The world is experiencing a very high level of disruption as a result of geopolitical and social changes. The old patterns of operating are increasingly ineffective due to their lack of speed, agility and proactivity. In this rapidly changing business environment, sourcing, procurement and vendor management (SPVM) leaders have a unique opportunity to determine their transformation and define a new vision for technology acquisitions and vendor relationships. SPVM leaders must balance speed, flexibility and vendor relationship building with managing and mitigating risk. 

SPVM leaders must prepare for the following trends:

• Increasing proliferation of unproven vendors and technologies: The pace of innovation is accelerating with an ever-increasing number of new vendors, products, services and solutions staking their claim to market share.
• Rising number of business technologists: Technology acquisitions are transforming every business unit, function and department within companies.
• Transitioning toward the product-centric IT organization: IT will continue to contribute significantly to the attainment of key business objectives with the focus on aligning products to capabilities or customer journeys. SPVM leaders will be an integral part of the repositioning of IT. 
• Continuing geopolitical and social uncertainty: The world is changing, the status quo is being challenged and the emergence of a new geopolitical architecture affects all facets of business, including technology.

Challenges for SPVM Leaders

SPVM leaders must react to the following challenges:

• Without market intelligence capabilities, SPVM leaders lack the necessary data to drive informed decisions. “Buyers’ remorse” is a major issue for enterprises as technology buyers very often regret the purchase they made. 
• The current-state sourcing, procurement and vendor management operating model does not support “autonomous” tech buying and cannot support “business-led” buying effectively. 
• In this product-centric era, contracting is stuck in time, and antiquated contracting vehicles make it hard to manage vendors and expectations effectively. 
• Geopolitical and social volatility have an increased impact on supply chain, risk and talent.

Recommended Actions

To be successful, SPVM leaders must:

• Move toward a dynamic sourcing approach while developing market intelligence capabilities.
• Build a flexible SPVM operating model that formalizes business-led technology buying.
• Create product-centric contract proposals.
• Develop a vendor and market risk management program to address constant regulatory changes, environmental, social and governance (ESG) considerations, and major geopolitical shifts.

The role of IT sourcing, procurement and vendor management is changing. SPVM leaders need to decide if they will elevate their role and become internal commercial advisors, or will remain the leaders of a tactical, low-value group that will continue to be an afterthought.