Many organisations are struggling with where they should go on their digital procurement journey. This article gives you actionable guidance and 8 steps you can take to get a clear digital roadmap for your team.
As Dr Elouise Epstein of Kearney said: “Procurement Technology is an Abject Failure”. Current technology has seen legacy processes digitised and incrementally improved. This doesn’t match procurement’s requirements – a profession moving away from process based work and onto strategic, relationship based work. Buying technology in isolation from your people, strategy and process needs will guarantee a failed implementation. Having the right plan is vital.
McKinsey & Co report – Driving Superior value through Digital Procurement – estimates that the impact of leading digital procurement programmes is a 40% increase in annual savings, between 30% to 50% less time spent on transactional sourcing and a 50% reduction in value leakage. Improving team satisfaction, overall productivity, stakeholder satisfaction and faster time to value are additional benefits of digital transformation.
Ultimately, if you are not in the process of executing a plan to digitise your function, the danger is you are falling further behind teams which are moving forward and realising the benefits of our digital future.
Of course, jumping straight to a tech buzzword like “AI”, “Big Data” or “Bots” is unlikely to be the right move. Whilst this could be part of a longer-term roadmap, getting the foundations right is a vital first step. This includes fixing any issues that you have with legacy technology and poor data. Getting a tailored plan that is right for your organisation and circumstances is key.
How to do it:
- Document current state – spend time reviewing your current systems, processes and pain points. Speak to your stakeholders and any external users of procurement systems or process touch-points (including suppliers). Encourage as much candour as possible – consider externally facilitated sessions or anonymous feedback to get the best result
- List the outcomes you want from your roadmap – what problems are you trying to solve, what issues are users reporting? What are the process pain points? What are the strategic objectives you want to solve? What other areas of your strategy can be facilitated by technology – productivity, resourcing etc?
- Conduct a Gap analysis – using a gap analysis matrix, look at where you are and where you want to get to. What gaps need filling? Look at everything you need to solve – this is not just tech, but can be a business process, data issues etc. Doing this will give you a list of areas to focus on.
- Set strategy – bearing in mind what is achievable, prioritise your areas of focus into quick wins (<3 months), medium-term (6-12 months) and longer-term (2-3 years). Map these onto a prioritisation matrix – ease of implementation vs potential benefit. Challenge your team to investigate running proof of concept activities that will help accelerate benefits and learnings. Consider risks and how you can overcome them.
- Secure investment for your strategy – be clear on the benefits that this will deliver for procurement, but also highlight the benefits for the wider organisation. If your function is delivering value for your organisation, a focussed investment in technology will increase productivity and therefore wider organisational benefits. If the technology touches business stakeholders, use any poor user feedback gathered in step one to build the case for change. Make sure funding covers a number of years, and remember that most new technologies will be software as a service and therefore an operating expense.
- Scout the market and source the technology. For each area that you need to source, look to scouting firms or review market information to find the right participants in your sourcing process or proof of concept. As it’s a fast-moving industry, it is good to get some external support and viewpoints on the technology landscape out there. Remember that there is much innovation coming from start-ups which may not be used to participating in a full tender process – consider how you can work with a diverse set of organisations to improve the success of your strategy.
- Implement – once you have selected your technology, you should look to accelerate implementation and benefits where possible. Gone are the days of the long lead time, complex, waterfall style implementations that must perfectly meet acceptance criteria (but may subsequently fail to be adopted). The mantra now is delivering user benefit as soon as possible, failing fast and learning all the way. Most importantly, not getting left behind!
- Review & repeat – conduct a PIR after each implementation and diarise a quarterly strategy review session to ensure you are on track and to consider any amendments that need to be made to your strategy. Continually look for new areas of innovation that your team could make use of.
Procurement has a lot to benefit from the wealth of tools and technologies that are out there – but there is no one size fits all approach. By approaching this transformation from a strategic standpoint, we are better placed to maximise this benefit and minimise the failed implementations of the past.