Industry News Details

Agile IT procurement in a post-COVID world Posted on : Jun 24 - 2020

During the pandemic, organizations adopted transformational sourcing and procurement practices to drive savings, speed, and agility. They may never go back.

Over the last several months, IDC has hosted several virtual roundtables with sourcing and IT executives on technology sourcing and COVID-19 recovery practices. One theme that emerged is that agile sourcing practices are driving their recovery strategies.

For some, the shift to agile procurement happened out of necessity. "When COVID hit, I had to accommodate new IT procurement requests by doing master agreements in less than three hours," one senior procurement executive told us. "But then we went back to our risk-based negotiation, doing speedy risk assessments to see where the tolerance was and whether we could mitigate risk in a contractual relationship. If we couldn't mitigate certain risks, we did a risk advisory," she notes. "We used a quick risk assessment of the situation to expedite negotiations or click through terms and keep going. After COVID, we'll come out with a leaner and more practical, flexible, and agile procurement process."

Towards an agile approach

Organizations have long recognized the difficulty of the traditional procurement cycle, anchored with the ubiquitous request for proposal (RFP). As one Fortune 500 CIO recently commented, “We spent a year developing ERP specs to include in an RFP only to find that the technology landscape and capabilities had changed. We literally fell a year behind.”

Indeed, with digital disruption, an overly cautious and extended traditional procurement process introduces its own risk component: when competitors move more quickly and the technology changes more rapidly, slow-moving procurement can leave a company flat-footed and vulnerable.

Leading-edge procurement executives recognize the need to deliver a required set of business objectives using a completely different approach. Although RFPs are still being used, no longer are they as cumbersome as they have been in the past, and technology executives have begun to rely more heavily on alternate sources of information to evaluate competing technologies. The goal is to transform the procurement process to be faster, leaner, and more flexible, and deliver value to the business sooner.

Getting started with agile procurement

The Institute for Public Procurement (NIGP) defines agile procurement as an "approach to procurement that is flexible, adaptable, collaborative, and results driven." Further, the NIGP suggests cultural changes that are required for successful agile procurement, with several key shifts: from contract centered to project centered, from buying a service to entering into a relationship, and from contract management to performance monitoring.

Implementing an agile procurement process requires a clear commitment from procurement leadership. If agile methods are new to the organization, considerable time and outside expertise may be required to understand how agile works. In the past year, professional organizations such as Sourcing Interest Group (SIG) and the International Association of Commercial and Contract Management (IACCM) have provided seminars and training on agile procurement. Contact organizations in your industry to understand how they are implementing agile procurement. Source