During the last couple of weeks, I’ve attended a few great conferences (shoutout to Zip, Keelvar, DPW and SAP). Several discussions and observations from these conferences point to how the role of third-party services, both internal and external, will need to adapt to new types of systems with updated capabilities.
These capabilities include high levels of automation and no-code capabilities for both configuration and integration. This means that usage of several solutions that previously were only utilized by experts, can now be delegated to end users — with procurement organizations configuring and integrating the solutions themselves without the need for third-party system integrators.
So, what does this mean for the internal and external service providers?
Internal Shared Services Centers and Centers of Excellence
Shared service centers (SSC) have been a popular way of supporting the rest of the organization with a wide range of procurement activities. Depending on the maturity of the business, the size of the procurement organization, and other factors, activities can vary from creating POs to running sourcing events.
Centers of Excellence (CoE), on the other hand, are (theoretically at least) more strategically focused, providing advice and driving policy development, governance, and continuous improvement. These definitions are not black and white, especially in cases where an SSC supports more advanced activities or CoE provides operational advice. Regardless, with the new technology coming in that automates and makes many actions and processes far easier to execute, the shift in internal services needs to be towards the strategic CoE type.
For example, even if eSourcing solutions have become easier to use, there still needs to be experts who can provide guidelines around what approaches to use. For now, eAuctions and larger and more complex/strategic sourcing events still require human expertise to ensure the events are set up correctly and run smoothly. Even in the case of automation, the workflows need to be designed and configured by experts to ensure that the processes are correct and compliant.
With respect to transactional procurement, this has been the case for even longer. Using modern P2P solutions that automate the creation of POs means there should be no need for an SSC to help with that. However, there are plenty of organizations that use ERP solutions for PO creation — particularly when solutions are priced by the number of users, it’s a matter of not wanting to extend licenses to all users. The introduction of IM&PPO solutions has highlighted this trend even more by removing the middleman to shorten cycle times and improve engagement. But it still requires experts to design the workflows and ensure that they are in line with policies and category strategies.
External Service Partners
In the case of external service partners, the change is mostly due to the introduction (and improvement) of low- or no-code capabilities. This means that procurement organizations can, with the assistance of the solution providers, manage more and more of the implementation and maintenance of the solutions themselves without the need for third-party system integrators (SIs).
This suggests that the SIs need to pivot. If the procurement organizations can manage implementation (including integrations) on their own, the consultancies need to, similarly to the SSCs above, focus on more strategic aspects. Examples of this would include how operating models need to change and how to better drive change management.
Change Management Remains the Key
All that said, the systems still need to be used (for now at least) by people. These people need to be convinced that it’s in their best interest to use the right systems. Part of this depends on how easy it is to find and interact with these solutions (intake management plays a big role here) and how much easier it makes life for the users. An often-overlooked aspect of this was discussed during a session at Keelvar Konnect by Rasmus Nielsen from KK Wind Solutions who pointed out it’s now difficult to do the wrong thing. The example Nielsen made was the onboarding of a new supplier. If you do it through the system, it’s fully automated, but it’s possible to do outside the system as well except then it includes calling one of the few persons who have the access and permissions to do it and then do it manually. More work and longer time to complete if it’s done wrong! It’s all about incentives!
As always, if you have any thoughts or questions, don’t hesitate to reach out. Ardent Partners is here to help!
