Acquisition
1. Introduction
Acquisition means “an asset or object bought or obtained”. ISO/IEC 38500 defined acquisition as it balances benefits, opportunities, costs and risks in both short and long term [7]. Also, the delivery of acquisition contributes valid reasons in decision making. Acquisition is applied throughout the whole life cycle of IT Governance including initiative project creating. There are mainly seven different activities and the deliverables are finished in turns [2]. They are listed as follow [6]:
Activities Deliverables
Initiation System/Software requirement
Acceptance criteria
Request for proposal Acquisition requirement
Contract milestones
Prepare contract Selection procedure
Supplier selection
Negotiate changes Negotiation with suppliers
Update contract Updated contract
Supplier monitoring Time schedules
Acceptance and completion Acceptance test
Configuration management
In our group, we divided acquisition into three parts, including procurement strategy, who involved the projects and project plan explanation.
2. Procurement strategy
(1) Introduction
In the large-scale production of socialization and commodity economy conditions, procurement is an important part of production and business activities of the industrial and commercial enterprises[4]. From the perspective of production process, procurement strategy is a front-end activity, procurement activities are the prerequisites and conditions of other activities. Procurement strategy can be
Procurement is the act of obtaining or buying goods and services. So it’s the process an organisation uses to buy the products or services it needs, from other organisations. So procurement department for Tesco is essential in order for them to be able to sell products and offer a service to their customers. Without the good and services it needs Tesco would not be able to operate so it’s essential the procurement team do a good job.
It is quite challenging to discuss about procurement management without stating the importance of its strategies. There are four main basic procurement strategies that serve different functions within a procurement management. To begin with, a “Partnership” strategy focuses mainly on constructing mutual commitment in long term relationship with suppliers. While a “Secure Supply” strategy aims to secure short and long term supply while reducing risk from suppliers. In addition, a “Category Management and E-Procurement solutions” serves as a tool to reduce logistic complexity, improve operational efficiency, and attempts to reduce the number of suppliers. Lastly, a “Competive Bidding” strategy emphasizes on obtaining the “Best Deal” for short term transactions with suppliers.(van weele) Each of these four strategies involves a unique purchasing methodology, which implies that the complexity is embedded in an individual strategic implication. Therefore, it requires different tools to accomplish the specific strategical characteristics. A business entity may need to support and execute procurement decisions with other strategic apparatus with analytical methods, including market analysis, uncertainty analysis, price forecasting, supplier relationship and along with others.(Harvard)
Procurement is one of supply management’s most challenging responsibilities (Burt, 2010). Therefore relationship management is the key to procurement success (Zhang, 2011). The purchasing of services has the potential to turn into relationships with suppliers that tend to focus on trust instead of the transaction (Burt, 2010). With that in mind, procurement should focus on long-term supply sustainability rather than short-term cost-saving (Zhang, 2011). To nurture an organization’s supply base into a fully committed and fully supported external entity requires time, effort and a highly collaborated working relationship (Zhang, 2011). Effective communication within the relationship is indispensable for any procurement outsourcing strategy to prosper (Simchi, Kaminski, Simchi, 2008). Failing to establish and manage good relationships could cause irreversible and catastrophic damage to a procurement outsourcing strategy. One of the most common outsourcing relationship problems is that organizations tend to sit at opposite sides of the work-group table instead of next to each other (Vitasek, 2010). The application is that the two organizations are working against one another instead of work with each other to solve an
Comparing to the option of upgrading the whole procurement system, my recommendation aligns with Russell Menere (National Procurement Manager of BAL)’s idea, which is to implement short term improvements based on current procurement system in
The procurement management in companies and institutions are right-hand man to the company aims procurement department in any organization and the sector to several objectives of each in:
The purchasing or procurement department can be likened to a production department in a manufacturing set up. The purchasing would be responsible for acquisition of goods for the inventory to accomplish the goals of the Triumph Trading Company. Its roles include purchase planning, specification development, standards determination, inventory control and price negotiation, disposal and other related functions. Hence, the administrative department would perform management activities that would benefit the entire organization. Some of its subdivision would be human resources unit- to ensure that the company’s employees are competent and supervise their welfare.
The main goal of company should always be providing maximum customer service at the lowest cost possible. Nowadays company are facing many challenges regarding some areas. Let’s talk about Procurement, it begins with managing processes associated with a firm’s need to purchase goods and services required to manufacture goods/services (direct) or run the organization (indirect). The process of procurement is regarded as part of the organization because the ability to purchase certain materials will determine whether the operation will continue or not. For a business to survive in the competitive market the price of procurement should be low than the profit it makes on selling the actual product. HollyFrontier Corporation is a largest petroleum company and it operates to a global market where it has to face many competitors. Many companies are adopting value based strategy and less volume which helps them to sell their product in higher cash value. An organization spends colossal sum on discovering, creating and delivering oil and gas. In this way, acquisition capacity assumes extremely discriminating part in effective operation. Procurement management is divided into drilling, well completion, facilities, transportation, operation, office services and IT services.
(from Larson, E.E., and Gray, C.F., 2011 Project Management – the managerial process, fifth edition p441) Sitting in her office, Karin Chung is reviewing the past four months of the large corporate accounting software installation project she has been managing. Everything seemed so well planned before the project started. Each company division had a task force that provided input into the proposed installation along with potential problems. All the different divisions had been trained and briefed on exactly how their division would interface and use the forthcoming accounting software. All six contractors, which included one of the Big Five consulting companies, assisted in developing the work
1. This course explains and records and interprets some important existing theories, models, and practices in the IT governance and strategic alignment domain. IT governance be defined and its relationship with corporate governance and IT management clarified; devoted to the concept of strategic alignment, a detailed set of IT governance structures, processes, and relational mechanisms is discussed that can be leveraged to implement IT governance in practice.
Ensure ICT acquisitions are based on analysis and match up with organisational needs and that such investments offer both long and short term benefits.
It has been proven through industry research that successful IS project implementation and deployment consists of measurable project performance factors that have wide-spread impact on an organizations business goals and IS investment objectives. Taking a holistic approach to the application of effective and proven project management principles can ensure success to entirety and not just from a fragmented perspective.
Acquisition: To acquire another firm, usually through the purchase of shares of the company or to buy assets of the business directly. “Acquisition is the purchase of one company by another in which no new company is formed”. An example of an acquisition is Manulife Financial Corporation 's 2004 acquisition of John Hancock Financial Services Inc.
Ms Smith’s supervisor noted that she seemed to know the ABC people and not people from the other companies present. He casually asked Ms Smith where she had met the ABC team previously and was amazed when she told him she had been helping ABC while on leave. She indicated her personal preference to see ABC win the contract, as she would become an employee if this occurred.
The new process that was instituted to prioritize IT projects at Volkswagen of America is very well organized. It takes an IT project and looks at it from multiple aspects, from business to IT. It also allows for several departmental entities to play a more active role in tying in business objectives with stated benefits of the IT project. As stated in Applegate, “IT governance is the effort to devise an overarching and integrated approach, addressing broad themes such as operating performance, strategic control, risk management, and values alignment.” (Applegate, 403) In
A1) Project Governance provides the project manager and team with structure, process and decision making models and tools for managing the project and ensuring its success. It includes a framework for making project decisions, designing roles responsibilities and accountabilities for the success of the project and determines the effectiveness of the project manager. Good governance can be demonstrated through the adoption of a disciplined life cycle governance that includes approval gates at which viability is reviewed and approved; recording and communicating decisions made at approval gates.