Building on McKinsey's vision: Actionable steps for achieving software procurement excellence

With the procurement sector increasingly shifting its focus from short-term cost savings to long-term value creation, McKinsey analyzed the procurement practices of 150 global companies to uncover the strategies driving excellence in software procurement.

While the report discovered some valuable insights, it can go further. We’ve translated these findings into actionable strategies that can be implemented to drive tangible results in software procurement.

Because better procurement drives better business results.

Key takeaways from McKinsey’s findings

Collaboration

McKinsey’s study highlights that collaboration is a cornerstone of procurement excellence. The most successful teams recognize that it is not a standalone function; it requires involvement and alignment from numerous stakeholders across the organization.

At Vertice, we believe that for procurement teams to operate both efficiently and effectively, all stakeholders need to be actively engaged throughout the entire procurement process, from the very initial stage of defining requirements.

In fact, findings from our own report underscores the link between collaboration and procurement excellence by revealing how organizations with cross-departmental collaboration, particularly among procurement, IT, finance, and legal teams, achieved better business outcomes such as improved speed to market, increased innovation, and streamlined operations.

Some of the steps you can take to achieve successful collaboration include:

• Automating alerts and notifications – Set up automated notifications to alert stakeholders of changes throughout the procurement process. By ensuring the right people are notified of changes and approval requests, you stand to improve communication and ensure that action is taken when needed, preventing delays.‍
• Enabling real-time document sharing – Ensure all stakeholders have access to the latest versions of documents, contracts, and proposals, to avoid the risk of error or misunderstandings.

Use of data, analytics, and automation

McKinsey emphasizes how the best procurement teams not only have access to advanced analytics, but that they also turn this data into actionable insights at both scale and speed.

This mirrors Vertice’s criteria for high procurement maturity, where the ability to leverage data effectively and rapidly is essential for driving strategic decisions and maximizing value.

While McKinsey’s report highlights how this data can expose opportunities for improvement, such as reducing negotiation effort, the analysis doesn’t fully explore how organizations can leverage data to optimize their procurement operations at scale.

For a procurement team to truly excel, the following steps should be taken:

• Implement procurement technologies that leverage automation – Utilize tools that help simplify procurement processes, improve spend visibility, and make more informed procurement decisions.
• Enhance decision-making with real-time data – Leverage data to identify cost-saving opportunities, rightsize contracts, monitor supplier performance, and ensure alignment with organizational goals.
• Leverage automation to streamline operations – Automate tasks such as approvals to reduce administrative workload, eliminate bottlenecks, and allow teams to focus on more strategic initiatives.

Centralization

McKinsey also found that software procurement excellence is closely tied to centralized procurement.

Our own procurement impact survey corroborates this: organizations that centralize and standardize the software procurement process achieve better business outcomes, including greater cost savings, improved vendor relationships, stronger compliance, and enhanced spend visibility.

To achieve this, companies need to:

• Establish clear policies and procedures – From requisition to approvals, stakeholders need to know what is expected of them and the specific steps that should be taken. ‍
• Implement procurement technologies that leverage automation – Utilize procurement tools that can simplify processes and ensure that all purchase requests go through the same standardized steps, while providing total visibility and control of the entire tech stack.

Technical and market knowledge

Finally, McKinsey highlights that high-performing teams develop knowledge of the software market, enabling them to influence early decisions on architecture and supplier selection.

At Vertice, we believe this knowledge extends to having a specialist understanding of areas such as contract structures, vendor pricing, and even advanced negotiation tactics. By leveraging deep market insights and specialized expertise, procurement teams can make far more informed decisions, navigate complex contracts, and secure more lucrative deals.

This does, however, rely on:

• Obtaining peer insights – Understanding the technology that other companies of a similar size and industry are using can provide valuable context, helping inform vendor sourcing strategies.
• Gaining access to benchmarking data – Knowing exactly what other similar companies are spending on their subscriptions provides crucial leverage in negotiations, ensuring that your company is paying the best possible price.
• Leveraging specialized negotiation expertise – Engaging with negotiation experts who understand the intricacies of vendor agreements and can drive better terms and conditions ensures your procurement team is delivering maximum value.

Find out how one company saved 115 hours on contract negotiations

Building on McKinsey’s procurement excellence vision

While McKinsey sets the stage for understanding the critical factors driving software procurement excellence, there are some further steps that can be taken to deliver long-term value for both procurement and the wider business.

Aligning procurement with future business goals

By understanding the company’s strategic vision and growth objectives, you can make decisions that not only meet short term needs, but that also support the future direction of the business.

This ensures that all procurement initiatives, from vendor selection to contract negotiations, are aligned with key priorities such as innovation, growth, cost management, and sustainability.

Choosing a procurement software solution that can be customized, allowing you to adapt your processes in response to shifting business needs is therefore key to achieving procurement excellence and improving business results.

Ensuring total SaaS visibility

SaaS visibility provides organizations with a comprehensive view of their entire software stack, usage patterns, and other associated costs.

This is fundamental for minimizing software duplication and underutilization – both of which contribute to a substantial amount of wasted spend within the average organization. Our data indicates that companies with 400-749 employees waste $1.3 million of SaaS spend annually, with this rising to $2.8 million for those with a headcount of 1,000-1,999.

By having oversight of your entire software portfolio and the utilization rates for each tool, you can make more informed decisions on whether to consolidate, terminate or renew contracts, while using the data to underpin your negotiations.

This data-driven approach is key for building a strategic and efficient procurement function that drives value across the organization.

Customizing procurement processes for different departments

Different departments will have unique requirements and objectives when it comes to procuring SaaS, which means that the timings, processes, and workflows need to be customizable.

Investing in a platform that can support this customization is crucial. As an example, it should have the capabilities to enable tailored intake forms that automatically route requests based on specific responses, or trigger workflows when certain criteria are met, such as the department submitting the request or the financial value of the solution.

Navigating procurement excellence with Vertice

By centralizing processes, leveraging data analytics, and adopting automation, organizations stand to not only optimize their software procurement, but also drive greater cost-savings, make smarter decisions, and deliver long-term business value.

As a Procurement Orchestration Platform, Vertice is well positioned to help organizations achieve all of this and more.

Why not experience Vertice in action by taking a self-guided tour of the platform. Alternatively, see for yourself how we’ve helped one company accelerate their procurement cycles by 55%, while saving another more than $155,000 on a single contract.