A ‘Big Picture’ Procurement Mindset

There is a considerable difference between what procurement can do with an eProcurement platform, what they should do, and what they actually do. Part of the problem is the level of technology segmentation that exists in the typical enterprise. Procurement has technology, legal has technology, sales has technology, etc. Everyone transacts with and stores their information separately. It may not be intentional, but it prevents companies from getting the full benefit of the technology they implement.

Huge strides have been made in digitizing procurement, but the work is not nearly done. Procurement needs to move into a larger business role where it is highly involved in the development and execution of enterprise-wide business strategy — and therefore enterprise-wide technology and data development.

If procurement is to think “big picture” when it comes to data and technology, it has to include suppliers as well. Good supplier relationships require good technology, especially to facilitate activities using portals and digital transactions, as well as to ensure prompt payment. Most companies realize that the time has come to emphasize total value rather than focusing exclusively on price, but this realization cannot translate to value through purely internal investments in usability. Suppliers have similar expectations to internal stakeholders when it comes to frictionless user interfaces and ready access to information.

I remember what it used to be like to onboard a new supplier. It could take years to qualify them, between site visits and research and discussion with their leadership team. Today, this is happening much faster, even though our supply chains are far more global. Technology allows procurement to source faster and to incorporate more information into the decision-making process. As an industry, we are quickly moving toward increased information sharing between companies, especially for the sake of benchmarking. The consolidation of information across different buy-side companies will change — and potentially transform — the way procurement sources, selects and partners with suppliers.

But none of this is possible without meaningful change. Given how integrated technology is with our work, we can’t change a platform without also re-examining process, governance and talent.

For a perspective that incorporates the impact to procurement program design, I reached out to my colleague Joe Payne, Vice President of Professional Services at Source One, a Corcentric company.

“What procurement really needs to build support for digital transformation is a ‘Goldilocks zone’ level of dissatisfaction with current processes,” Joe pointed out. “It has to be high enough to motivate change, but not so high that the situation is irreparable. When a stakeholder needs to buy something, if it takes so long and is so complicated and there are so many rules to follow and they keep getting their hand slapped because they didn’t follow the right rules … then they are ready to support transformation.

“On the sourcing side of frustration, procurement can’t manage what they can’t see. If every time procurement needs to get spend data from corporate systems there’s a three-month process and four people involved and IT is upset because they’re asking for the information AGAIN, procurement is going to dread the effort and potentially delay making updates,” he said.

“Transformations often falter when people react to the ‘need’ scenario by thinking technology will fix their issues without asking whether it is their process that is actually broken. How procurement reacts to feedback about their processes is usually a good indication of how successful the transformation is going to be.”

I completely agree with Joe’s point of view on motivation for change and taking a holistic approach to transformation. Few people respond to the suggestion that new technology be rolled out with optimism or enthusiasm. To be fair, however, most of the pain associated with implementation is caused by change rather than the technology itself.

Technology silos will always present a problem, whether they constrain operational visibility or hamstring the potential of analytics. All change has to happen one step at a time — while keeping the big picture in mind. In this way, incremental change eventually delivers full, real-time visibility for and between users and suppliers. By maintaining that big picture view, procurement can drive enterprise-wide change while still holistically managing technology expectations and preserving unified data resources.

Julien Nadaud is Corcentric’s senior vice president of innovation.