All Smoke, No Fire: A Procurement Practitioner’s Thoughts on Digital Procurement (Part 1)

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Editor’s note: This is the first in a three-part series on digital disruption from a procurement professional’s perspective.

“Digital” is smoking hot for CPOs right now. “Disrupt” is the newest square on Corporate Buzzword Bingo.

Really?

As someone with a front-row seat to the inner workings of procurement teams, I don’t see it. I was dismayed at the lack of content on this topic on the agenda of the most recent ISM conference in Orlando.

All is way too quiet on the digital front in procurement. In the business environment today, the “why” of this inertia doesn’t matter. The need to do something, on the other hand, does.

Technology has already irreversibly changed how we interact with the world and with other people, as well as how we work.

But in procurement, things often appear stuck in the early 1990s. Why is it easier to go online and buy a mint-condition 1996 Tickle Me Elmo than it is to place a purchase order at work for a mouse pad? It’s sometimes easier to find out the shipping status of that Elmo than to get updates from your buying team about that mouse pad. Procurement needs new technology to survive, or the rest of the business will innovate around us. It is not optional.

For leaders in procurement, digital innovation comes with a set of challenges:

  1. New things are risky, and we create teams who only exist to eradicate risk.
  2. You have other priorities, like saving money.
  3. Every company has cultural dynamics that can make change difficult.
  4. There is potential to put yourself on a collision course with IT.

The technology landscape is full of opportunities to try something new and potentially game-changing. Yet there is a lack of action from most procurement teams to jump in and make revolutionary progress.

Here are four things you can do today to kickstart your digital procurement program:

Make someone accountable. Give someone on your team responsibility to figure this out. This doesn’t necessarily mean creating a separate role. Pick a rising star — someone who sees the broader picture, thinks about users, understands systems, and most importantly, gets things done. Ask that someone to create three things: a strategy, a framework for finding the right projects and a short list of projects to run.

Find a buddy. Send your newly minted digital lead to find other departments working on digital innovation. Someone has probably already done a pilot or proof-of-concept that would also improve procurement. See what is being done with customer analytics (customers are just the reverse of suppliers) or voice command technology (like Siri) for order inquiries. Talk to the head of sales or R&D. You’re in procurement so you understand the concept of leverage; now go look for it internally. Why internally? You gain speed to launch a pilot, reduced expenses as it already exists and a blazed path to IT (someone else already ticked them off).

Get something done. I have seen too many well-intentioned people get into the spin cycle on grandiose implementation plans. Repeat after me, “I don’t need to deploy everything to cover everyone, everywhere, today.” Global or “enterprise” projects take several years and millions of dollars. Think about it — starting a technology project in 2017 means it might not finish until 2020. You will be facing obsolescence before you finish printing training materials.

The approach of running small pilot programs has a huge advantage here. Pick a process, like automating P.O. approval. Find a willing participant in the business, set aside a small budget and see if you can make it better. You will quickly know whether you have a winner — and if you do, you have a fan in the business and a working solution you can build on. 

Pump the smaller wins. Mark Twain once said, “Many a small thing has been made large by the right kind of advertising.” People have a tendency to wait until the whole project is done to take a victory lap.

I argue that any success story is made possible by a series of smaller accomplishments. Communicating your victories lets the organization know that procurement is forward-focused and open to taking calculated risks. It helps morale internally and helps the perception of procurement within your company. It will build a fanbase of people who want to work with (and dare I say, work for?) procurement.

Much has been written about digital opportunity in procurement but precious little about what has been accomplished. Procurement manages the important but unsexy work of saving money and creating policies. It uses systems to progress toward those ends.

I encourage — nay, implore — you to change how you look at technology. Why does marketing get to have all the fun? Why are external customers the only ones to benefit from your company’s digital innovation? I know the spark is there to use technology to take your company to new levels of procurement greatness. Whether you fan that spark into a productive campfire or a landscape changing blaze doesn’t matter — but go light it up.

Rebecca Karp is a principal of Sourcing Synergies, a procurement strategy company based in Chicago. You can reach her at rkarp@sourcing-synergies.com or follow her on Twitter @rebeccakarp.

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Voices (3)

  1. Lewis Barnard:

    Really great points Rebecca; I love the suggestion to find a buddy to help with taking technology forward in procurement departments. I work for Market Dojo, an eSourcing provider, and the greatest success we have seen is amongst clients with those who have an internal champion (or ‘eSourcing Hero’ as we like to call them).

    I think that procurement specific technology providers suffer from an inherited negative stereotype created by the legacy systems of old. It is no longer acceptable for technology to be cumbersome or have lengthy implementation times, and hopefully this will make the uptake in the future much better, and raise the profile of procurement within their organisations.

    I couldn’t agree with your last paragraph more; it’s time that procurement teams treated themselves to something which aids and enables them to perform their duties in-line with modern practice.

  2. Serge Milman | Alldyn:

    Transformative initiatives, including digital transformations, are not the faint of heart. These are complex undertakings that require significant technical expertise, strong program managements, clear set of objectives with a well-planned roadmap, support of senior leadership, among other factors.

    Most will agree that many Procurement groups will score poorly along many of the requirements needed to drive a successful transformation program. Moreover, the resource allocation – budget and resources – required for anything other than ‘lipstick on a pig’ solution is significant and likely ‘disruptive’ to most of the enterprise.

    How does a typical CPO justify the investment and the expense when many Procurement teams talk about savings that so often fail to materialize on the P&L?

    It may be prudent to ‘give’ before ‘taking’ … that is, first deliver 15% – 20% savings on total vendor spend base with savings that are directly traceable to the P&L. Show specific and meaningful contribution which earns the CPO the right to seek support for a many million-dollar investment related to a digital transformation initiative.

    1. Lewis Barnard:

      Hi Serge, you make some really good points.

      I spoke to an interim CPO who recently said he faces challenges getting budget signed off on digital solutions for his team as his team are supposed to reduce the bottom line, not contribute to it.

      Hopefully that isn’t a view shared by all Senior Executives, and your point about ‘giving’ before ‘taking’ is great. We offer an on-demand solution based on this very premise – getting users to prove the value through a low risk pay-as-you-go model, before rolling it out on a wider basis.

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