When it comes to procuring digital services, not much has changed since the early days of the internet. We still write contracts, evaluate RFPs, and handle procurement in much the same way today as decades ago.

We’ve essentially taken offline processes and moved them online without reimagining how they could work better in a digital world — or why they might need to.

As someone who’s been on both sides of digital procurement — both as a vendor and advising clients on selecting technology platforms — I’ve seen firsthand how the current approach often falls short. Digital procurement services occupy a challenging middle ground, sitting somewhere between the structured domain of traditional IT vendors (reminiscent of buying from giants like SAP) and the fluid, shock-and-awe approach of legacy ad agencies, a la Mad Men.

Neither of these models perfectly fits the digital procurement needs of today’s businesses, which require a blend of technical precision and creative innovation.

Such challenges are compounded by current trends within organizations, such as vendor consolidation. This movement toward fewer vendors aims to simplify management and potentially reduce costs, but it requires procurement teams to be more discerning and strategic in their selection processes.

How can organizations improve their digital procurement services to ensure they select the best possible vendor for their needs? The answer lies in transforming the way we think about procurement in a business context, from a routine administrative task into a strategic function.

To that end, I’m sharing five strategic updates businesses can make to improve existing digital procurement services and get better results.

5 Updates to Improve Digital Procurement Services

1. Write Better RFPs

The request for proposal (RFP) is often the first point of contact between an organization and potential digital service providers. Yet all too often, RFPs fail to set the stage for a successful engagement. Some common pitfalls I’ve encountered include:

• Misalignment between writers and evaluators: Frequently, the people grading RFP responses aren’t the ones who wrote the original RFP. It’s a disconnect that leads to confusion about what’s truly needed.
• Unclear evaluation criteria: Without a clear, agreed-upon rubric for assessing vendors, it becomes nearly impossible to make an objective decision. RFPs ask so many questions that the responses blur together across various vendors. To further complicate matters, teams often lack alignment on which factors will help them make a decision.
• Failure to distinguish between vendors and partners: RFPs rarely capture the nuances of the relationship an organization is seeking. Are you looking for an order-taker to execute pre-defined tasks? Or a strategic partner to collaborate on or lead the way into innovative solutions? This define-the-relationship best practice sets the tone for future interactions and makes expectations clear from the outset.

To write better RFPs, involve key stakeholders early in the process. Clearly define what type of relationship you’re seeking and what success looks like. Develop specific, relevant evaluation criteria that align with your goals. And don’t be afraid to follow up and look deeper to see how potential partners think and work.

2. Embrace Flexible Contract Structures

Every project has unknowns — digital projects doubly so. One of the biggest challenges in digital procurement services is balancing the inherent need for flexibility with the desire to control costs and manage risk.

Traditional fixed-price contracts can’t accommodate the evolving nature of digital projects. But open-ended arrangements involve too much risk on the business’s side.

To keep costs in check while accounting for shifting needs, consider more flexible contract structures that allow for adjustments as project needs change. For example, we often use year-long retained team constructs that align with the client’s planning cycles. Rather than writing new statements of work for every change, we create work orders throughout the year, reducing the need for frequent renegotiations and helping maintain project momentum.

This approach allows us to right-size the team, bringing in additional expertise or scaling back as needed. It gives both parties regular checkpoints to manage risk while avoiding the burden of constant change orders.

3. Rethink How You Measure Vendors

Many organizations are moving toward outcome-based contracts for digital procurement services. While well-intentioned and sensible in theory, this approach can have unintended consequences.

In reality, digital initiatives often require collaboration across multiple teams and departments to drive business outcomes. Focusing too narrowly on specific metrics can incentivize the wrong behaviors.

For example, many organizations default to measuring velocity — the number of story points completed in a sprint. But velocity is meant to be an internal team metric, not a performance indicator for external vendors. Plus, velocity is one of the easiest metrics to “game.”

Emphasizing velocity can lead teams to inflate estimates or avoid complex, high-value work to hit their numbers. When teams know they’ll be evaluated only on speed, the scramble to hit that metric often comes at the detriment of other factors.

Instead, consider a more holistic approach:

• Develop a balanced scorecard that looks at multiple factors: code quality, time to revision, onboarding efficiency, defect escape rate, cycle time, etc.
• Use this scorecard as a tool for continuous improvement, not just vendor evaluation.
• Conduct regular, blameless retrospectives with your partners and vendors to identify areas for shared improvement.

Business outcomes around revenue and cost savings are a great end state, but many such metrics rely on collaboration between internal teams and vendors. By removing the “blame” factor, you make these measurements truly useful in improving processes and facilitating productive relationships.

4. Ask Your Team the Right Questions

Strategic vendor management involves more than simply assessing costs or negotiating contract terms. In recent years, teams have been asked to evaluate total project cost versus the cost of individual resources.

The overall dollar price of engaging a vendor certainly includes the direct costs of fees, but it can also include indirect costs like training and integration efforts and intangibles like communication barriers and time spent on coordination.

Consequently, companies have to consider the entirety of the relationship to understand the true cost of a vendor. This requires asking internal product and engineering teams thoughtful questions about their experiences with vendors. For example:

• What do you value most about our current digital partners?
• Where have we seen the greatest impact or return on investment?
• What challenges or friction points exist in our current vendor relationships?
• How well do our vendors’ processes integrate with our own?

By gathering qualitative feedback, procurement teams gain valuable insights that go beyond simple cost metrics. They learn key elements behind why the company works well with certain vendors, helping them shape future elements of the procurement process, like RFPs, contract structures, and vendor selection criteria.

5. Take a Broader View of Cost and Value

Companies often initiate cost-cutting measures by reviewing existing cost structures and identifying ways to do the same work for cheaper. However, this approach can be less effective in the long run.

As an alternative, consider taking a more strategic, 30,000-foot view of cost that focuses on overall value and efficiency.

First, adopt a holistic view of your work portfolio. 

This involves evaluating which products or services require high levels of collaboration and innovation and might require high touch and frequent communication. For projects where speed-to-market is critical, for example, investing in smaller, senior, agile teams can drive a company’s revenue and competitive advantage, ultimately leading to greater cost efficiencies.

Second, broaden your focus from the cost of teams to their efficiency and effectiveness. 

Consider recent innovations in areas like design systems and component libraries, where investments could increase team efficiency. At Method, for example, our teams are starting to leverage generative AI in the software development life cycle (when clients are comfortable with it), which is driving double-digit percentage efficiency gains.

By taking a broader view, you optimize your digital procurement services to drive real business value, not just short-term cost savings.

Optimizing Digital Procurement Services: Final Thoughts

Digital services occupy a unique space — part consulting, part creative agency, and part technology service. This “no man’s land” has led to a great deal of uncertainty in how companies approach procurement.

Unlike a factory that produces the same widget over and over, digital services rarely involve identical projects. Each engagement brings its own challenges and opportunities, and each outcome is unique. This inherent variability makes digital procurement much more complex than its forebears.

By embracing this complexity rather than attempting to force digital procurement into preexisting molds, you can develop more effective strategies for selecting and managing digital partners.

Remember, the true goal of digital procurement isn’t just finding the cheapest option or the most impressive pitch. It’s building more effective partnerships that set your organization up for long-term success in a rapidly evolving digital landscape.