So, the person who is in charge of IT in an organization is automatically perceived to be far more important those in charge of procurement and supply chain operations, right? As ESPN's Lee Corso would put it, "not so fast my friend!"
OK, here's a question that even your 5 year-old could answer (well, simplified - maybe using pizza or a package of cookies - as they haven't yet started covering percentages in Kindergarten math, even trying to achieve higher math test scores :-).
Which would you want - 2% of something, or 20% of that same something? As Homer would say:
Recently, my friend Kevin O'Marah, a GVP of Supply Chain Research for Gartner, opined on the overall status of supply chain management in organizations is his article:
Chief Supply Chain Officers are still rising, but what is the job?
O'Marah had a great observation comparing the relative importance of IT and supply chain:
Think about budgets. According to our research, IT budgets typically represent anywhere between 2%-5% of revenue depending on industry. Meanwhile, supply chain management—encompassing direct materials sourcing, manufacturing operations, packaging, handling, and transport—is likely to account for as much as 20% of revenue including not only technology like order management systems or planning algorithms, but machinery, buildings, freight contracts, and more. Big money is spent each year in bets that merge good old fashioned industrial technology like conveyor belts and forklifts with information age technology like sensors, inventory tracking systems, and web order forms.
So, in your own organization or agency, think about the potential cost savings that could be achieved through focusing on savings across all spend areas - 20% of your entire budget, and not just counting on the "price deterioration" in information technology to achieve incremental savings.
As you know, we here at the Reverse Auction Research Center: (http://reverseauctionresearch.blogspot.com/) believe that competitive bidding can bring not just cost savings, but improved efficiency and heightened transparency to procurement in most areas of corporate and governmental buying - including yes, especially in buying information technology wares (see You Can't Fight Moore's Law: Why Price Deterioration Means That Reverse Auctions Make Sense and Produce Savings in The Acquisition of Information Technology Resources).
So, if you would like to learn more about how to focus on achieving substantial savings across 20% - or more - of your budget, contact us today on how to develop a strategy to take a big bite out of your procurement - and your IT - budgets through strategic use of reverse auctions as part of your overall purchasing and acquisition strategy.
David Wyld,
Professor of Management
Southeastern Louisiana University
From the Reverse Auction Research Center: http://reverseauctionresearch.blogspot.com/
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