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Getting Buy-In For Procurement Software: The Stakeholder Playbook

Our previous post taking inspiration from the Ever Given saga, touched on some tips to build a business case for procurement software.  No matter what job title you have, chances are you’ve already known you need a solution, now it’s just a matter of convincing others to share your vision.

Let’s get into the nitty-gritty of structuring your business case. Here, we would analyse things and write using three frames of reference.

To get buy-in and lay a foundation for change management down the road, it’s crucial to air it all out for internal stakeholders. So the first frame of reference is:

  • What they are getting
  • Why they should care or how it will be benefiting them
  • What they need to do to help get the project off the ground

Closely related to the first, this second frame of reference looks at the concrete touchpoints those stakeholders will have with the new system.

In other words, this is about how stakeholders interact with the procurement solution:

  • Vendor information
  • Vendor engagement/performance
  • Processes & operations
  • Financial performance or analytics

When putting together the business case for procurement software, it’s also worth linking it back to the importance of procurement as a function itself. Hence, the third frame of reference is basically about demonstrating how the tool would help procurement deliver benefits to the wider business.

Based on Deloitte’s latest research of CPOs around the world, these metrics are expected from procurement:

  • Cost savings
  • Cost avoidance
  • Cash improvements
  • Internal stakeholder satisfaction
  • Labour efficiency
  • Risk management
  • Vendor performance
  • Sustainability/diversity
  • Revenue uplift
  • Innovation enablement

[We’ve also recently summarised the highlights of Deloitte’s annual CPO report here]

In the next section, we’ll attempt to fill in the key points to “sell” to various internal stakeholders, using the 3 frames of reference above.

C-level executives

While not on the tools daily, this group definitely has a lot of sway, and can often be budget holders or approvers. By getting them on your side as a “project sponsor”, your chances of getting buy-in from other groups increases.

What do they care about?

  • Headline items: risk management (reputation, director and senior management’s liability), financial performance, revenue, cost savings.

Your job is to translate those high- level items of interest into concrete, bite-sized benefits to be delivered by the procurement system. Examples:

Functionality/featureBenefit groupRelated headline item
Audit trailEnsure procurement and process governance is adhered toRisk management: line of defence
Compliance managementEnsure no non-compliant vendor is engagedRisk management: director’s liability
Streamlined processesReduce cost to manage vendors at scaleFinancial performance: improved margins
Vendor database with segmentation and tagsMeet CSR and ESG targetsSustainability / diversity

 

Finance

While the CFO’s perspective in the C-level execs group above can also be tied to this, there are more nuances to consider for the finance team.

By default, having a system to capture all vendor-related information as well as your organisation’s engagements with them would make it easier for finance to ensure cash flows to the right places. Let’s demonstrate with a few examples:

Functionality/featureBenefit groupRelated headline item
Spend data and vendor engagementsSpend visibility throughout supply chainCash improvement
Vendor payment details, rates, contract, termsPayment optimisation and fraud protectionCash improvement, cost avoidance (fraud)
Streamlined processesReduce admin cost for manual processesCost savings

 

Commercial

Closely linked with finance, the project-based nature of work in industries such as construction, mining, utilities means each project is like its own entity with its own cash flows and supply chain.

As procurement is a critical part in ensuring commercial success, the commercial team need to have visibility and the ability to collaborate on key decisions, e.g. selecting the right third-parties.

Functionality/featureBenefit groupRelated headline item
Vendor selection and performance evaluationOptimal project delivery

 

Vendor performance and revenue uplift

 

Contracts storage and alertsReduce maverick spend or unnegotiated renewalCost avoidance and risk management
Streamlined RFx processesReduce admin cost for manual processes, avoid project delaysCost savings and cost avoidance

IT

A lot has been said about involving IT earlier rather than later in a digital procurement initiative. Why? IT knows far too well the challenges and implications surrounding any new piece of software being purchased.

We’ve previously discussed some of those points, which if left too late to address, could hinder tech adoption for procurement.

Functionality/featureBenefit groupRelated headline item
Role-based permission for different featuresSecure access to the tool any time anywhereInternal stakeholder satisfaction
Short implementation cycleFreed up IT resourcesLabour efficiency
Integration with other corporate systemsTech stack that doesn’t require excessive maintenance and can scale.Innovation enablement

 

HSEQ

These are the subject matter experts that monitor all the health, safety, environment and quality of projects. Since vendors are needed to deliver a significant part, procurement can facilitate the due diligence process with input from HSEQ.

Functionality/featureBenefit groupRelated headline item
Vendor onboarding and approvalEnsure vendors’ compliance to policiesRisk management and internal stakeholder satisfaction
Vendor segmentationAllocate resources to manage different types accordinglyLabour efficiency
Vendor evaluation and historyMinimise future issuesVendor performance
RequalificationEnsure new requirements are captured across vendor poolRisk management

 

Legal

New legislations and regulatory updates can affect how organisations interact with their supply chains. In recent years, a focus on Modern Slavery, industrial manslaughter, social procurement etc. has added pressure to ensure compliance.

Compliance also comes with a cost. You can get buy-in from Legal by looking at it from 2 angles:

  • Reducing cost to comply
  • Avoiding non-compliance cost
Functionality/featureBenefit groupRelated headline item
Up-to-date vendor databaseRisk visibility across supply chainRisk management
Standardised prequalificationCompliance at scaleLabour efficiency

 

Operations

Closely linked with HSEQ, the operations team are on the ground ensuring things go according to plan. They also take part in the planning and pre-construction work. Hence, the ability to facilitate seamless input collection would be key for procurement.

Functionality/featureBenefit groupRelated headline item
Rapid and strategic sourcingEnable decentralised procurement activities to meet project needs fastLabour efficiency and internal stakeholder satisfaction
Integrated vendor onboardingEnsure vendors are compliant before being on-siteRisk management
Performance evaluation and historyInform future decision making for all stakeholdersVendor performance

 

 

Vendors

Too often, we forget this is a two-way street. Third-party vendors, subcontractors, and suppliers are also partners. Their success or failure could have a direct impact on organisations’ bottom line.

While vendors don’t normally provide input into which procurement tool their client uses, considering their needs in the software selection process can help drive adoption later.

Functionality/featureBenefit groupRelated headline item
Guided onboardingOnboarding process tailored to type and risk profileCost savings
Self-service capabilitiesFreed up admin resourcesLabour efficiency
Streamlined RFx processTransparency, equal opportunitiesInnovation enablement

 

In summary

This article aims to provide a starting point for you to get the buy-in you need from multiple stakeholders by being in their shoes.

Each company and role will be slightly different, but the broad categorisation of stakeholder needs would be largely the same.

Be sure to check out the latest Procurement Software Buyer’s Guide for more useful content that can help you in this process.

Originally published on the Felix blog.

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