What is Technology Procurement 4.0 [Book Fragment]


A fragment of the "Technology Procurement Handbook: A Practical Guide to Digital Buying" (2020)

The bimodal transformation of IT strategy and operating model.


Megatrends are powerful macro-economic and geopolitical forces of emerging technologies, globalization, and changing demographics. They initiated the tectonic shift to Industry 4.0, which is enabled by always-connected data-hungry computer systems.   
Old computer
Likewise, our fellow IT departments transformed their operating model, becoming T&I – Technology and Innovation. 
This abbreviation represents the new paradigm of Bimodal IT – well-planned reliable quality core systems and processes and agile empirical business-centric innovations.  
IT procurement ceased to exist as we know it – it became "technology" or "digital" procurement, which no longer sources commodities for IT departments – it delivers value-generating services for the business. 
Our requestors are omnipresent – the marketing department needs the campaign efficiency metering, HR people want online timesheets, CEO office requires the virtual Board of Directors portal. All of them will sponsor and operate these cloud apps or web portals, which need to be delivered to them seamlessly "as-a-service." 
T&I (still remember what that is?) needs Platinum support and maintenance for the ERP platform and "no clue" app development hackathon – this means that procurement must be equally bimodal and exercise agile or boilerplate approach depending on the nature of a requirement.

ITIL Service Lifecycle as the Technology Procurement Basics.

ITIL Service Lifecycle fits the technology procurement perfectly, as it represents the path of evolution of a business requirement into a service strategy, then design, implementation (transition), and operation. 
Procurement needs to operate a similar logic and map the strategic sourcing process to the ITIL Service Lifecycle.
ITIL Service Lifecycle diagram

The roadmap to agile technology procurement

The result of procurement efforts is not a contract – it is the value delivered to the business and consumers. The longer it takes the value to reach its recipients, the less effective is the procurement work. 
This leads us to the notion of agility – the sustainably shortest lead time between the business requirement formulation and benefits realization.
Indeed, we need to be capable of supporting both agile and waterfall processes. However, our mentality should always be agile – streamlined, flexible, less obsessed with governance and documentation, and more – with value, performance, and collaboration. It must reside on trust with suppliers and the support of end-users. In this respect, agile is instead an adjective explaining the new procurement mindset.
There are multiple factors of resistance to agility – top-down long-term business planning, "big bucket" budgeting, waterfall PMO, rigid corporate governance, hierarchical siloed operational model. We apply strategic sourcing is sometimes reactive, sequential, with excessive controls and overwhelming documentation.   
Nevertheless, our existing processes contain agility, and you do not need to wait for the corporate big-bang change management program to run your first sprints. 
Try to apply agile methodology to the very process of becoming agile – create a vision, specify a roadmap, identify an MVP - the best level of agility you can reach without dramatic changes to corporate frameworks – and start reaching there increment-by-increment.
For example, 
  • our project budgets could be allocated as seed funding (per a couple of sprints until a prototype or an MVP and then the next tranche),
  • agile governance needs to be exercised by delivery teams, who should decide on the empirical performance metrics they will use and self-monitor, 
  • the standardized management reporting (if required) becomes part of the delivery of each sprint, 
  • Scope of Work should be replaced with the Statement of Objectives with the product vision,
  • the supplier selection process should be streamlined and favor competitive prototyping.

The Technology Procurement 4.0

The 4th industrial revolution requires technology procurement 4.0 that is agile, supportive, customer-centric, and value-driven. 
The paradigm shifts from governance and cost-cutting to value generation, speed of execution, and partnership with the business and suppliers. 
So, procurement integrates with the business to share common values and achieve joint results.
Currently, procurement is at the crossroads of possible evolutionary directions, and if we do not choose the right path, our profession may become extinct. 
The business is unforgiving to rudimentary functions and equipped with various tools to divest those – outsourcing, automation, and decentralization will take their toll on those stuck in the past. 
Therefore, being bimodal, flexible, and valuable is not a nice-to-have option – it is a survival kit.
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