Mastering IT Service Procurement: A Maturity Guide for the Oil & Gas Industry

A Procurement Maturity Model provides a structured framework for evaluating and enhancing an organization’s procurement capabilities. It encompasses practices, technology, and strategic alignment, enabling companies to identify their current maturity level for evaluating, enhancing, and setting goals for improvement. This model drives efficiency, effectiveness, and resilience by aligning procurement strategies with organizational objectives.

Stages of Procurement Maturity in Oil & Gas IT (OIT)

Domain IT procurement for products and services supporting Upstream, Midstream, and Downstream operations evolves through stages—from basic, reactive purchasing to fully integrated strategic management. Each stage emphasizes aligning procurement with industry needs and business objectives. While globalization offers opportunities for greater efficiency, it also introduces challenges that require careful handling. As companies advance, they improve oversight and reduce uncontrolled (grey) spending.

Key Considerations for Advancing Procurement Maturity in Oil & Gas IT

• Technology Investments
  Cloud-based solutions, advanced analytics, and AI enable the shift from reactive to proactive procurement.¹

• Supplier Relationships
  Transitioning from transactional to strategic partnerships fosters co-innovation and value creation.²

• People and Skills
  

  Developing specialized knowledge in procurement, risk management, and supplier collaboration is essential, coupled with an understanding of the unique demands of Oil & Gas IT.³

The Importance of Business Context and Domain Knowledge

• Tailored Solutions
  Understanding industry-specific requirements ensures practical and operationally aligned IT solutions.

• Risk Management
  Expertise in the sector helps mitigate risks related to vendor failure, regulatory non-compliance, and technological obsolescence.

• Alignment with Business Goals
  Advanced procurement maturity ensures alignment with key objectives such as safety, efficiency, and sustainability.

• Supplier Value
  Partnering with suppliers well-versed in Oil & Gas operations enhances reliability, operational value, and efficiency.

By improving procurement processes, Oil & Gas companies can make smarter, value-focused decisions that drive efficiency and long-term financial success. The chart below shows how value, business involvement, and grey spending change as procurement matures.

Ultimately, as procurement maturity increases, the role of procurement evolves from a transactional function to a strategic enabler of business success. This transition ensures cost savings, drives innovation, fosters stronger supplier partnerships, and reduces risks associated with uncontrolled grey spending. Organizations can unlock value beyond operational efficiency by embedding procurement within broader business strategies.

At E&P, we operate in the Established, Advanced, and Optimized stages, where Digital and Business in partnership generate the most value at a minimum risk for the lowest Total Cost of Ownership.

Footnotes

1. Construction Placements, 2024.
2. Bain & Company, 2023.
3. Boston Consulting Group, 2023.

Author

Wilson Rincon, Operations Lead

Responsible for ensuring smooth operations in E&P, enabling teams to focus on excellence, delivering value to clients, and driving continuous growth. This includes collaborating with the client's organization to implement effective contractual and financial models that strengthen the partnership.