What is IT procurement? Types and best practices

Procurement is the continuous process of purchasing goods and services to support organizational goals and efficiency. In IT (information technology), procurement involves sourcing and acquiring technology assets, such as software and hardware, while considering the company's needs and budget constraints. It helps cut costs, reduce risks, and maximize the return on IT investments.

In this guide, we'll provide a comprehensive overview of the IT procurement process, highlighting its importance, steps involved, and challenges faced.

What is IT procurement?

This process is designed to meet business needs efficiently and cost-effectively. It encompasses several strategic activities, such as identifying technology requirements, researching the market, selecting suitable vendors, negotiating contracts, and overseeing the lifecycle of IT assets.

Key activities for the IT procurement process include:

• Identify technology needs: Determine your business's requirements for hardware, software, and services that effectively support business operations
• Conduct market research: Explore available options, staying informed about industry trends and innovations in IT procurement
• Evaluate and select vendors: Choose partners based on reputation, cost-effectiveness, integration capabilities with existing systems, and support for future scaling needs
• Negotiate contracts: Work with selected vendors to establish terms that align with your business's budget constraints and business goals
• Manage IT assets: Optimize the use and efficiency of acquired technology throughout their complete lifecycle

By implementing a structured IT procurement process, you can streamline project execution, reduce costs, and ensure you have the necessary technology resources to support business operations.

Why is IT procurement important?

IT procurement functions as the strategic foundation for technology acquisition, helping companies make smart digital investments while maintaining security standards. As companies increasingly rely on digital solutions to manage various tasks, having a well-defined IT procurement strategy helps in:

• Ensuring strategic alignment: Evaluating company requirements and conducting market research to select vendors and technology solutions that enhance productivity and improve customer satisfaction
• Mitigating risks: Preventing unauthorized software tools from bypassing IT department oversight, safeguarding the business against security vulnerabilities, data silos, and missed integration opportunities
• Reducing costs and avoiding redundancies: Preventing duplicate subscriptions across departments, enables better vendor negotiations, and leverages economies of scale
• Enhancing visibility and control: Providing clear oversight of technology usage across the business. This visibility enables informed decisions about renewals, upgrades, and decommissioning to maximize IT return on investment (ROI).
• Keeping up with market growth and trends: The global procurement as a service market reached USD 6.15 billion in 2022, with projected growth of 11.1% through 2030, highlighting the increasing importance of formalized technology acquisition processes

As companies continue to adopt digital solutions, thoughtful IT procurement becomes increasingly valuable for balancing innovation with budget realities while maintaining strong security practices and improved vendor relationship management that drives better service levels and more favorable contract terms.

Types of IT procurement

Not all IT purchases serve the same purpose—or follow the same process. Understanding the different types of IT procurement helps businesses make smarter, more strategic decisions about where to invest, how to source, and who should be involved.

Whether you're building out infrastructure, subscribing to new software, or outsourcing specialized services, knowing which category your procurement falls into allows you to evaluate risk, optimize spend, and align purchases with long-term IT and business goals.

1. Hardware procurement

Hardware is a key component of every IT environment. Poor procurement decisions—like overpaying for underutilized servers or skimping on endpoint security—can create bottlenecks and vulnerabilities.

Effective hardware procurement considers lifecycle costs, compatibility with existing systems, and scalability as business needs evolve. This involves sourcing the physical devices that power your organization’s infrastructure, such as servers, workstations, networking equipment, and mobile devices.

2. Software and cloud services procurement

This includes everything from one-time software licenses to ongoing SaaS subscriptions and cloud platforms like AWS, Microsoft Azure, or Salesforce.

As businesses shift to cloud-first models, procurement teams need to weigh not just price, but vendor lock-in, integration capabilities, and data portability. The right software stack can dramatically improve collaboration, automation, and customer experience—while the wrong choice can lead to adoption issues or compliance headaches.

3. IT services procurement

This refers to contracting third parties for implementation, consulting, managed services, or specialized support—such as cybersecurity audits or custom development.

IT services procurement allows businesses to access expert knowledge without committing to full-time hires. But the value hinges on vendor quality and clearly defined scopes of work. Well-structured contracts and alignment with internal stakeholders are key to ensuring results, particularly for complex or regulated environments.

The step-by-step IT procurement process

IT procurement follows a structured approach to acquire technology solutions that align with organizational needs. This process ensures proper evaluation, negotiation, and implementation of IT assets while maintaining cost control and vendor relationships.

1. Assess business requirements

This involves understanding what specific requirements the business has and how a new IT solution can address these needs. The procurement team should collaborate closely with stakeholders and users of the potential new software or hardware to identify gaps or areas that could be improved.

2. Assess current technology solutions

Reviewing your existing technology stack helps determine whether you already have tools or relationships with suppliers that can fulfill the new requirements.

For example, if you already use software for project management, you could explore whether creating a custom CRM through their integrations is possible. Rather than requesting new tools from a different software vendor, you can access if your current software stack already provides them.

3. Evaluate buy vs. build options

This involves evaluating whether to purchase a ready-made software solution or develop a custom one in-house or through a third-party contractor. Buying pre-built software is often the most cost-effective choice for many small to medium-sized businesses.

Larger organizations with particular requirements not adequately addressed by existing market options or those that can afford the higher costs, potentially reaching hundreds of thousands of dollars for custom software, might opt to develop their own solutions.

