Digital Procurement is critical to the success of a modern day procurement team and something that many organisations will have embedded to some extent. The success of their efforts will have been dependent on how effectively their teams have embraced change, realised the value it brings and adjusted to the new way of working.
Prior to embarking on a transformation programme, you need to be clear that it’s something you need to do and want to do! Build a team who are passionate about change and understand that there are real benefits to a new way of working. Technical understanding helps, but more important is a lean and agile mindset – a desire to bring efficiency to your working practices. Programme management and business change skills are important too.
For successful procurement transformation we use the following seven step framework:
1. Identify sponsorship and governance:
- Decide whether the programme will be sponsored by the CPO or CFO. This depends on how much will you be transforming the wider business – P2P etc.
- Establish regular governance cadence – a weekly/fortnightly working group, monthly steering group, agree a clear and concise reporting format which can be refined throughout the programme.
- Who should be on the steering group? Include stakeholders with a range of views from outside procurement (finance, legal, audit, IT)
- Obtain initial budget and resources
2. Map current process and systems
- Sketch out the whole procurement lifecycle from identifying demand to paying invoice / terminating the contract and the same for supplier management
- Overlay current system touch points, pain points, hand-offs to other teams
- List processes and create a reference number for each
- How well does each process meet its objectives and are there opportunities to streamline? Mark next to each whether it can be Retained, Refined, Transferred, Automated, Eliminated.
- Map current state systems – in procurement control and outside procurement control
- Gain user and stakeholder feedback
3. Define programme strategy and objectives
- Develop/refine procurement strategy or review current strategy – make it exciting and challenging but not unachievable.
- Document objectives – Organisational, Financial, Functional, User
- Create a strategy one-pager to share with stakeholders and your team so everyone has clarity on where you are going
- Document user stories in the format: “as a <procurement category manager> I can <access all my project information in one place> in order to <save time accessing relevant information>”
- Conduct a gap analysis. What do we need to do to get from where we are to our desired end state?
- Group requirements into streams. Identify team members with relevant expertise
- Create stream plans, roll up into an overall programme plan (review interdependences and risks)
- Ensure that there are streams looking at communications and change
- Do we have the right capability in each area? Do we need to bring in external support to help? (Call Acada)
- Agree programme budget and KPIs with the steering group
5. Sourcing process
- Run your usual sourcing process in conjunction with your relevant SMEs (professional services or software procurement team)
- Include programme strategy and objectives
- Ideally use one sourcing framework, with requirements (in form of user stories and non-functional requirements) split into ’towers’ or programme streams
- Consider whether to single or multi source and present a vendor recommendation to your steering group
- Contract and award!
- Refine the plan based on vendor inputs
- Execute on your plan
- Refine as you learn more, identify risks and dependencies
- Keep communicating – concise and often. Show progress against plan, sign-post changes at agreed points and have clear timescales for when new systems / processes take effect
- Start realising the benefits!
7. Post Implementation Review
- What went well, would could have been better?
- Are there future phases to continue or refine
- How can we keep continuously improving? Assign a lead and look to make small refinements on a monthly basis.
This structure can be expanded or reduced depending on the requirement of your transformation programme. Please get in touch if you’d like a no obligation, free of charge video call on Procurement Digital Transformation and what benefits it can bring to your organisation.