Spend Matters welcomes a guest post from Mark Digman, VP of product marketing and strategy at SciQuest.
In my first post, I talked about the prohibitive cost of resisting change for public sector procurement departments. Since then, I’ve read a very interesting article that provides the hard numbers to fortify my comments.
According to a report by the US Government Accountability Office (GAO), the federal government could save upwards of $12 billion annually by adopting procurement practices that are commonplace in the private sector. And that’s only the federal government – no mention of dollars being lost by hundreds upon hundreds of local government procurement offices.
What I didn’t discuss last time (and what I want to focus on today) is how these public sector procurement offices can address the growing gap between early adopters and those now struggling to keep pace. Early adopter organizations are now leading the charge and are often focused on “best-in-class” practices. This may mean a focus on visibility, collaboration, broader adoption and optimization (to name a few) based on the mission or strategy of the organization. So often these novel approaches get most of the spotlight because they are fresh, different and push the envelope of current thinking. But regardless of what these early adopters are doing, at the end of the day they are grounded in basic principles and practices that the “market majority” (for example, everyone else) can apply to their organization. These basic principles fall into three key areas: people, processes and technology.
We’ll start with processes.
The simple reality is that if your department relies heavily on manual procurement processes, you have considerable room for improvement. Manual processes are the bane of any procurement department’s existence – they’re slow, clunky and prone to error. Whether you’re trying to identify areas to consolidate purchases, sourcing suppliers, managing contracts or analyzing your spending, manual processes are cumbersome and resource-intensive. As I discussed in my last post, automation has gone from the “nice to have” bucket into the “need to have” bucket – it’s the only way to reduce complexity, simplify processes and eliminate errors. The good news is that (thanks to the early adopters) the processes around better procurement are proven and practical – not academic and theoretical.
To automate processes effectively, you need to start thinking about the second pillar of procurement – technology. This is the easy part. If there’s one thing I’ve learned in my 20+ years in the B2B software industry it’s that people want solutions, not features. If there’s a process out there giving you pain (that you are willing to pay to fix), someone’s got a tool to automate it. Research the different vendors. Talk to your counterparts at other organizations and find out who they’re working with – and start the dialog.
Why does automation with technology matter so much? We know it dramatically improves speed and efficiency while reducing errors, but it also helps drive satisfaction – people get the materials they ordered more promptly and easily and buyers get the pricing they worked so hard to establish with their suppliers. But that’s only part of it. The hidden value comes from what it does for your people (the third key area). Your people are now freed up to apply their strengths and talents to support the objectives in your organization. This makes for happier, focused, productive “value-creating” employees.
For those stuck at the tail end of the adoption curve, the climb to effective procurement can appear overwhelming, but with a little up-front effort and investment in people, processes and technology, those in public sector now facing a “new normal” in procurement can close the gap pretty quickly.