Editor’s Note: Procurement transformation will be a big topic at Ardent Partners’ inaugural CPO Rising executive symposium next year. Join us in Boston on March 29-30 for what is shaping up to be the procurement event of the year. Register here!
Procurement transformation has become a familiar topic here on CPO Rising, particularly over the past couple of years when it has become increasingly clear that what got procurement departments where they are may not get them where they need to go. Ardent Partners believes that Chief Procurement Officers (CPOs) and other procurement leaders need to foster innovation at multiple levels in order to elevate the procurement organization and the enterprise as a whole to the next level of performance. Put another way, procurement transformation cannot and should not be attributed to any one particular factor; people, processes, technologies, stakeholder relationships, and knowledge management each need to be regarded as causal – and instrumental, really – in driving forward procurement transformation within an enterprise.
Each of these variables is significant in their own right, and their importance should not be understated. That is why procurement transformation needs to be broad-based – it needs to account for each of these aspects in order for a lasting and successful transformation to take root within an organization. Thus, this new series will examine each facet of procurement transformation in greater detail, and shed further light on what CPOs and their teams need to do to successfully implement a holistic procurement transformation project. Today’s installment will focus on the technological aspects that can propel a transformation project forward.
How to Transform Procurement in Five Steps – Step Three: Technology
Once a CPO and their procurement team determine that they need to automate in order to ascend to the next level of performance, there are a host of factors to consider before moving forward. These include their short and long-term goals for automation and adoption, their requirements (must-haves versus nice-to-haves), the solution market, their budgets, and finding the best fit between their budget and requirements. From there, CPOs need to make a business case for technology adoption, and consider how they are going to get this organization to the next level – if their current staff and talent levels support technology adoption or if they will need to hire and train more, and if they have processes that can map to the technology, or if they need to reengineer processes to align with new technologies.
Going back to the example in the last article, process simplification and user friendliness are vital to drive high user adoption, which in turn is vital to enterprise performance. Organizations that adopt complex, kludgy processes as a way to interface with technology inadvertently complicate matters and frustrate users that just want to do things “the old way,” thereby neglecting the benefits of automation. Conversely, organizations that over-simplify processes may make it easier for users, but they risk neglecting key parts of the sourcing and procurement value chain (e.g., standardizing and automating spend analysis without connecting it to sourcing and supplier management). Luckily, processes can be revisited and steps can be added back in to make them more robust and capture more value. Ultimately, what organizations are are trying to do with their systems is to get wide-spread adoption. If they do not, they will not have significant returns. Simply, if procurement staffers do not use the technology, they will never become experts in the solution and they will never see the desired results.
Conclusion
Organizations need to consider the technological aspects of procurement transformation holistically, as there are many factors that will interact to produce the end state. CPOs and procurement teams need to be honest with themselves if they have the right people and processes in place, the budgetary allocations, the short- and long-term goals in mind, and have their fingers on the pulse of the solution market to select the technology solution that is right for them. If do they not, they may be wasting their time, effort, and money on expensive systems that will be disregarded in favor of the old manual methods.
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