Can Employee Prejudice and Internal Practices be Hurting your Procurement_­­

Procuring products, data center space and pretty much anything IT has been operating the same way for a very long time.  Larger companies are getting savvier when it comes to following their dollars and learning more about their supply chains and the sphere of influence surrounding purchases.   Procurement’s tasks include monitoring vendors and purchases, but there are problems with the current procurement processes in many instances.  Please consider the following list of points to consider.  While certainly not malicious, these points are worthy of consideration and are leading to new procurement thinking.  

• Employees use product recommendations to enhance resumes.
• Employees become close with vendors making it hard to say no.  Who can say no to a friend?
• Employees may specify solutions before understanding other available options.
• New vendors are difficult to add to current systems, and therefore, the status quo applies.
• Vendors that are within the system don’t have any checks and balances.
• Price creep results from a lack of competition (discounts begin to disappear).
• Business partnerships can be very one-sided.
• New products are implemented based solely on vendor suggested configurations which may not be the most cost effective.
• Vendors provide specifications that unfairly lock out the competition through proprietary items that are meaningless to the overall end result of the project.  
• “Or equal” is often viewed as lip service when the original specified product is well known to bidders, and therefore no or equal is bid.
• Procurement has a hard time evaluating “or equal” and therefore must rely on the original specifiers that may not be impartial.

While this list is not applicable to every environment and not all inclusive of others, just a few items on this list are worthy of attention.   The important thing to note is that employees have 40 (at least) hour a week jobs and this leaves little time to hunt for new products, updates to standards, updates to products that may exceed the standards and products that could exceed currently specified products.  When new projects come along, employees can only act on the basis of the best knowledge they have available.  This knowledge may come from a single vendor, and therefore may not be at the best interest of the company. 

To the employee, the vendor is a tool as much as the product set they sell.  And while many vendors provide great information, support and lunches or happy hours, that doesn’t necessarily mean they are the best solution.  When vendor products are hard specified, price creep occurs, and discounts tend to diminish over time.  As the company/vendor relationship grows over time, employee prejudice towards that vendor may operate against your company goals and best interests. 

Suppose a vendor has product P and there are 10 competitors in the marketplace.  Your employee that is specifying the products for an RFP automatically sources product P because they have had a good relationship with that vendor or that vendor’s product.  Suppose that vendor provided verbiage for the RFP and maybe even the design, layout or parts list.  Out of the 10 competitors in the marketplace, say 5 have equal or greater performing products.  If your employee did a cut and paste in the RFP for product P, even if they list “or equal” after that, if product P is well known in the industry, it will be assumed that the “or equal” option is simply lip service to have the appearance of open bidding.  If the vendor has done their job, there will be no doubt in the employee’s or bidder’s minds that option P is the best, true or not.  If 5 products are equal, then they are exactly that, equal.   

Product P is “in” because the vendor has made the employee’s job easier.  There are 10 other products worthy of consideration.  In some cases, employees will argue on the vendor’s behalf over nonimportant features like color.  Other vendors never get the time of day to prove that their products or services are better or equal. 

Let’s also assume Product P is a great resume’ builder.  If the certification to use that product or that product knowledge is a highly desirable skill, then there is further weight and incentive in the employee’s mind to use that product.  Whether intentional or not, the resume boost appeal is another level of employee prejudice that is hard for other vendors to overcome.  This level of tunnel vision leads to probably the most damaging result, and that is letting the vendor have free reign with design and recommendations. 

Employees want the shiny new toys.  Not only do they enhance their resume (as noted above), but new toys also provide some great experience that helps solidify their careers (both in your organization and outside).  In order to figure out how to specify new toys, we ask the vendors. 

We have all seen the articles where vendors over specified products to the detriment of their end user.  In a past life, I personally recall a time when I recommended that an end user rethink a certain strategy with switch ports.  The employee at the end user had a great relationship with the switch vendor.  Next thing you know, the company took the vendor recommendations across the board and had way to many switches in their data center that could NEVER be utilized.  A year later, they had 19% port utilization across the entire data center.  That means that 81% of all of their purchases were wasted.  Further, the power to run them, the cooling required, the maintenance bills, etc. were wasted over 81% of their purchase.  The employee was a staunch defender of the solution simply due to that vendor friendship.  

When you let the person in charge of the sales quota have free reign, there are many that will take full advantage of it!  I have seen the same with over-specified cooling, PDUs, servers and every piece of equipment inside and supporting a data center. 

Larger companies work to guard against those relationships by not allowing meals or drinks to be purchased, but there are ways around that system, for sure.  Now I’m not saying that you should keep all vendors at arm’s length.  There is some great information to be had out there, and vendors can provide invaluable education.  What does need to occur is that employees need to be empowered to challenge the norm.  Companies need to make it easier to switch out vendors or consider new ones. The overall fear of failure and job repercussions because of failure needs to be addressed.  Employees should not be afraid for their job for challenging the “norm.”  That norm may have been set well before half the employees at the company even an input!  It is well within a company’s interests to have a test bed and encourage employees to provide like functionality at a savings.  Just like it is important to encourage bidders to do the same.  This open competition provides a checks and balance to company spend and, in many cases, a better overall solution. 

Every person that will be impacted by a spend should have not only an understanding of the solution presented but also how it will interact with their environment.  They should also have a say in alternatives and have an overall buy in of the final solution.  And don’t forget, complimentary vendors (those that interface with given solutions) can provide invaluable insight, as can disinterested third parties.  The bigger you cast the net, the more fish you catch, so to speak.  Companies need to allow time to vet options and make it easier for employees to do the vetting.