University IT Sector Procurement Challenges: A Detailed Analysis

This report provides a comprehensive analysis of procurement challenges within the IT sector, focusing on the retail sector. It begins by highlighting the importance of procurement in supporting business strategies, examining organizational structures, purchasing procedures, and relevant legal aspects. The report then delves into the specific challenges faced in the IT sector, such as those related to public procurement, stakeholder conflicts, information asymmetry, and the integration of new technologies. It also identifies key challenges like leveraging data analytics, embedding sustainable practices, balancing outsourcing, maximizing supplier benefits, and engaging effectively with indigenous suppliers. The report concludes by summarizing the key findings and emphasizing the need for risk assessment and strategic planning to overcome these challenges and ensure the smooth functioning of procurement processes. References are included to support the analysis.

Running head: PROCUREMENT CHALLENGES IN IT SECTOR
IT Procurement Challenges in the Retail Sector
Name of the Student
Name of the University
Author’s note:

1PROCUREMENT CHALLENGES IN THE IT SECTOR
Abstract
Procurement is one of the necessary functions in the retail sector. The purpose of this report is to
examine the role that is performed by the functions in procurement in business sector. The study
also reveals the various challenges that are faced by experts in developing economies. The study
found out the fact that there were several reasons, which were the major challenges that were
being faced by the procurement issues in some sectors. This report also suggests the various
solutions that could be implemented for a proper working of the procurement function.

2PROCUREMENT CHALLENGES IN THE IT SECTOR
Table of Contents
1. Introduction..................................................................................................................................3
2. Analysis of the Importance of Procurement in the IT Sector......................................................3
2.1 Role of Procurement in Supporting the Strategy of Business...............................................3
2.2 Structures of the Organization in the Industry Sector...........................................................4
2.3 Procedures of Purchasing in the Industry Sector...................................................................5
2.4 Important Legal Aspects Related to the Industry Sector.......................................................5
3. Analysis of the Procurement Challenges in the IT Sector...........................................................6
4. Conclusion...................................................................................................................................8
5. References....................................................................................................................................9

3PROCUREMENT CHALLENGES IN THE IT SECTOR
1. Introduction
In the new age of Information Technology, many of the important decisions have an
implication of procurement, which could impact the total cost of carrying out the decision. The
cost could include the overall cost of the goods or services. In the IT sector, the function of
procurement is seen as a strategic function that works to improve the profitability of the
organization [2]. Procurement could be helpful in streamline of processes. It can also help in
reducing the costs of the raw materials. The function of procurement is greatly concerned
regarding obtaining the necessary services and goods from the proper suppliers. This could
enable the organization to meet the strategic objectives in an effective, efficient and economic
manner, which could influence the success of an organization [3].
2. Analysis of the Importance of Procurement in the IT Sector
2.1 Role of Procurement in Supporting the Strategy of Business
Procurement plays a major role in approaching the strategy of business. These could be
achieved in two ways. Firstly it could be performed by different activities from competitors and
by performing the same activities in a better way. Procurement could be supported in a different
strategy. It could serve as a distinguishing competence in implementing same strategies in a
better way than other competitors [6].
In the recent market, the professional people who are engaged in procurement are highly
expected to develop options, which could help their business organization to stay in the
competitive market. The proper evaluation of the costs of the transaction is a major issue for the
trade purpose and the various decisions in investment. This could be helpful in ensuring the
profit and larger volumes of purchases [4].

