In the cloud age, software is purchased at ever-increasing rates, by IT leaders and business leaders alike. Procurement professionals, especially cloud-based sourcing professionals, face an unprecedented opportunity to own the category and drive value.
As Siddharth Ramesh, Manager of Corporate Procurement at VSP Global, says, procurement teams should operate as a brand within the enterprise to seize the opportunity and increase their strategic importance.
VSP Global’s vision is to provide access to affordable, high-quality eye care and eyewear. In a company like VSP, with six lines of business and operations across the world, visibility for critical initiatives are much more important.
Today, procurement teams must build relationships with business leaders to better identify and report on business outcomes. Then, by promoting the value provided enterprise-wide, Siddharth and his team can level up their brand.
By continually providing value, procurement leaders can morph into trusted advisors and trusted partners to the business units and enterprise leaders. With this goal in mind, at VSP Global, procurement teams are entrenched in business units to accelerate time to value and increase brand visibility.
Entrenched Procurement Teams Partner Better
To increase procurement participation with business units, many enterprises, VSP Global included, are staffing personable procurement professionals to place “in the trenches” alongside business leaders.
Called entrenchment or co-location, this practice is quickly becoming common practice in cloud-forward enterprises, especially when technology is mission-critical. The average tech-forward enterprise purchases hundreds of SaaS subscriptions annually: entrenchment ensures that these purchases are secure, measured, strategic, and successful.
Through entrenchment, procurement can better understand the business needs and goals. Additionally, business leaders can receive the on-demand support that enables procurement to socialize best practices for IT governance throughout the enterprise.
As the procurement maturity model centers around engagement, Siddharth recommends co-location for enterprises that are struggling to increase engagement and IT collaboration. In the form of support or education, these face-to-face engagements are enabling both procurement and the business unit to reach KPIs.
In the past, procurement teams have struggled to expand their primarily transactional relationships. For example, business units would only call on procurement to save costs at renewals. But even today, procurement leaders must start with cost savings initiatives to build trust with business units.
Increase Savings and Tackle Cost Challenges to Increase Brand Affinity
In modern procurement teams, KPIs vary beyond the traditional goal of increasing cost savings. However, to increase procurement’s strategic importance within the enterprise, procurement leaders must master reporting, benchmarking, and saving costs.
At VSP Global, Siddharth has tripled the spend under management as well as the savings. As a result, the organization has over 80% of software spend under management, leading to 12-15 percent in realized savings, an ROI of 750% when compared to the team’s operating budget.
To reach the immense level of savings in an organization that employs nearly 6,000 employees, the procurement team at VSP Global took the following steps:
- Determine metrics for tracking and benchmarking cost savings.
- Wrap metrics around known applications.
- Build relationships with known application owner.
- Optimize licensing and contracts.
- Report savings back to business units.
- Explore creative opportunities to drive value.
- Promote continuous discovery with and through application owners.
When procurement leaders employ a SaaS system of record, they can uncover common areas of mismanaged software spend. From the elimination of forgotten renewals to the consolidation of duplicative applications, cost savings opportunities abound.
Additionally, in the subscription economy, the buying model for software (especially infrastructure), provides many unforeseen challenges when forecasting budgets and containing costs. Procurement and IT experts can aid business units in understanding what decisions will greatly influence pay-as-you-go services, therein containing costs.
Through cost savings initiatives, procurement leaders can build trust with business units. Then, business leaders and procurement experts can derive KPIs that drive business value beyond cost savings.
Push Beyond Cost Savings to Expand Procurement’s Influence
Proving your procurement team’s cost savings prowess is only the start. While the business can see the value of cost savings initiatives immediately, the procurement maturity model prioritizes much more than cost savings.
Tasked with taking a holistic view to enterprise technology, procurement teams must meet compliance standards, ensure secure data flow, and promote procurement best practices — all in a timely manner.
To reach this world-class level of maturity, procurement leaders must have strong relationships throughout the enterprise. These relationships enable procurement leaders to work with and through legal, IT, and Finance to advance procurement best practices and business outcomes.
At VSP Global, Siddharth has had the pleasure of helping their procurement function grow and meet the demands of the growing enterprise. As they have staffed entrenched procurement experts and helped software buyers meet their business goals, other functions have taken notice.
By continuously providing cost savings, timely support, and business value, Siddharth and his team now own their internal brand to strengthen the strategic importance of procurement at VSP Global.