The recent annual PASA ProcureTECH conference in Sydney, now in its 7th year, offered much useful advice for busy buyers looking to implement new technology and automation tools into the supply side of their business.
Jonathan Dutton FCIPS outlines the top ten tips offered by experts throughout the #ProcureTECH conference.
Over 150 people attended the 7th annual ProcureTECH conference hosted by PASA in Sydney last month.
Some 17 of the top IT vendors in the procurement space showcased their products and services, conducting many one-to-one meetings with procurement managers interested in learning more about how these products might fulfil their specific needs.
Meanwhile, in the conference sessions, a stream of industry experts and experienced CPOs offered laser insights into what it takes to successfully implement new cloud-based, service-orientated technology into the procurement arena today.
The ten tips listed below helpfully build on last year’s advice (a quick re-read of which will confirm that a good number of earnest procurement teams have repeated their mistakes during 2019!)
1. Plan your I.T. roadmap like a CIO
Jeremy Suter from Gartner believes that the need for a proactive plan in the form of an implementation roadmap is an essential step for IT investment; a basic requirement for CIOs. Moreover, technology doesn’t stand still, so it is likely that phased roll-outs, change management programs and planned upgrades need to be accounted for. IT product owners and project managers (ie: procurement professionals) should primarily own the responsibility for this.
Additionally, iteration is inevitable and can be planned for to some extent. It’s also wise to consider the planning phase of the project as a journey of discovery rather than purely a sourcing exercise. We do not always have the luxury of knowing exactly what we want (usually not until we see it!).
2. Define what is not in your spec
IT specs tend to grow, not contract, as needs develop. Vendors are keen to sell their wares – with a service tendency towards “the answer is YES, what’s the question?”
‘A good discipline is to define what is not in your requirement,’ said Jeremy. Start with what is essential, what is preferred, what is “nice to have”? The aim should be to solve your primary business problems, not to just improve general efficiency, and to align your solution with your business goals (not with nice-to-have features).
Overall speed to value should be your aim, not holding up the bus for one more thing. In fact…
3. Speed should be a goal
“The times they are a changing” warbled Bob Dylan back in the day and, as Vernon Kringas from Infosys-Portland highlighted, not much has changed. In fact, as we say today, change is the only constant. Marc Benioff, CEO – Salesforce.com said “speed is the new currency of business.”
A typical sourcing exercise with reasonable expenditure and some complications can easily take nine months. But, in that time, markets can change. New technology can complete a product life-cycle in that time – smartphones are a good example of this. So, what opportunities is your business operation missing in the time it takes to decide on a spec, source it and fix implementation? Is there another way? Agile procurement, that is the fusing of IT agile methodology with procurement process needs could be the answer.
4. Define your service vs governance balance
Stakeholders tend to be rather uncomplicated with their demands of due diligence, good governance, sound process and consistency. They enjoy a one-click service standard at home, so why not at work in their world-class organisations? Why does it take so long to secure supply?
This tension between service and governance is growing. Stakeholders want stuff now. Procurement is evaluating risk management, liability, needs vs wants, total cost and duty of care. Defining the balance between these two tensions will be a pre-occupation for (especially indirect) procurement in future. Yet, as Vernon suggested, ‘they play out firstly in the discussions on system specs.’
5. Co-design needs – do not impose them
‘Buy-in’ is a valuable thing and stakeholders buy-in a lot more when they are involved. Growing and balancing needs together, one problem at a time, can be a better approach rather than trying to design a solution that is “all things to all people” and leads to a big-bang cutover, the dangers of which were covered last year in detail.
6. Secure senior level support at the outset
Senior level buy-in and support is often essential. As we noted last year, business cases can be thin and, as costs grow, benefits can be relatively marginal on the face of it. Judgements between service vs governance requirements need executive level judgment calls, and it is always better to have them proactively up the learning curve, rather than grappling to keep up with the story so far.
Executive level support built out of vision can help. It also helps fledgling procurement departments climbing the procurement maturity curve (this is covered in detail in the JD Strategic Procurement Masterclass)
7. Utilise Microsoft Power B.I.
Microsoft Power B.I. can do amazing things and it is free to download for Microsoft 365 subscribers and surprisingly easy to use. It can obviate the need for expensive data analysis, even analytics, software.
Dr Stefan Gassner of the Grosvenor Performance Group demonstrated how you can use Power BI in a desktop machine-learning approach to present data in a much more accessible way. It’s even possible to build widget-compiled dashboards in the cloud using feeds from even basic text-heavy systems and programs.
With relatively clean data (see last year’s point on using A.I. wisely) the Power BI presentation suite can make your points sing. It can also work in the cloud as a front end to data feeds from your legacy systems. A picture paints a thousand words, remember.
8. Cost grows
The regional VP for Coupa, Keaton Miller, hosted a ‘fireside-chat’ with one of their clients. Perhaps Keaton’s most poignant point (in relation to IT specs growing) was “it always costs more than you think.”
At the same time as focussing on your business needs, studying your chosen system reveals its broader capability. Both perspectives inspire growth more than contraction of your requirements.
Moreover, last year’s thunderous point on the need to invest in change management and training was relevant to this discussion. Failing to invest in the rigour of this approach (as so many are tempted to do) usually results in added expense later on to rectify things.
9. Target cuts in procurement admin costs
Very few procurement teams have accurate data on exactly how much it costs to administratively ‘raise a purchase order’ through their P2P process and issue it to a supplier. Over the years a number of studies have been published, and it’s clear that a number of consultants have made good money trying to establish the number for their client. Stefan suggested somewhere between $4 and $400 per order. Yet, typically, around $40 or so is an accepted and reasonable rule-of-thumb for time pressed consultants.
Recently a client of mine identified a substantial spend of $1bn generated by about 300,000 individually invoiced transactions following a detailed system implementation. Roughly an average PO value of $3,300 or so. Yet, at $40 per order, an administration cost of $12m per annum is a weighty cost in itself and one well worth targeting.
Using this approach, even in round terms, can bolster any ‘thin’ business case. Targeting $12m in admin costs would make friends not enemies.
10. Online marketplaces have a role in future
Two compelling presentations both offered a tantalising glimpse into the potential of online marketplaces – firstly, Sharon Melamed from matching platform, Matchboard and, secondly, Frances Atkins from givvable.com, the platform which matches corporate buyers to sustainable and indigenous vendors.
Both case studies illustrated the scope for pre-approved or certified suppliers to work through a single portal to reach corporate procurement managers quickly and easily. At the least, such websites can play a part in the mix of sourcing platforms you use for your organisation, either by procurement practitioners or directly by our users. Maybe, just before we build major new systems, we should consider what channels are being offered quickly and easily by others at a very modest price.