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Understanding Maverick Spending in IT Purchasing & Procurement 

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Based on client feedback, and data analysis of indirect IT procurement spending, by 1000+ companies over the past 10 years, Markit has identified the causes and trends in maverick IT spending.

An increasing number of international companies are looking for help control maverick IT spending, and with good reason. 
Maverick IT spending is causing a significant loss of profits for companies who do not have full understanding of why it occurs, or they actually know the reasons, but their current procurement solution does not allow them to control the situation well. 
Prices of IT hardware accessories and IT consumables have dropped massively in the past decade, whilst at the same time an explosion of product variety and increasing salary costs mean every IT procurement department and chief purchasing officer is facing significant new challenges as the rates of maverick spending continue to rise. 

What is Maverick Spending? 

Maverick spending, also known as rogue spending or tail spend, is unmanaged, uncontrolled spending outside of an agreed contract, and it can happen for various reasons. In IT procurement this is a growing issue, especially with purchase of smaller items e.g. tablets, headsets, keyboards, toner and so on.  

Why does Maverick IT Spending Occur? 

The explosion in variety of products available and the human instinct to “get what I want, when I want” are key drivers of maverick spending but there are also more systemic causes too. 

Headsets is a category of IT product which was almost non-existent 10 years ago but the growth in tele-conferencing with Skype, Microsoft Teams, Zoom, WebEx and so on) obviously people need solutions for that. People have personal preferences and you know our ears are different, unique in fact, so, even if you wanted to, you cannot really standardise to one headset.If you are an international organisation with people holding diverse cultural and physical attributes, then you will need to provide a wide choice of headset options or risk maverick purchases for those items. 

* Time consuming/ ineffective purchasing process = employees use another method to buy, especially for small items.  
* Delivery times through the official procurement channel don’t fit with end user needs. 
* Employees think they are helping the company by finding a better price elsewhere, outside the contract. 
* Employees haven’t been told they MUST use the agreed system/suppliers for specific products. They think it’s optional. 
* Employees don’t see the big picture. They imagine a few small purchases have no effect on the well-being of the company or its profitability 
* Purchasing managers may allow some unmanaged spend and the employees may assume that’s for the “small stuff” as PMs focus on larger items. 
* Conflicting information about rights and which suppliers to use can arise in non-centralised IT purchasing systems 
* Maverick spending might seem so pervasive in a company that management avoid tackling the problem because the cure is seen as expensive or complicated.  

Negative Impacts of Maverick IT Purchasing 

Damaged profits -Time is money. Too much time is spent finding “the best price” resulting in a significantly higher total cost of purchase when an employee’s salary/time is considered. This becomes a huge issue if official policy is to get tenders/quotes for even small items. 
Lost productivity - Time spent looking outside agree procurement channels could be better spent adding value to the company in other ways. 
Contract conflicts - Leveraging volumes with key suppliers for better pricing is a key component of many IT procurement strategies. Maverick spending could result in targets not being met to achieve best organisation-wide pricing levels. Ultimately that can result in damaged or even terminated supplier relationships 
Contract Non-Compliance - Some contracts have minimum order requirements and if this minimum is not met (because employees are purchasing elsewhere) then this could lead to the contract being broken and potentially damage a relationship with a preferred supplier. 
Warranty and SLA issues - If there is no contract with the “maverick” supplier then returns and repairs can become a serious headache. Unapproved suppliers may not meet a company’s required SLA standards for delivery, quality, price, time-to-purchase, or customer support. 
Lack of data oversight - Without access to all spending figures in a single system CPOs struggle to understand the big picture and where the next round of IT procurement optimisations should be focused. 
Excessive invoice handling - Smart IT procurement systems consolidate purchases into single invoices.
Multiple maverick purchases increase work for the finance department and invoice handling comes at a cost that mounts considerably when maverick spending is pervasive in a company’s culture. Invoices without official purchase orders can cause extra time spent resolving the issue by the finance department. 
Internal tensions - If some teams/staff are spending outside the contract this can create conflicts within a company.   

​Whichever IT procurement solution provider you use it’s essential that they understand maverick IT spending issues and can provide the necessary tools and controls to minimise its impact on your organisation.