Spend Matters welcomes this guest post written by Mark Digman of SciQuest.
I’m a “process, flow chart, build a plan and work the plan” type of person. This is not associated with marketing, which tends to be labeled or positioned as “creative types.” One of the things I like about the professionals in the procurement community is their pragmatic and often passionate approach. They drive efficiency and cost savings on behalf of their organizations. They have ideas of what they need to do – and they want to “get it done.” At the same time, they empathize with their internal customers and want to make it easier for them to do their jobs. They are also very passionate about the processes and technology they have in place to enable all of this. They want it to work and work well for everyone involved – and they aren’t shy when they think it can be done better.
Given all of this, as an executive, I understand the frustration procurement leaders feel around “getting a seat” at the proverbial “executive table.” Why? Marketing was in the same situation several years ago. While many things have changed over the years, I believe one of the watershed events that brought greater visibility to marketing was the ability to leverage technology. Technology tracks customer engagement and helps translate money spent into revenue gained, customers acquired and sales pipeline growth.
Today, procurement and sourcing professionals have a similar opportunity to innovate, more directly support customers and provide transparency and visibility into processes that showcase their value. But they have to invest in the right technology, the right way, with cost being only one of the critical factors.
That’s why I found the research SciQuest commissioned from The Topline Strategy Group so interesting – and I hope we help spotlight the huge opportunity every organization has to save money, avoid unnecessary costs and drive efficiencies in their business. According to Topline’s research report, procurement needs a lot of help in reaching its potential; North American companies are losing a staggering $1.5 billion PER YEAR as a result of inefficient procurement systems. That amounts to 32.3 million man hours wasted each year due to bad tools – hours that could be spent finding new savings opportunities or guiding purchasers toward making better choices.
The results are clear – organizations are not getting maximum value from their current investments in sourcing and procurement technology. Procurement, sourcing and finance are measured largely by their contributions to the bottom line. These contributions come in the form of cost savings, cost avoidance, the ability to minimize inventory, as well as aid cash flow (to name a few). The report from The Topline Strategy Group goes into detail about how organizations can optimize sourcing and procurement strategies, offering 5 simple rules:
- Choose the right software
- Don’t get caught up in vendor standardization
- Invest in implementation
- Frequently update and improve the system
- Focus on the end-user experience
Topline will be presenting the results in a webinar Oct. 9. Their findings indicate there is a huge opportunity for most organizations to make significant and transformative technological improvements to the way they approach sourcing and procurement. When sourced and implemented correctly, procurement systems represent a great opportunity for organizations to turn spending into savings by reducing costs, improving process efficiency and gaining visibility into spending decisions.
Unfortunately, for a number of reasons detailed in the report, the majority of organizations are not receiving the value they should be from their procurement systems. They are “settling” with what they have today. Bottom-line: It doesn’t have to be that way.
In the marketing community, not leveraging social media, analytic insights/data and KPI’s was once commonplace – today, any marketing professional worth their salt must use these tools to stay relevant. I see this same opportunity for procurement – don’t settle for manual processes or old technology. To make better decisions and stay relevant to your business, keep your skills fresh and be able to take advantage of all the data related to spend management. To do this, you have got to have the technology tool kit to support you.
Those that can make better, more informed decisions on processes and technology to drive spend “innovation” will be rewarded with tremendous cost savings. And, those individuals who do this will help their procurement and sourcing professionals get a seat at “the table.” Don’t believe me? Just ask marketing.