Today, we continue our Technology Adoption Series –
Ardent Partners’ latest research report[i] introduced the concept of a “Procurement Competency Matrix” which looks at a list of many of the higher-level competencies that a procurement staff or department should have in place in order to execute well, including specific procurement areas like transactional procurement and supply risk management, as well as, more general skills like financial analysis and presentation skills. The two highest-rated competencies were sourcing and transactional procurement. The two lowest-rated competencies were (1) cash management and(2) the ability to leverage technology to drive business value.
To be fair, none of the staff competencies were deemed to be very good or far above average (we will return to this point and “the Matrix” in the Fall); but, it is very clear that Chief Procurement Officers do not feel that their staffs know how to use technology to a significant advantage. From an adoption standpoint, this is a potentially huge problem. While the typical business case for an investment in technology points to the most “optimistic case/scenario” of returns as being most probable, a staff that forever underutilizes a solution, makes that case/scenario unlikely. The investment may still occur, but a CPO is less likely to invest time, money, and resources in a solution that is poorly used, even if the “average case/scenario” is very positive and highly probable.
Yes, you can finish a 10K (a road race of 10 kilometers) with 3 pound ankle weights on each leg, but you can forget about world records and personal bests. The added weight is not recommended because it will change your stride pattern and put added stress on other parts of your leg. Why run a race with a significant handicap if you can avoid it? Why take on any added stress? Since there are so many other races to run (improving skills, placing spend under management, getting executive engagement, etc), why get bogged down here.
While investing in technology should be straightforward, for many procurement groups, it can become a very complex process. In any case, having poor staff capabilities as it relates to their use of technology is not the only reason that CPOs don’t invest in technology (but, it is a contributing factor). In reality, many CPOs invest in technology because their departments are poorly skilled and many understand the solutions will not be optimized (at least to start) but, invest anyway.
Earlier this year, I caught up with a Chief Procurement Officer to discuss a potential job opportunity and catch up [Sidebar: he is not part of the CPOs on the Rise series]. I asked him why, after going for several years, he didn’t attend a certain solution provider’s user conference. He admitted that he was no longer a customer since did not renew his subscription for an enterprise-level solution. When I asked why, he said that he was faced with a stripped-back budget that required a 15% head-count reduction. This CPO has been doing a number of great things the past few years so he took this very hard. He determined that by not renewing the technology subscription, he was able to save a few jobs. Whether or not this was the right strategy is not my place to judge – jobs were saved and the solution was turned off. For this CPO, in his specific context, at that point in time, it was the right strategy.
When I asked him about the impact of his decision and if there had been any downside to moving back to a manual process and reducing overall scope. He began by saying “Well, we never really used it [the solution] very well….”
Leveraging technology to drive business value is an important capability and most departments fare poorly in this regard.
Postscript: The “MTV VMAs” were Sunday night. As a proud member of Generation X, the Slacker Generation, the MTV Generation (the generation between the Baby Boomers and the Millenials), I’d like to include a few links to some memorable moments from these shows over the next few days – we’ll start with one of my wife’s favorites – Madonna 1984 and Madonna 1989.