The next phase of margin improvement for technology businesses will be delivered through procurement excellence.
Rapid top-line growth for technology companies has rightly been the prime focus; grabbing market share and establishing product dominance. However, as growth naturally slows, focus must turn to margin, and the management of costs as well as revenue.
Despite very sophisticated approaches to development, sales and service, many technology organisations fail to harness the power of best-in-class procurement to improve profitability. We see a number of key areas for consideration;
- Procurement in tech companies is often a back-office transactional function, without any proactive savings delivery focus. The impact of best-practice procurement can be significant.
- Technology companies often buy a lot of technology – all priced in US$ - and with a 20% slide in exchange rate following the Brexit vote, a margin impact is inevitable.
- Technology companies spend significant sums on categories such as marketing where the involvement of procurement can generate significantly more marketing impact for your budget.
- Categories of core corporate expenditure such as Utilities, Facilities Management, Cleaning, Catering, Office Supplies and Telecoms will yield savings and, hence, margin improvement when sourced professionally.
The technology businesses we work with are already seeing how improvements in procurement can deliver substantial, sustainable cost savings, while also improving the quality of purchased goods and services.
Procura can help tech businesses;
- Identify, quantify and prioritise savings opportunities
- Achieve significant profit improvement through indirect spend procurement cost reduction
- Achieve significant profit improvement through specialist marketing procurement cost reduction programmes
- Focus on core direct procurement whilst we professionally manage indirect category procurement through our managed service
We have a deep understanding of the sector challenges and supply markets.