The key to getting the maximum value out of every dollar spent on IT, according to GE executive director of sourcing Sam Guertin, is a combination of in-depth knowledge and tough negotiation.
Guertin spoke to Al Subbloie, the founder and CEO of telecom expense management firm Tangoe, at the Gartner Symposium/ITExpo 2015 event held earlier this month at Disneyworld. The practice of taking deep-dive looks into every facet of the procurement process began, for Guertin, when he was the sourcing manager for GE’s wireless products in the early 2000s.
“I was new to sourcing at the time,” he said. “But one of the things I’ve always known about is that we have this expense management tool where we centrally invoice corporate and have visibility into the spend, and once we get that visibility, we allocate it out to the business units.”
Digging into the data from that tool, Guertin was able to make a number of major improvements to GE’s procurement process for wireless. Instead of numerous individual users signing up for their own plans, running up overage charges, and billing the whole thing to GE, the company began to negotiate per-minute costs directly with the carriers, cutting per-unit costs by half.
Once identified, there were easier fixes, as well.
“We saw that we were paying bills for employees who had left the company … years [ago],” Guertin said. "That was about a $5 million hit to GE."
Armed with this knowledge, Guertin had the leverage he needed to not only reduce GE’s costs, but to actively change the wireless companies’ billing practices. It’s a part of what he refers to as not being a “victim” of an established industry.
“We’ve seen that happen through multiple different services whether it’s wireless, whether it’s in Infrastructure-as-a-Service, whether it’s in hosting,” he said. “We want to be able to dictate how the industry gets priced, how the industry then manages that commercial model … and the only way we can do that is through data and expense management.”
Those practices are going to have to become more deeply integrated into the fabric of a company’s operations in the future, Guertin argued. The growing complexity and decentralization of IT means that automated data collection and analysis are going to become important very soon.
“For the Internet of things and the connected model that we’re going to have across machines, every single machine is gonna create billing and we’ve got to be able to ingest that billing,” he said.