Why Users Make Poor Buyers

With an annual online spend of $3.2 billion, Motorola is among the global leaders in e-procurement. “The vast majority of the physical goods that we purchase are now bought online,” says Toby Redshaw, Motorola’s corporate vice president of IT strategy, architecture and e-business.

Now Redshaw is turning his attention to the e-procurement of things other than physical goods—the $2 billion to $3 billion Motorola currently spends on services such as consulting, temporary labor, marketing, R&D and cleaning—and the advantages to be gained by professionalizing the procurement process and taking purchasing power away from users.

The key to this last strategy comes from a lesson the company learned from e-procuring physical items: Users make poor buyers.

“We have great storage guys and great networking guys, but that doesn’t make them great buyers of storage and networking,” says Redshaw. For that, he says, “You need fierce purchasing professionals with piranha and bulldog genes built into their genomes: We call them ’deal sharks.’”

The main boost to operating income, however, will come from securing better prices from service providers and ensuring that both sides stick to a deal, once struck. “You can spend a lot of time negotiating a fantastic global contract with a consulting or accounting firm, only to find that the people on the ground in Brussels or Beijing either don’t know about it, or say that they’ve got a good deal locally that they intend to continue with,” says Redshaw.