Author: Tim Cummins, IACCM
“Investments in organizational capabilities rather than specific technology choices separate the leaders from those who still have work to do”.
This quote comes from a recent study by McKinsey, a leading management consulting company. They are referring to the adoption of Cloud software and service solutions and make the point that it is defining and equipping capabilities that makes the difference to business performance.
This conclusion is very similar to other comments I have been hearing recently – that increasingly it is users of services who best understand their needs, not technical or commercial experts. The problem is that the experts will often make buying decisions that align with their particular measurements or interests, rather than whether those decisions increase organizational capabilities. The result may be that short term savings destroy longer term value.
It is increasingly argued that our digital age means the pendulum is swinging towards users. They have access to knowledge and information that previously only ‘the experts’ could assemble and understand. And as we move away from product sales to solutions, services and outcomes, it is those users who need to be investigating options and evaluating their impact. Only users can really appreciate the value of particular features or functions, or recognize the potential to innovate the way they do things or what they can do.
Contract management technology is a good example, As more and more new solutions reach the market, the potential that comes with analytics, with artificial intelligence or with ‘the internet of things’ is hard for someone with a non-contracts background to understand. Hence, many of the systems that have been acquired are simply not being used. They offered too little benefit.
What does this mean for the process of buying? It suggests that the future will lie far more with the groups that represent ‘capability’ and far less with central functions such as IT or Procurement. Indeed, the purpose of these central groups will be solely to enable others by developing business capability that draws on their area of expertise – in other words, to be an enabling (rather than control) function.