Procurement
Primary Goal: Effective management of technology procurement creating value from partner and vendor interactions.
Procurement teams rely upon data and insights enabled by the FinOps team to identify sourcing and purchasing of product and services across the technology landscape, to optimize the value achieved from vendor and publisher relationships, and to allow Procurement to target and execute strategic purchasing decisions in the right timeframe. Procurement works closely with FinOps to ensure that prices and terms negotiated in the contract are fulfilled, both by the vendor and by the organization. Forecasting of spend within a particular category of technology like Cloud or data cloud platforms can enable Procurement to stay on top of quickly changing landscape of services. Curation of the procurement processes and vendor lists often require advance work to effectively manage, so proactive engagement is essential before contract deadlines become imminent.
Objectives
- Negotiate valuable technology contracts that support organizational strategic objectives
- Clearly understand and communicate vendor and service tradeoffs between technology categories
- Navigate cost-effective technology tradeoff decisions, and proactively adjust the vendor landscape accordingly
- Enact and support enterprise discount / volume commitment programs
- Manage relationships with strategic vendor partners, and other vendors appropriately
Challenges
- Lack of visibility to current or future cost and usage data
- Understanding the rapidly changing environment of technology use cases
- May be traditionally seen as a blocker to innovation rather than a partner
- Lack of centralized process for procurement of technology
Key Metrics
- Strategic vendor purchasing, meeting commitments and contractual compliance
- Software license value
- Cost per license/product/metric
- Utilization of licenses/entitlements purchased
- Cost or IT Spend per Vendor to provide tradeoff opportunities
FinOps Benefits
- Clear understanding of current and forecasted future usage by technology category
- Translate billing data to activity based costing
- Provide visibility and enable understanding of cost per technology license and contracts
FinOps Procurement Persona typical roles:
- Procurement/Sourcing Specialist
These roles are experienced in negotiating contracts and managing vendor relationships. - Procurement Specialist/Buyer
This is often an entry-level or mid-level role focused on sourcing, purchasing, and managing specific categories of goods or services. - Sourcing Specialist/Analyst
Focuses on identifying and evaluating potential suppliers, negotiating contracts, and managing supplier relationships. May specialize in particular areas like global sourcing. - Contract Administrator/Manager
Manages the lifecycle of contracts, ensuring compliance, tracking obligations, and handling renewals. - Procurement Analyst
Supports the procurement team by analyzing spend data, market trends, and supplier performance. They often provide insights for strategic decision-making. - Vendor Manager
Responsible for overseeing and managing a company’s relationships with its vendors (suppliers). This includes selecting vendors, negotiating contracts, monitoring performance, ensuring compliance, and optimizing vendor costs and service levels.