IT Purchasing Process

Part
01
of four
Part
01

IT Purchasing Process - Healthcare Systems

The purchasing process in the healthcare systems industry is not streamlined and mostly still relies on individual clinicians looking for IT supplies and engaging in the purchase process in order to acquire the necessary software and hardware. CFOs are the official key stakeholders when it comes to the approval of purchases. After the CFO approves the purchase of IT, the OEM and product are then added as a vendor in the purchasing software system either by the procurement team or the IT team themselves.

Primary and secondary influencers in the purchasing process

  • Many healthcare systems report to be still relying on manual methods when it comes to tracking all procurement of IT systems and hardware.
  • In the last decade, a number of academic studies have stated that clinicians are wasting up to 25% of their day looking for IT supplies or the latest clinical equipment for their workplace.
  • According to Health Facilities Management Magazine, there exists no consistent equipment acquisition process that is recognized nationally, and the IT acquisition processes can vary across health care systems. In the majority of cases, IT equipment is chosen by a single clinician who has not consulted the correct multidisciplinary group of experts within the healthcare organization.
  • Additionally, hospitals still largely use group purchasing organizations for all of their procurement needs. The reason for this is that hospitals "derive value from pricing benchmark data supplied by their GPOs as well as data analytics", specifically when it comes to IT as they allow for large savings and data support for value analysis.
  • Overall, CFOs are the key stakeholders when it comes to the approval of purchases. After the CFO approves the purchase of IT, the OEM and product are then added as a vendor in the purchasing software system either by the procurement team or the IT team themselves.
  • When it comes to department leads involved in the selection process for IT, 84% of healthcare institutions employs a chief information officer to oversee such manner, while 68% has a senior clinical IT leader, and 56% has a senior information security leader.

Primary IT needs

  • Primary IT needs for healthcare providers include database management, security, analytics, point-of-care software, and cloud migration.
  • In order to cut costs, hospitals and large clinical systems are highlighting the need for CMS reimbursement models that allow for "tailored, specific reporting that may be particular to certain conditions or even certain states or locations."
  • Smaller healthcare establishments such as rural hospitals primarily report the need for connected systems that will allow for the collection and analysis of "social determinants of health (SDoH) data given the specific populations they serve across Medicare and Medicaid plans."
  • Population health analytics are the software basis for hospitals in order to drive good physician performance as predictive analytics can assist hospitals and other clinical staff to appropriately staff high-cost centers such as emergency rooms.

IT priorities

  • According to an annual study by HIMSS that included feedback from 269 U.S. health information and technology leaders, cybersecurity was established as the number one priority for healthcare institutions. It is followed closely by privacy, and security, making these issues so predominant that other priorities might even be put on the back burner in order to be able to find adequate solutions to cover all aspects of security.
  • The second biggest priority is improving quality outcomes through using health databases and clinical intelligence.
Part
02
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Part
02

IT Purchasing Process - Higher Education

The primary decision makers of IT purchases for higher education institutions are the University Purchasing/Procurement Departments and executive level staff, like University Presidents and Board Members. Influencers for these purchases include Chief Information Officers, IT Departments, and Faculty/Staff. Primary needs for IT systems at higher education institutions include information security and institution-wide compatibility, while priorities for intuitions include affordability and the impact on the purchases on student and faculty success.

Primary Decision Makers

  • Based on a review of the purchasing policies for New York University and Michigan Tech, the primary decision maker for higher education IT purchases is the University Purchasing/Procurement Departments, generally part of the institution Treasury Division, part of the executive office of the institution. The Purchasing/Procurement Office provides final approval for large purchases, including IT purchases, based on the recommendations of the influencers detailed below.
  • Depending on the scale on the IT purchase, University Presidents may be involved in selecting the IT system to be purchased, and have final approval.

Influencers

  • Chief Information Officers are a primary influencer of IT systems purchases for higher education institutions, including being the key person to communicate the recommendations of the IT Department to the President, Treasury, and other members of the board.
  • The IT Department is generally the party that gathers information about different IT solutions and technologies and makes recommendations to higher-level institution officials, like the CIO or Purchasing/Procurement Departments.
  • Faculty and Staff are sometimes the prompting party to instigate a new IT purchase, based on their department needs.

Needs

Priorities

Research Strategy

The IT purchasing process was based on a review of the purchasing policies for New York University and Michigan Tech. In 2019, not including wages or fringe benefits, Michigan Tech Office of Information Technology had an expenditure budget of $3,799,421. New York University had a proposed project spending budget for capital improvements of $816 million for 2019-2020. One of the major capital improvement projects covered in this budget was "a new High-Performance Computing Cluster." Based on this information, we safely assumed that both institutions spent more than $120,000 annually on IT projects. Additionally, it is safe to assume that for the vast majority of medium-to-large higher education institutions, their annual IT spending would exceed $120,000, since Educause Review found that "4.2 percent of institutional spending goes to IT (averaged across all institution types)."

