Technical procurement at Internet speed

This paper is intended to describe the way America Online Technologies Group managed the procurement of technical equipment while growing at a rate heretofore unparalleled by most, if not, all-comparable technology organizations. This paper discusses a paradigm shift in how procurement groups function in a rapidly changing technology environment. The Technology Procurement team was formed in early 1995 to help address the rapid growth of AOL. At that time, the company was just entering the hyper growth stage in which it remains even today. Since then, raised floor server requirements have grown from 16000 square feet to over 300000 square feet. During the same time frame, technology procurement has grown from two people to ten. Technology procurement also expanded its mission from just hardware to software and technical consultants. It was apparent very early that an extreme paradigm shift would be needed. Working with the senior management in technology, we developed a model where line technology managers assumed the primary role of technology procurement. We concluded that typical procurement departments tend to base buying decisions on price via the bid process. Sole source, if needed, was done on a case-by-case basis. We defined six variables that contributed to the procurement decision at America Online: scalability, compatibility, reliability, availability, price, and serviceability (SCRAPS).