How To Expand Your Procurement Ecosystem
By Brian Laufer, QuoteWerks
The latest technologies are essential for keeping businesses profitable and competitive today. However, the true value of innovation comes from the creativity of IT professionals - those who develop instrumental new solutions from a variety of components and applications. Designing and constructing useful technology systems is hard enough when the most critical pieces are close at hand, but supply chain issues and escalating prices are forcing VARs and MSPs to rethink their operations.
Accessibility and inflation continue to complicate development and technology procurement today. Despite the easing of many pandemic-related supply constraints, the unavailability of some critical products is still forcing providers to adapt or delay major projects, causing anxiety for everyone involved.
For IT services firms, that situation negatively impacts sales and client expectations, especially when it postpones plans with big budgets. One missing piece can disrupt the entire venture or considerably alter margin projections.
One solution to those problems for VARs and MSPs is to modify their supplier ecosystems. Evaluating and shifting vendor and distributor relationships from time to time allows providers to take control of their procurement options, including product availability and pricing. The greater the ecosystem, the greater the leverage for securing quality, high-margin goods.
Constantly Evaluate
Are existing suppliers meeting clients’ current needs? How quickly can those vendors or distributors deliver and how competitive are their prices? A common best practice for IT services firms is to periodically assess various parts of their operations, including their procurement process and industry alliances.
Evaluation of prospective vendors and distributors allows providers to shift to new suppliers quicker if they run into pricing or availability problems -or if they are already interested in making a move. Change is never easy, but if the benefits outweigh potential costs such as the loss of volume discounts or partner program status, it might be worthwhile to alter the supplier ecosystem.
Identifying existing and potential gaps, including technologies with single sources, is a good first step. What parts of an MSP’s portfolio rely on a single vendor or distributor? Every provider needs contingency options for their solution stack, even for unique or favored technologies. The channel is filled with endless tales of IT services firms scrambling to replace vendors or distributors involved in M&A deals they don’t support. Good or bad, MSPs and VARs always need backup plans for every aspect of their business, including suppliers.
Build A Dynamic Strategy
How many suppliers does an IT services firm need? While there’s no one-size-fits-all solution for MSPs and VARs, according to the latest QuoteWerks IT Procurement Report, half (50%) of those companies work with four or more distributors, with nearly 20% leveraging six or more of those key suppliers to source their technology offerings.
Expanding the procurement ecosystem to include Amazon Business and other primarily web-based IT suppliers boosts bidding power for securing better pricing and delivery options. While vendors, marketplaces, and e-tailers typically command secondary status in the procurement hierarchy — just 12% of respondents in the report lead with those suppliers — their value cannot be understated. The greater the procurement ecosystem, the more leverage providers have to get the best deal for themselves and their clients.
Leverage MSP Tools In The Procurement Plan
The good news for MSPs and VARs is that it’s now easier than ever to not only manage a larger set of suppliers but more advantageous from a financial and efficiency perspective. Thanks to the latest channel-specific management solutions, providers can let technology do their bidding and handle many of the most time-consuming procurement processes.
For example, connecting quoting and proposal tools to Customer Relationship Management (CRM) or Professional Services Automation (PSA) applications streamlines and enhances collaboration, and accelerates the closing process. Providers also can employ sales intelligence and analytics, e-signature and document tracking, marketing automation, and customer success solutions to increase short- and long-term revenue opportunities. By selecting feature-rich, industry-specific tools with comprehensive integration points, technology providers can create a “single pane of glass” platform that eases management headaches and maximizes productivity.
Adding tools and suppliers are just two of the many steps involved in implementing an effective IT sourcing strategy. With the systems and suppliers at their disposal, each sales team member can close more business while optimizing the buyer experience. The goal should not be to have the most suppliers, but a collection of distributors and vendors with the portfolios, pricing, and delivery options that best fit an MSP’s needs.
The good news for IT firms is that it’s easier than ever to leverage a larger and more comprehensive supplier network to instantly locate available products and pricing and close sales with a click of a button. In an era of supply chain shortages and issues, those capabilities provide MSPs and VARs with a distinct competitive advantage.
About The Author
Brian Laufer is Vice President at QuoteWerks.