization and control, which in turn lowers the total cost of ownership on each procured asset or service.
- The ability to better categorize requested line items for improved reporting on spending by products, functions, projects, and vendors.
The implementation of a centralized, organization-wide requisition process in the short term is a critical step in any organization’s attempts to manage spending. Without the visibility and control provided by a central mechanism, it is difficult for organizations of almost any size to effectively manage spending.
When attempting to align acquisition activities within an organization with disparate approaches, taking steps that avoid significant change management issues during the initial stages of the effort frequently increases the likelihood of success. Appropriate steps include:
- Creation and enforced use of a single requisition system that captures additional key information about each line item (type, service, project, etc.)
- Approval workflow that includes organization-specific approval steps as well as system mandated steps that require the approval of pre-defined management and technical personnel for each request.
- Implementation of a catalog requiring requestors to select from pre-approved lists of products for certain categories with exceptions handled by additional justification fields and approval steps.
- Implementation of an integrated receiving function which ties procurement details to the requisition, allows for the adjustment of key fields such as final pricing data, and captures key asset details for direct or subsequent feeding into an asset management system.
- Implementation of a reporting layer that enables management to view spending by various dimensions for improved management and decision-making.
An initial implementation that standardizes the technology and process layers, while leaving existing budgetary and organizational structures in place, often allows an organization to realize many of the benefits of consolidated procurement without significant organizational disruption. Once integrated, leadership can then use the visibility obtained to assess whether additional budget control would produce appropriate returns.