Deloitte Software Procurement Service

Efficiently manage the complete Source-to-Contract Process with Deloitte's Software Procurement Service

The ongoing digitization of business has rapidly increased the amount of money companies spend on software over the past decade. It is predicted that software expenses will continue to grow and could triple by 2025. The amount organizations spend on software is typically divided into two categories: spend from larger contracts with a certain strategic interest, such as contracts with SAP, Oracle, etc. ("Strategic Spend") and spend from a large number of small to medium-sized contracts with less strategic interest ("Tail End").

With our industry-proven Software Procurement Service, Deloitte provides the most efficient and effective way for our clients to reduce their financial and contractual risk exposure within their Software Tail End, while simultaneously reducing their internal administrative efforts. Using state-of-the-art AI-driven data intelligence, our specialized buyer team handles the entire Source-to-Contract (S2C) process. Starting with a detailed and critical demand analysis with relevant business stakeholders, the process includes negotiation preparation and conduction, initializing the contract signature process, as well as the detailed documentation of the procurement project (see fig. 1).

Our service generally operates in close alignment with IT procurement systems, purchasing guidelines and processes of our clients. The specialized buyer team performs from a German delivery center and provides the service to global organizations. 

Advantages compared to the "Traditional Model"

The "Traditional Model" of handling the Tail End is best characterized as having implemented a process that is simply designed to reduce the effort required to handle the large number of small to medium sized software orders. Generating savings and reducing contractual risk exposures are not the primary goals within this model. Therefore, in the "Traditional Model", the Tail End is often outsourced to software resellers to achieve low costs in processing the large volume of software procurement transaction. With the Tail End already representing a rapidly growing portion of an organization's IT spend, and with savings becoming more important in general these days, we believe a new approach to efficiently handling the Tail End is required. By using Deloitte's Software Procurement Service, our clients benefit from the following advantages compared to the "Traditional Model":

Achieve higher discounts

A reseller is typically more interested in maximizing its own sales margin than in achieving the lowest possible purchase price for its client. Therefore, the price level offered by a reseller is most likely not the optimal price level. Even with an open-book policy provided by some resellers, the true reseller margin often remains unknown due to hidden sales commission payments the reseller receives from certain software manufacturers. As a result, the full savings potential cannot be realized. 

Our Deloitte Software Procurement Service is designed to address this natural conflict of interest by focusing strictly on achieving the highest possible discounts for our clients, rather than maximizing any sales margins. By following state-of-the-art procurement standards and processes, our specialized buyer team acts as an extension of an organization's purchasing department, providing procurement expertise and knowledge along the whole S2C-process.

Reduced Contractual Risk Exposures

Even if you purchase the software from a reseller, in most cases you will be asked to accept the software manufacturer's terms and conditions before downloading and installing the software. These contracts are commonly known as “Clickwrap-, Clickthrough-Agreement” or “ Shrink Wrap-License” (see fig. 2).

Because of these contracts, it can be assumed that there is somehow a direct contractual relationship between the end user and the software manufacturer, making you liable for a compliant use in accordance with the T&Cs or EULAS of the software manufacturer. Therefore, the "Traditional Model" of handling the Software Tail End does not protect you from contractual risks. In most cases, contractual risks within the Tail End remain completely unknown.

As part of our Software Procurement Service, our buyers take care of pre-defined risks such as auto-renewal clauses or price escalation clauses, depending on the client's individual risk aversion. In addition, we offer our clients the benefits of a state-of-the-art AI contract screening tool, which efficiently scans contracts for pre-defined risks, significantly increasing the level of transparency within your Software Tail End.

Extension of electronic software catalogues

Electronic catalogues have the advantage of enabling self-serve purchasing of licenses in line with company standards and reduce the workload for internal stakeholders via a simplified Procure-2-Pay process. Identifying products that are eligible to be introduced to an electronic catalogue requires a regular and proactive screening of the Software Tail End. Within the "Traditional Model" this proactive screening of the Tail End is often neglected or done occasionally. Based on our regular AI driven Spend Cube Analysis, we detect licenses that eventually qualify to be implemented within a software catalogues. This not only yields to an increased efficiency within the ordering process but also leads to better pricing due to the usage of license bundling opportunities.

Conclusion

Given the steadily increasing financial significance of the Software Tail End regarding a company's financial result, we believe a new, more efficient way of handling it is required. Our industry proven Software Procurement Service is especially designed to reduce the financial and contractual risk exposure by simultaneously reducing internal administrative efforts for our clients. Our specialized buyer team hereby complies with state-of-the-art standard procurement processes and acts as an extended arm of your procurement department. Based on our Managed Service Approach with attractive financial implementation models, we ensure a constant positive Return on Investment that represents a significant value add to your organization.

For more information, please feel free to contact us at any time.