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Category Planning has died, long live Category Planning

By Yanni Karalis | April 10, 2021 | 0 Comments

Everyone who is involved with Technology Sourcing and Procurement is trying to build faster and more flexible ways of buying technology products and services. The reality is that no matter what process, tool or workflow is put in place, early involvement remains the name of the game.

Category management is a concept that was formalized in the late 1980s in the retail industry. The goal of category management was to allow retailers to work with manufacturers or producers to develop joint plans, so they can sell more effectively to the end customer. It quickly became of interest for areas like technology as tech leaders started to think more and more about IT financial efficiencies and cost optimization.

Category Planning for technology is the process where an IT Sourcing team would break down IT spend in categories (such as Software, Hardware, Network, Telecom, Professional Services). They will run category diagnostics to understand what contracts are in place, identify optimization opportunities and build 12,24, 36 months strategies. The problem is that these plans were created in isolation from tech leaders and other influential stakeholders. They ended up becoming “shelfware”.  IT departments have been trying to transform, become more proactive and focus on planning and roadmaps. Hence, it has been very difficult for technology category plans to get any traction and become a real  valuable tool for the organization.

Nowadays, technology is not just bought within the IT department. Every part of a corporation is buying technology solution or considering buying a technology product or service. Category Planning can really help build acquisition strategies, but it must be transformed. It cannot be anymore about the top spend tech categories. It is impossible to build a category plan for Saas (as an example). What we need to be able to do is to build simple (sub)category plans working together with key business and IT stakeholders. What we need to create is the commercial equivalent of a technology roadmap. Hence, category planning cannot be anymore just something that we need to do because that is how it has always been. Category planning must become an exercise that will align Tech Sourcing and Procurement with stakeholders on what needs to be done to successfully acquire, manage or eliminate technology products and services.

We are currently working on a Gartner Tool that will help Tech Sourcing and Procurement professionals drive the right conversations, gather the appropriate data and build plans that are actionable, easy to communicate and make sense to everyone interested within the enterprise. Stay tuned, more to come!!!

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