Last week I tackled the question of what to do with a failed P2P implementation. This week I’ll be addressing another common question: Is it a good idea to build your own procurement solution? In today’s article, we will take a look at why that’s usually not a good idea, nor is it ideal to customize or configure existing solutions for procurement use.
This topic came up during a discussion with Nick Heinzmann of Zip, who said the question is often asked about the company’s intake management and procurement process orchestration (IM&PPO) solution. I’ve mostly discussed this in the context of supplier management where organizations already have a CRM (typically Salesforce) and have configured or are thinking about configuring it for suppliers as well. Other examples are spend analytics where various combinations of Microsoft Excel and business intelligence (BI) solutions are used in place of real spend analytics solutions, or contract management where homegrown SharePoint solutions commonly occur.
It’s rare that organizations decide to build a complete procurement application from the ground up. Thus, I’ll focus more on the trend to configure or customize non-procurement solutions for procurement purposes.
And, by all means, there are some scenarios where it might be a good idea to leverage solutions already in use. It can be a relatively inexpensive way of experimenting or testing a hypothesis. It can also work if the use case is really simple. Beyond those examples, there are some concerns with taking this approach.
Upgrades or Replacement
When organizations choose to configure or customize a solution outside its intended purpose, there is a big risk associated with any upgrades or replacements.
In the case of upgrades, the solution provider is focused on product improvements with an emphasis on their intended use cases. Thus, use cases outside those parameters (including suggested changes for a procurement use case) may not work in the upgraded version. The worst-case scenario is that functionality, critical for the procurement use case, is discontinued completely.
In the case of a solution being replaced, those concerns are business-unit specific. For example, the decision by sales to replace its CRM is made regardless of procurement using the solution for its purposes.
Support, Maintenance, and Development
As mentioned previously, for simple use cases it might be a good idea to leverage existing solutions. The problem with procurement is that use cases are rarely simple. Even if they start simple, users will soon have more requirements and demands — leading to more building/configuring or switching to a purpose-built solution. The more complex the solution becomes, the bigger the risk of bugs and other things going wrong, which means escalating costs. Over time, significant resources will be spent on solution maintenance and end-user support. What might seem simple at the start quickly becomes complicated.
Economy of Scale and Domain Expertise
A solution provider that builds a procurement solution not only benefits from the economies of scale when it comes to maintenance and development (assuming they have more than one customer), but are also focused on building the best possible procurement solution. And if you made the right choice of solution provider, their roadmap and vision should align with yours. They also have other customers, often similar to your organization or with similar challenges, who might have ideas you can benefit from as well. Most solution providers support user groups that encourage knowledge and best-practice sharing.
Another benefit of scale is around data. Given the development of AI and automation, solution providers with a larger number of customers can aggregate more data, improving AI output.
Focus on Using the Solution Rather Than Maintaining It
So, in almost every case, it’s better to find a dedicated procurement solution from a specialized procurement solution provider that understands what you want to achieve and whose vision aligns with yours. In most cases, the ROI of a specialist-built solution is superior to anything built and maintained internally.
Focusing your resources on selecting and implementing the right solution creates more value over time versus scoping out, developing, maintaining, and supporting an inferior solution — even if abo’t it’s only configurations.
As always, Ardent Partners is here to help with any questions regarding procurement solutions.
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