4. Research and evaluate vendors

Start by making a list of all vendors that offer the products or services you need. This requires comparing products based on cost, functionality, adaptability, and support services.

Market research ensures you have a comprehensive view of available options. It allows you to proceed with a well-informed strategy, find the most suitable product, and negotiate effectively once you select a vendor.

5. Create a vendor shortlist

Use the detailed needs identified earlier to eliminate vendors that don't fit your budget or lack essential features. Also, assess whether potential vendors offer native integration with your existing tools.

6. Evaluate suppliers and assess risks

Vendor vetting typically includes the evaluation of several important factors, such as a supplier's financial health to ensure they are stable and capable of fulfilling long-term contracts or their capacity to meet order demands.

For SaaS solutions, prioritize assessing software security risks, including the potential for data breaches and the vendor's security protocols. This step ensures that you choose vendors who meet your functional requirements and align with your security and ethical standards.

7. Select and prioritize vendors

Ranking each potential service provider based on how well they meet the criteria established earlier creates a clear roadmap for making the final purchase decision. It allows your procurement team to focus negotiations and final evaluations on the highest-ranking vendor.

Depending on your company's organizational structure and procurement policies, this step might also involve getting approval from higher management, such as the Chief Procurement Officer (CPO).

8. Negotiate contract and agreement

When entering negotiations with your chosen software vendors, consider key aspects like service level agreements (SLAs). Set specific key performance indicators (KPIs) and metrics to measure the software's effectiveness and value.

Approach negotiations as a collaborative effort to establish a contract that benefits your organization and the vendor. This thoughtful approach to negotiation helps build a strong foundation for a productive and long-term partnership with the vendor.

9. Finalize the contract

This step formalizes the agreement and marks the beginning of your new supplier relationship. Make sure to review all the details one last time to ensure everything is in order.

The IT procurement process balances technical requirements with financial considerations. By following these nine steps, you can make informed decisions, reduce risks, and build effective partnerships with technology vendors.

IT procurement best practices

Effective IT procurement requires careful planning and execution to ensure organizations acquire the right technology solutions within budget constraints while minimizing risks. Following established best practices can significantly improve procurement outcomes and stakeholder satisfaction.

• Define IT requirements before initiating procurement: Thoroughly document technical specifications, business needs, and success metrics
• Establish standardized evaluation criteria for vendors: Create consistent scoring frameworks that assess vendor capabilities, solutions, pricing models, and support services
• Implement contract management practices: Develop contracts with clear terms, performance metrics, renewal conditions, and exit strategies
• Conduct total cost of ownership analysis: Include maintenance fees, integration costs, training requirements, and potential upgrade expenses
• Maintain documentation: Record all decisions, communications, and changes to establish accountability, enable knowledge transfer, and support future procurement activities

These IT procurement best practices help organizations secure better pricing, reduce implementation delays, avoid compliance violations, and prevent technical compatibility issues. When implemented consistently, they lead to more successful technology deployments and stronger alignment between IT investments and strategic business goals.

IT procurement challenges

Procurement teams face several complex obstacles when acquiring IT products and services for their organizations. From technical constraints to relationship management, these challenges require strategic planning and thoughtful consideration throughout the procurement process.

• Vendor lock-in: Choosing a vendor that offers proprietary technology can lead to vendor lock-in, making it difficult and costly to switch vendors or integrate with other systems
• Security concerns: Ensuring new IT products and services meet stringent security requirements to protect sensitive data can be challenging, especially with increasing cyber threats
• Regulatory compliance: Navigating and complying with various industry-specific regulations and standards can complicate procurement, particularly in highly regulated sectors like healthcare and finance
• Vendor stability: Assessing a vendor's long-term viability is crucial, as financial instability or mergers and acquisitions can impact service continuity and support
• Sustainability and ethical sourcing: Increasing emphasis on sustainability and ethical sourcing practices can add complexity, requiring thorough vetting of vendors’ environmental and labor practices
• Vendor management: Robust vendor management strategies and resources are required to manage relationships with multiple vendors, negotiate contracts, and ensure service level agreements (SLAs) are met

Addressing these procurement challenges proactively helps you secure better technology outcomes while minimizing risks and maintaining productive vendor relationships.

Streamline your procurement process with Ramp

Implementing an IT procurement process is essential for maximizing efficiency, reducing costs, and ensuring your organization’s technology needs are met. A well-designed approach to IT acquisition helps identify vendor compatibility issues early and provides clearer visibility into technology life cycles across departments.

Ramp’s comprehensive procurement solution can further enhance your procurement processes. Ramp helps you control spending from the beginning, automate the procure-to-pay process, and prevent out-of-policy spending.

Here are some of the key features Ramp offers:

• Control spend from the beginning: Automate the entire procure-to-pay process and prevent out-of-policy spending before it happens
• Capture every request in one place: Build custom intake forms to collect details up front and gain earlier visibility into spending
• Easily collaborate with stakeholders: Centralize procurement discussions to streamline productivity and access the same information across approvers to reduce time-consuming back-and-forth.
• Accelerate approval cycles: Integrate with tools your team already uses such as Slack to build automated approval workflows that fit your business processes
• Get full visibility into committed spend: Automatically generate purchase orders for clear sight into upcoming invoices and match invoices to purchase orders for added control

Learn how Ramp’s procurement software can significantly simplify and optimize your procurement process, ensuring you get the most out of your technology investments.