4PROCUREMENT CHALLENGES IN THE IT SECTOR
2.2 Structures of the Organization in the Industry Sector
The structure of an organization describes the way in which the management and the
employees would connect to each other in a particular organization. The IT sector should rely on
the strict rules so as to accomplish their goals and objectives.
Vertical Structure: The structure has a director or departmental head at the top of the
structure. It also has a middle level for the managers who would create plans for the company
and some workers who would implement the procedures. In this structure, the heads of the
department decide and dictate the procedures of the functions and operations. The middle level
managers help in creating the plans and thus implement them. This type of strategy could help in
the smooth working of the procurement procedures in the IT sector.
Horizontal Structure: This structure use few levels between the workers and the
management. This allows a clear and open connection between the layers. This kind of structure
occurs at the higher levels of the organizational structure that have low budgets and few
employees.
Divisional Structure: In this organizational structure, the entire department oversee their
entire operation with a minimum input from other departments. The divisional structure is able to
separate the employees based on their specialty of their job and the geographic location of the
place.
Matrix Structure: This kind of structure of organization defines the relationship
between management and employees that would be established as a matrix or grid instead of the
hierarchy of convention. This kind of structure can allow the organizations to communicate with

5PROCUREMENT CHALLENGES IN THE IT SECTOR
each other. This could also lead to the efficient communication between the employees and the
management.
2.3 Procedures of Purchasing in the Industry Sector
The following procedures are involved in the purchasing in the industry sector:
1. The organization should know the facts about a certain product. The product should be
something that would be new for the company.
2. The organization should know the exact source from where the product could be
obtained. Ensuring the right product is extremely crucial for the company [8].
3. The organization should search for all the appropriate information in order to
determine the most suitable prices and terms related to the product.
4. The purchase order is used to define the price, specifications and the various terms
related to the product.
5. The order that is purchased should be delivered by using email, fax or some other
electronic means within the proper time. The recipient acknowledges the receipt of the order
purchased.
6. The documents that should match when a payment procedure is requested by an
invoice. The discrepancies should be resolved before the before the payment is done by the
recipient.
7. The company should maintain the records properly. The records includes the purchases
in order to verify the tax information and conform the warranty information [11].

6PROCUREMENT CHALLENGES IN THE IT SECTOR
2.4 Important Legal Aspects Related to the Industry Sector
Most of the legal challenges that are being faced by the IT sector are being driven mobile
and cloud computing technologies and various other kinds of software which are responsible for
transforming and are critical in every industry. This procedure are in relation with the existing
laws and regulations.
Data security is an important aspect in the IT sector. Securing and protecting the data are
an important concern for various organizations. Hence a proper legal system is extremely
necessary to define the rules.
3. Analysis of the Procurement Challenges in the IT Sector
The public procurement could be defined as the purchasing or buying of goods and
services. The importance of strategy related to procurement can also improve as the companies
would emphasize on the fundamental capabilities and transmit the activities to the partners
involved in business [1].
The procurement process in IT systems and their services would be perplexing as
compared to the purchase of much more consistent services and goods. The decisions related to
procurement should be made early in the process of procurement when the requirements would
be uncertain for the organization. The buyer might link between the opposing and complex
system options. The Information Technology systems should help in supporting the process
although extensive research demonstrates the difficulties in implementing the process of e-
procurement in the public sector.

7PROCUREMENT CHALLENGES IN THE IT SECTOR
The research is mainly concerned about the challenges and the several dilemmas, which
are mainly faced in the procurement in the information systems and the related services in the IT
sector [7].
The procurement by the public could be viewed as a system which is in action. It mainly
consists of making and defining the policy of management, authorization, appropriations, and
regulations of procurement and the proper implementation of the policies of procurement. One of
the identified challenges of procurement should be in the concern of the issue of the several
internal stakeholders who possess conflicting goals. In addition to the challenges, the public
sector involves the complication of the various complicating needs of various stakeholders [12].
Another related issue is of asymmetry of information when services are procured from
consultants of information security. The theory of different agencies suggest that contract and
monitoring of the work should be able to bind the speculation of the vendor. This may be
insufficient in order to manage with the various problems as several consultants have much more
information of the critical areas of the problem.
The profession of procurement is becoming a core component of the innovation of the
organization. When the procurement strategies are related to the IT sector, there are several
unique challenges that would be present in order to successfully implement the strategies,
processes and systems into the existing operations. The managers of the procurement in the
public sector should have an open framework within their proper work area [9].
The major challenges of procurement that have been found are:
1. To realize the true benefits from data analytics in the division of procurement.