Priorities and needs were identified based on the Top 10 IT Issues for higher education institutions, as determined by Educause Review, which is a non-profit organization and the "largest community of technology, academic,
industry, and campus leaders advancing higher education through the use of IT." The priorities and needs identified were then backed up with other example institution policies or industry media articles.
Part
03
of four
Part
03

IT Purchasing Process - Finance

The IT purchasing process in the finance industry most commonly involves the companies' IT and procurement teams. The primary needs for IT in financial institutions are digital account openings, person-to-person payments, CRM, new account/teller systems, and commercial loan origination systems.

Primary and secondary influencers on IT purchases

  • The banks' IT teams are the go-to influencers usually asked to deliver a new service in order to become or stay market competitive. IT will then partner with procurement and follow the traditional RFP process which usually involves the firms' strategic partners.
  • According to S&P, the banks are turning towards a more centralized procurement process in order to cut costs.
  • For emerging technologies, such as blockchain or AI, IT teams will first ask for proof of concept from different bidders, and rely on procurement to help later in the process.
  • In some cases small, medium-sized, and even large financial institutions such as HSBC will ask a third-party procurement firm to run the whole process of acquiring IT.
  • According to McKinsey, IT project managers used to be the sole decision makers when it comes to technology purchases in banks and other financial institutions, oftentimes having little direct consultation with business leaders.
  • However, with the growing awareness about technology procurement processes being more about fostering long-term business transformations, financial firms are appointing senior business and IT leaders in the planning and selection process.

Primary Network/IT needs

  • Digital account opening is the most-frequently cited technology by banks and financial institutions in need of addition or replacement. It was also at the top of the list of IT needs that banks plan to make use of their fintech partnerships.
  • Person-to-person (P2P) payments are the second most cited technological need. $300 billion in funds were transferred to other people in the US through their banks and credit unions in 2018.
  • Customer relationship management (CRM) is the most sought after software technology, followed by new account/teller systems in both hardware and software, and commercial loan origination systems (LOS).

IT priorities

  • IT priorities in the finance industry are based on the increasing pressures from the boards to deliver sustainable cost savings for IT equipment, an increasing demand to constantly manage supplier relationships and the associated risk and performance that comes with it, and the unique challenge of the suppliers of IT also being clients of the bank or the finance institution.
  • According to Lenovo, the most important priorities for the finance industry are compliance, fraud and cyber detection — a problem which finance industry is using behavior analytics to solve. The second most-common priority is the integration of conversational interfaces regarding customer care.
  • The third priority for 2019 and beyond are mobile payments using NFC, followed by IoT for all insurance products (Usage Based Insurance), and cognitive, robotic process automation, and blockchain.
Part
04
of four
Part
04

IT Purchasing Process - Media

Titles of the departments / persons directly in-charge of IT purchases in the US media industry vary with company. At Microsoft, for example, the production division is in-charge of IT purchases and this is subdivided into specific product types. Technology for content creation & fine-tuning, for story telling and for mobile-based applications are the key IT needs in the US media industry. The IT priorities for this industry include technology for user subscription and for enhanced data privacy.

IT Purchasing in the US Media Industry

IT Needs for the Media Industry

  • As more young people across the globe and in the United States strive to become 'stars' in various fields, the media industry is expected to provide a platform where the young persons have their content fine-tuned for them to impact the market. This requires that media companies to develop capacity to understand the specific interests for each of these clients making content creation & curation technology and data analytics technology to be at the core the US media industry IT needs.
  • Findings in a study conducted by Apps-Run-The-World in 2018 and 2019 show that the most purchased IT technologies among United States media companies were those for autonomous database management, talent management, customer relations management, human capital management, e-commerce and enterprise resource planning. One US media company listed in this study, News Corp, whose revenue is over $8 billion purchased a content management software called dropbusiness by Dropbox.
  • Studies indicate that Americans spend about 6 hours in a day watching videos from different sources and the demand for digital sources over the traditional ones is due to the high content diversity in the former. On the social media front, the trend is moving towards technology that highlights story telling as opposed to news briefs and Instagram is taking the day in this sector. Since 2016, the use of digital story telling has increased by more than 800% and the United States is among the top internet markets in the world.
  • On average, Americans check their mobile phones more than 80 times per day and the use of mobile apps is a leading trend among the US people seeking to watch videos and access critical information on their phones as they go.

IT Priorities for the Media Industry

  • Subscription/paywall software top priority for media companies for this will reduce the challenges they face from third parties and increase their revenues. New York Times, for example, has reduced the number of free articles they offer by about 50% and there are several paywall technologies media companies need from IT including hard paywalls, metered paywalls, hybrid paywalls, vertical paywalls and geo-location paywalls among others.
  • Trusted brands is the other key priority for media companies and past studies have shown that the public confidence in digital platforms and in media is on the decline because of scams. Facebook's popularity, for example, was significantly affected in 2018 due to the many scandals that faced the company.
  • Digital data privacy is also a priority need among media companies and studies show that media companies' clients have particular concern about the technology used to manage their data. A study conducted by Pew Research in 2018 shows that 81% of Americans are worried about how companies and the government use their private data.
  • Use of authorized content, uniqueness of content & fair price are other key considerations media companies make when purchasing IT products/services and Netflix has used these three items to be the largest over-the-top service provider with over 158 million subscribers in the US.
Sources
Sources

From Part 04