As an experienced ITAM consultant and coach, I frequent IT conferences across the nation. This past June, I found myself at ProcureCon IT Sourcing in Boston. The event is a senior-level, peer-led symposium addressing the intricate challenges that plague the IT sourcing community. It magnetizes procurement managers from large corporations—those unsung heroes tasked with wielding their company’s purse strings responsibly.
To my surprise, a significant number of these financial stewards approached me with their asset management woes. A recurring theme materialized: these procurement managers, so critical to their organizations’ financial well-being, often get benched during crucial discussions about license reconciliations and new contract agreements. This is especially concerning because their roles hinge on the availability of accurate and timely data to execute cost-effective decisions.
Among the network of professionals I met was a seasoned industry veteran who’s head of IT procurement for a sprawling operation that includes almost 300 storefronts across 44 states. With twenty years in the procurement sector, she is all too familiar with the stumbling blocks that arise when crucial data is either incomplete or inaccessible. She was kind enough to lend her insights for this article:
Procurement's Critical Data Needs
If your organizational tableau lacks a robust ITAM strategy, your position as a procurement manager becomes akin to a ship captain without a compass. In negotiations, you’re practically unarmed. And when audits rear their heads, you lack the ammunition to challenge the auditors. The result? Financial repercussions that send tremors through your budget.
Take, for example, a scenario where you negotiated 15,000 licenses at a bulk rate of $200 per license. An audit claims an overage of 1,000 licenses. Without hard data to refute this, you end up shelling out an additional $800,000 from your budget. Keep in mind that audits form a hefty percentage of software vendors’ revenues; they have minimal incentive to ensure you’re getting the most accurate count.
The Value Proposition of ITAM for Procurement
Now, visualize a scenario with a comprehensive ITAM program in place, providing real-time data on your license counts and utilization rates. Not only can you thwart unjust audit penalties, but you can also negotiate future contracts from a position of strength. Reliable asset data can empower procurement to negotiate optimal supplier agreements. To encapsulate, an effective ITAM program provides:
- Real-time visibility into license counts and usage
- Credible data to challenge unfair audit penalties
- The ability to leverage better pricing and terms during negotiations.
When asked how a competent ITAM program would streamline her workflow, our procurement expert offered this perspective: “It would give me leverage in negotiations. It’s often the case that even the business partners are unaware of our actual license requirements. Having accurate data would not only assist in proactive management but also offer a buffer against unexpected audits. Essentially, it’s about being both proactive and reactive.”
What To Do Next
Interested in understanding how an ITAM strategy could benefit your organization? Let’s have a conversation about the unique challenges you’re facing and how a tailored approach could steer your procurement efforts towards greater accuracy and cost-effectiveness. Reach out to me directly here.