Category Management: Developing an IT Category Management Strategy


I came across a deliverable that we had created for a major utility that I thought would be interesting to share as an example of developing an IT Category Management strategy.  If you are interested in the whole deliverable, just reach out and we’ll get it to you 😊.

A CM strategy, by our definition, has to go beyond a sourcing strategy focused on price/cost.  You need to help IT identify their Stakeholder’s Value Drivers and help them deliver those.  Here was the list that we helped this client develop:

  • Process, Product and Service quality
  • Reliability of Suppliers
  • Service Levels
  • Risk Management
  • Delighting Customers
  • Operational Competitive Advantage
  • Business Growth
  • Support Rate Case
  • New Products
  • IT Delivery Costs

Once we helped them identify and get alignment with the  and her staff, we then moved into Phase 1 which involved the following steps:

  • Environment Scan
  • Gather Business Objectives and Needs
  • Prepare a Detailed Spend Profile
  • Understand Categories and Requirements
  • Develop Approach to Supply Market
  • Lay Groundwork for RFPs
  • Develop Execution Roadmap

This established the foundation and groundwork for developing the CM strategy but also ensured that there was significant alignment with IT leadership.  What was unique about this client was that they had already established a few very key strategic partnerships and therefore that had to be a critical component of the overall CM strategy.  Here was Phase 2:

  • Review established Corporate and IT Strategies
  • Confirm current & future customer business requirements
  • Prepare for strategic partner workshop
  • Conduct strategic partner workshop
  • Facilitate internal debrief session
  • Assess Partner alignment with Corporate and IT Strategies
  • Establish Strategic Partnership Approach

While these relationships were working, there was still a significant gap between what had been achieved and what had been promised.  Therefore, it was critical that the CM strategy address this to provide maximum value to the IT organization.

This approach is rooted in the core principles of ITSM which helped establish significant credibility with the CIO and her leadership team because they immediately recognized that the sourcing organization understood their function and ere not just looking to drive down prices to the lowest level.  Here are some basic shifts that occur under ITSM:

  • Technology focus moves to a Process focus
  • Firefighting/Reactive moves to Preventative/Proactive
  • Users become Customers
  • Delivery shifts from Centralized, All in house to Distributed/Sourced
  • Isolated/siloed solutions become Integrated/Enterprise wide
  • “One off’/Ad hoc solutions shift to Repeatable
  • Informal processes transform to Best Practices
  • IT internal perspective shifts to a Business perspective

Using this as the foundation of the entire Category Management strategy and demonstrating to the CIO the causal relationship between these goals and the CM strategy being proposed by the sourcing department led to an immediate acceptance of the strategy.  Because the client was experiencing high growth, we made sure that the  IT CM strategy clearly demonstrated support of that goal.  Here were some of the messages we delivered:

An IT Operating Model Must:

  • Be strategically chosen – it won’t just happen
  • Support the direction of the company
  • Serve as a platform for future growth
  • Provide a competitive advantage
  • Incorporate processes, organization structure, people, technology, culture, etc.
  • Be scalable

It become abundantly clear to the CIO that we had carefully considered the pressures she was under AND that we had also incorporated the Value Drivers of her Stakeholders.  If you would like more details, let us know but we would encourage you to consider some of the points that we have raised.


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