Procurement – Alive and Definitely Kicking!

kickingWhen Peter Smith followed up the results of our recent Pub Debate with his article "Procurement Is Not Doomed! But Needs to Change…" little did we expect such a flurry of commentary in response. One comment in particular was so well crafted, we thought it worthy of a post in its own right. We're sure readers will be stimulated by this response from Philip Nedeljkovic, a seasoned interim who specialises in driving change, with a strong focus on leading teams through large-scale and global technology transactions. He can be contacted directly  via

Procurement is not doomed! However it does need to continue to raise its game and work more closely than ever before alongside other functions to gain a truly holistic view of each category -- be that operations, vendor management, strategic relationship management, service delivery or other. In most organisations it’s just not feasible to expect a single (our) function to ‘own’ the end-to-end contract lifecycle.

Our role is to understand and create a vision of how things will work, sell it to our stakeholders and take them on the journey to make it happen! To achieve that Procurement has to improve at being the master of stakeholder management and facilitation and understand where to obtain the information required to make informed decisions, how to capture the data in order to generate the information and who is accountable for providing and maintaining it (systems and tools will only ever be as good as the data they collect).

I’m fortunate to have worked on some of the largest and most complex technology outsourcing transactions on the planet and a common factor amongst all of them is the lack of information upon which to make informed decisions, so let’s take a quick look at why that might be.

There are three stages of the strategic sourcing lifecycle:

  1. Identifying the value – doing the analysis to identify the opportunities
  2. Securing the value – running the sourcing process to arrive at a contract
  3. Delivering the value – Ensuring that individuals are made accountable for delivering the business case submitted at contract approval over the life of the contract

My observation over the past 15 or more years is that:

  • Most organisations will put a reasonable amount of time and effort into stage 1. However, it’s rare to find an organisation with a really thorough understanding of the current state (probably based on the limited information available to them – see stage 3!).
  • Every organisation likes to focus its efforts on stage 2. However, without the underpinning information from stage 1 (that relies on stage 3) we run the risk of ultimately solving the wrong problems.
  • Very few, if any, organisations, are effective at stage 3. There are so many reasons for this that ostensibly stem from the sheer complexity of most organisations. However, a key factor, in my opinion, is a less than adequate handover by the ‘deal’ teams to those responsible for ‘business as usual.’ As a result, all the little things that were built into the negotiations to deliver opportunities to extract value aren’t implemented effectively. On top of that, we often then fail to capture all of the performance data as was intended so the anticipated management information never materialises … and eventually we end up at stage 1 again in a not too dissimilar position to where we were last time around!

So, back to the start of this post. Our role is to engage our stakeholders and work with them to create a vision of what we’re really trying to achieve, what success will look like, how we’ll validate our assumptions, how and what we’ll measure and manage going forwards and how the organisation needs to change to achieve all of that.

Procurement is doomed? Not likely, we’re alive and kicking harder than ever!

First Voice

  1. alun@marketdojo:

    Absolutely concur that procurement is not doomed. As a solution provider, of course I would say that, but it is the same as saying ‘sales is doomed’. Automation will certainly change the way of working and the focus. However it is this change that will actually help make procurement more valued instead of less.

    With more automation through intelligent software and processes, peoples time will be freed up to be more strategic and give them the ability to converse more often with stakeholders. This combined with better training within procurement will help to achieve the nirvana mentioned above.

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