Every 12 months, South Africa has to find billions of rands in extra funding thanks to public and private sector purchasing officials going rogue.

“Whether you call it ‘maverick spend’ or ‘non-Purchase Order spending, unstructured purchasing is a huge driver of supply chain inefficiency in South Africa,” says Adriaan Venter, CEO of Cube ICT Solutions, a leading managed ICT services provider.

Most recently, it was reported that national departments alone racked up R4.9 billion in unauthorised expenditure in a single fiscal year. 

Anecdotal evidence suggests the private sector is not immune to unstructured and non-compliant procurement practices. While these costs are seldom publicly disclosed, they contribute significantly to operational inefficiencies and unnecessary expenditure.

When it comes to delivery-related procurement, the opposite of value for money is taking place in South Africa. For example, in the City of Johannesburg’s most up-to-date consolidated financial statements tracked by the Auditor-General, Joburg recorded R2.38-billion in unauthorised spending.

Purchasing is not just about public spending and tenders, however. “Unauthorised spending is pervasive in the public sector while unstructured spending is the bugbear of the private sector. Both cost the economy billions,” says Venter.

There is hope, however, in the form of South Africa’s IT industry which has developed specialist tools and expertise to help organisations regain control of unstructured purchasing.

Establishing a centralised governance framework, followed by the deployment of automated procurement software are usually advised as good first steps towards eliminating rogue spending and improving compliance.

Cube ICT Solutions, for its part, focuses heavily on ensuring consistency in purchasing across the client’s organisation as an effective way to quickly spot order anomalies.

“Introducing basic good practice like reviewing purchasing history before quotes are requested, approaching multiple suppliers and digitising the purchasing cycle enable businesses to crack down on overspending,” Venter explains.

Generally, every purchase must provide clear outcomes. Centralised procurement software can help establish measurable benchmarks for success like cost savings or quality standards, while also clearly documenting expected deliverables.

Cloud platforms can help teams work from the same source of truth.

When it comes to ICT sourcing specifically, every purchase must align with the firm’s actual operational needs and specific ICT context. 

Establishing cross-functional review committees and comprehensively evaluating Total Cost of Ownership are critical to prevent overspending, vanity purchases and unpleasant future financial surprises.

In addition to the above, top management needs to lead by example and build a culture of accountability within the organisation.

“In the final analysis, simplicity should be central to purchasing. Complexity allows inefficient purchasing and more serious corruption to creep in,” concludes Venter.