Mastering The Rising Complexities And Speed Of IT Procurement

By Brian Laufer, QuoteWerks

When a client has a specific technology need or sends out requests for bids on a project, time is often a key factor in their eventual purchasing decisions, as are pricing and availability. Experienced IT services firms understand how hard it can be to overcome the challenges and successfully close these sales. Whether attempting to decipher long lists of complex requirements or waiting for vendors and distributors to share the correct information, the processes can be tedious, and delays can easily compromise potential deals.

Speed and efficiency are critical to winning new sales for IT service providers. That means upgrading, if not completely replacing, procurement processes and systems, eliminating gaps in communications and information “pinch points.” Optimizing that part of the business’ operations is crucial with tech companies increasingly reliant on new customer acquisition.

IT services firms need incremental income, especially recurring revenue streams, to enhance cash flow and fuel organic growth. Every extra dollar of profit the sales team can squeeze out of a deal means less reliance on creditors (i.e., vendors, distributors, banks), allowing the company to hire, buy necessary tools and lease new space with its own money. No interest to pay, more money to grow.

An efficient IT procurement system can help make that happen. The global pandemic and ensuing supply chain issues illustrate the value of quality processes, supplier relationships, and automation. As demand for remote work enabling devices and other technologies rose, VARs and MSPs raced to locate cost-effective options to fill customer orders in a timely fashion. IT firms with more advanced procurement methods and strong supplier relationships typically fared better than those with less structured systems.

Adopt Buying Best Practices 

Businesses need benchmarks and standards. Successful IT service providers implement industry best practices to optimize various parts of their operations, from minimizing service tickets and response times to maximizing average deal sizes and profitability. Determining how the company compares with those at the top of their games allows organizations to note deficiencies and, more importantly, implement positive changes to strengthen those practices.

The quoting process is a great example. As one of the most critical activities in the sales cycle, customers must receive timely and accurate information to make educated buying decisions. The quicker the turnaround and more precise the data, the better the chances of closing the sale. Studying industry procurement metrics lets IT firms benchmark and compare their company’s processes so they can make positive adjustments. That procedure may involve modifying their RFQ process, adopting new tools for quoting and contract approvals, and expanding supplier relationships         

For example, one primary distributor is no longer the norm in the IT industry. While nearly two-thirds of tech companies still favor those companies as primary suppliers, e-tailers are gaining traction, and vendors continue to play a key role, according to the 2022 QuoteWerks Trends in IT Procurement report.

That research provides a good snapshot of MSP and VAR buying behaviors that IT service providers can compare with their own. Some of the other key takeaways include:

• One-fourth of IT firms spend at least two hours constructing a quote
• More than half (56%) secured more than $500,000 worth of goods for clients in the last 12 months
• The average quote value for three-quarters (78%) of respondents is between $501 to $10,000  

These statistics allow MSPs and VARs to benchmark their organizations’ RFQ results and identify areas that need improvement. For example, if the sales team spends more time than other IT companies creating quotes for prospects, that could impact their ability to close deals. Are competitors faster in responding to questions and pricing concerns? Investing in systems to boost communications and information-sharing capabilities could reduce closing times and increase the revenue and profitability of each deal.   

Adapt To The Times

Despite the lingering effects of the COVID-19 pandemic and ongoing supply chain shortages, the IT services business model is stronger than ever. Progressive VARs and MSPs are sourcing products and solutions from a larger and more diverse supplier community today, and the most successful firms leverage automation and integrations to drive greater process efficiencies.

With those expanded relationship ecosystems and advanced capabilities, providers can more readily overcome supply chain constraints, deliver more cost-effective solutions, and optimize delivery. Those operational efficiencies are within any tech company’s grasp with an effective quoting system, a Professional Services Automation (PSA) platform, and integrations with other IT services-enablement tools. That powerful combination of applications allows sales teams to quickly locate products, determine availability and pricing options through multiple suppliers, and then easily communicate that information to prospects. Automation helps VARs and MSPs build and close deals more effectively and profitably.      

Hardware continues to play a crucial role in the operations of modern organizations, and IT firms cannot sell the things they cannot locate and deliver at a fair price. That’s the value of an effective quote and procurement process. MSPs and VARs need that strong “sales machine” today to drive incremental revenue and cash flow. With the right methodologies and technologies, it is easier to source quality products and solutions from a larger and more diverse supplier community. More options mean additional opportunities to increase sales, margins, and customer satisfaction.   

Download a free copy of the 2022 QuoteWerks Trends in IT Procurement report and see how your company compares with the industry standards.

About The Author

Brian Laufer is Vice President of QuoteWerks.