IT buyers base performance on cost savings and avoidance
By Staff -- Purchasing, 10/18/2001 6:00:00 AM
Nearly 93% of IT purchasers report their cost savings results in some way, according to a new survey among members of Caucus—the association of high technology procurement professionals. The survey was conducted online by three members of the group—Caren Weiner, technical procurement manager, Xerox; Pete Daunais, strategic sourcing advisor, FedEx; and Brad Simpson, senior corporate negotiator, Principal Financial Group. They reported the results at the Caucus annual meeting held recently in Orlando.
"Current economic conditions provide an excellent opportunity to demonstrate cost savings and avoidance," says Weiner. "Top management at every company wants to see this."
Weiner suggests IT buyers demonstrate value to their organizations by:
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Establishing quantifiable measurements for cost savings and avoidance,
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Obtaining buy-in from key customers and management for programs, and
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Using every avenue available to publicize cost savings accomplishments.
Eighty percent of Caucus members responding to the survey say they report cost savings/avoidance results to people outside of the procurement/sourcing function. Sixty percent say cost savings goals are part of their companies' strategic plans.
Of the members who report cost savings, one third use software tools to do so.
Another 70% differentiate between cost savings and avoidance. (See sidebar for definitions used by Caucus members.) A similar percentage of members validate cost savings with validation processes most often performed by purchasing (44.5%), finance (22.8%), IT (8.4%), customers (19.2%), or other departments (4.8%).
Nearly half of those responding say their job performance measurements are linked to savings. Fifty-percent of this group say savings are measured by workgroup rather than individuals. Eighty-two percent of members say their departments establish cost savings goals for the group; the remaining 18% say their departments set goals for individuals.
Thirty-nine percent have a "scientific" or documented method for determining how annual savings are calculated.
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