8PROCUREMENT CHALLENGES IN THE IT SECTOR
2. To ensure the benefits and advantages of embedding the sustainable practices of
procurement, which are fully realized.
3. To balance the outsourcing and maintain the high quality of internal capacity.
4. To get the maximum benefit from the suppliers.
5. To develop the strategies in order to engage effectiveness with indigenous suppliers
[10].
4. Conclusion
Based on the above discussion, it can be concluded that procurement is a necessary
component in the retail sector. The function of procurement are having a major role in the
success scenarios of several global firms. The study also supports the previous identified
challenges that would be related to several stakeholders who are involved in the process of
procurement. The relevant groups of stakeholders should be involved in the project related to
procurement. The challenges in the procurement strategy is complex and regulations are present
[5]. This could make the process much more complex and thus could increase the costs. The
public procurement of the IT systems is a difficult task and could take a lot of time to be able to
seek the information. The problem could be overcome by replication of the strategy from several
known procurement processes. Risk is a matter of high concern for the procurement process.
More and more emphasis should be laid on the assessment of the risks in order to ensure a
smooth functioning of the process of procurement.

9PROCUREMENT CHALLENGES IN THE IT SECTOR
5. References
[1] Moe, Carl Erik, and Tero Päivärinta. "Challenges in information systems procurement in the
public sector." Electronic Journal of e-Government 11, no. 1 (2013): 307-322.
[2] Amann, Markus, Jens K. Roehrich, Michael Eßig, and Christine Harland. "Driving
sustainable supply chain management in the public sector: The importance of public procurement
in the European Union." Supply Chain Management: An International Journal 19, no. 3 (2014):
351-366.
[3] Loader, Kim. "Is public procurement a successful small business support policy? A review of
the evidence." Environment and Planning C: Government and Policy 31, no. 1 (2013): 39-55.
[4] Roberta Pereira, Carla, Martin Christopher, and Andrea Lago Da Silva. "Achieving supply
chain resilience: the role of procurement." Supply Chain Management: an international
journal 19, no. 5/6 (2014): 626-642.
[5] Lember, Veiko, Rainer Kattel, and Tarmo Kalvet, eds. Public procurement, innovation and
policy: International perspectives. Springer Science & Business Media, 2013.
[6] Uyarra, Elvira, Jakob Edler, Javier Garcia-Estevez, Luke Georghiou, and Jillian Yeow.
"Barriers to innovation through public procurement: A supplier perspective." Technovation 34,
no. 10 (2014): 631-645.
[7] Ashworth, Allan, Keith Hogg, and Catherine Higgs. Willis's practice and procedure for the
quantity surveyor. John Wiley & Sons, 2013.
[8] Chong, Eshien, Carine Staropoli, and Anne Yvrande-Billon. "Auction versus negotiation in
public procurement: Looking for empirical evidence." (2014): 120-142.

10PROCUREMENT CHALLENGES IN THE IT SECTOR
[9] Danzon, Patricia M., Andrew W. Mulcahy, and Adrian K. Towse. "Pharmaceutical pricing in
emerging markets: effects of income, competition, and procurement." Health economics24, no. 2
(2015): 238-252.
[10] Nojavan, Sayyad, Behnam Mohammadi-Ivatloo, and Kazem Zare. "Optimal bidding
strategy of electricity retailers using robust optimisation approach considering time-of-use rate
demand response programs under market price uncertainties." IET Generation, Transmission &
Distribution9, no. 4 (2015): 328-338.
[11] Toktaş-Palut, Peral, Ecem Baylav, Seyhan Teoman, and Mustafa Altunbey. "The impact of
barriers and benefits of e-procurement on its adoption decision: An empirical
analysis." International Journal of Production Economics 158 (2014): 77-90.
[12] Musanzikwa, Michael. "Public procurement system challenges in developing countries: The
case of Zimbabwe." International Journal of Economics, Finance and Management Sciences 1,
no. 2 (2013): 119-127.