Should Procurement and Supply Chain “Own” Their Applications vs. IT?

Bob Ferrari recently penned his usual insightful commentary in a post that turns his introspective lens to focus on whether supply chain groups should take ownership of software applications (rather than IT). I should note that the inspiration for Bob's post and observations comes from another column, by Gartner's Jim Shepherd, titled "Do You Really Need an IT Department Anymore?" When it comes to supply chain areas, Bob takes what appears to be a skeptical view of the ability of supply chain groups to fully manage technology on their own. Consider, for example, that "many firms continue to struggle in overcoming supply chain wide functional stovepipes in strategy formulation and goal alignment. Before taking over the keys to IT, should teams first achieve some form of organizational alignment?"

Within procurement, we've largely seen the disintermediation of IT departments in certain areas such as spend analysis, e-sourcing and supplier management. If anything, IT plays a supporting role as procurement selects and manages vendors in these areas. In the case of supplier management, IT might even be a customer, if an organization configures such a program to serve as a virtual system of record (a supplier/vendor master if you will) that populates other systems, including back-end financials (e.g., GL, AP, AR, etc.). Yet in other areas inclusive of eProcurement and electronic invoicing, including purchase-to-pay, I'd argue that we've seen a split among companies that embrace different visions.

Some, which have embraced fully what I'll call the Coupa-approach to eProcurement, have largely removed IT from both the decision and operational processes of technology usage and selection. But others, including those that have gone down an ERP procurement path (or continue down an Ariba-installed path) still often work closely with IT. Regardless, the bigger question to ask is whether procurement and supply chain alone can ever steward the broader application ownership when other parties are critical to the process. Here at Spend Matters, we believe, for example, that finance is the natural owner of the P2P process, especially as electronic invoicing, working capital management and other related areas rise in importance alongside basic eProcurement and order management.

It's our belief that most procurement organizations aren't ready to handle this broader process management and ownership on their own for P2P. And unless finance is ready to step in to fill the void, then IT should remain a natural ally and co-owner (even in SaaS/cloud deployments) in situations where applications are cross functional and remain upon system lines. As a last dart to throw at the board in this debate, consider Bob's point that "regardless of who owns IT applications, do not presume ownership of accurate data and robust business process[es]...Supply chain teams own these, regardless of the ownership of IT." As does procurement when it comes to such content and information as supplier content/catalog management, vendor details/contact information and the like.

Perhaps in the outcome of this debate, it's more grey (and co-ownership) than black and white. I'd be curious to get reader's thoughts on the topic.

Jason Busch

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