How to Build Your IT Procurement Strategy for 2024
- Optimize IT labor engagements and cultivate flexible supplier relationships.
- Ensure effective software governance by monitoring acquisitions, implementing standardized processes.
- Optimize existing hardware, capitalize on a soft market for hardware needs, and explore alternative maintenance.
February 06, 2024 | Procurement Software
Effective IT procurement is crucial for businesses seeking to leverage technology to enhance operations and align with strategic goals.
The ideal IT procurement strategy evaluates company size, industry, compliance needs, existing systems and growth plans to determine the optimal hardware, software, services, and other IT assets to acquire.
As we step into 2024, the outlook for IT services, software and hardware unveils a landscape marked by dynamic growth and unique challenges.
Here's a breakdown of the trends and GEP's recommendations for each category to guide organizations through the complexities.
• IT Services: Large Vs. Niche Providers
In 2024, IT services are anticipated to outpace growth in all other spend categories, making optimization a key focal point for organizations.
Striking a balance between large and niche providers is crucial.
However, the looming challenge of labor scarcity poses a threat to in-house talent acquisition and third-party staffing. This scarcity is likely to trigger price escalation and service delivery risks.
To combat these challenges, continuous review and optimization of engagements are recommended. Once inflationary pressures subside, leveraging go-to-market exercises can ensure price competitiveness and identify new technologies.
GEP’s Recommendations
1. Proactively review service delivery models, locations, seniority, rate cards, discounts/rebates, SLAs, KPIs and RACI of IT labor engagements.
2. Develop strong relationships with key strategic suppliers while avoiding vendor lock-in.
3. Hold providers accountable for implementing technology and process improvements.
• Software: Navigating Growth and Governance
The software segment is poised for significant growth, closely trailing IT services. Digitalization, investments in core platform capabilities, and increasing vendor prices contribute to this surge.
Organizations are responding by developing mature practices around software asset management and governance to ensure efficient utilization and compliance.
GEP’s Recommendations
1. Continuously monitor software acquisitions and utilization.
2. Establish uniform processes and governance for software purchases aligned with finance and IT enterprise architecture.
3. Challenge incumbent providers to prevent vendor lock-in and control price increases.
• Hardware: Balancing Growth and Optimization
End user and data center hardware growth is expected to be modest in 2024 due to extended refresh cycles and project stalls amid inflation. However, hyper growth is witnessed in cloud footprints and infrastructure-as-a-service (IaaS) spending. To adapt, organizations are exploring alternative maintenance support for assets and maturing practices around monitoring and optimizing cloud utilization.
GEP’s Recommendations
1. Leverage utilization management tools or partners to optimize existing assets and control demand for hardware and cloud.
2. Seize opportunities in a soft market to meet requirements.
3. Explore alternative maintenance options for equipment slated for extended use.
To Sum Up
In conclusion, a proactive and strategic approach is paramount for organizations navigating the IT landscape in 2024. By aligning with these recommendations to their IT procurement strategy, businesses can not only mitigate challenges but also position themselves for growth and efficiency.
Download GEP Spend Category Outlook 2024 report for detailed insights across categories.
