Procurement Technology – It’s All About the Audience

Hot Topic

Alan Day, Chairman and Founder, State of Flux, a leading provider of contract lifecycle management, category management and strategic sourcing, and supplier management services, reflects on the real end user of the procurement system.

Procurement technology is continually changing. Previously, the idea was to have a system that operated as a one-stop-shop, covering all of procurement’s needs. Finally it seems that we are starting to understand that it’s all about usability, and more often than not, procurement is not the main user of our systems.

The trouble with the traditional one-stop-shop approach is that it is driven by what is easiest for procurement and the category manager, not what’s best for the business. For example, take the link between RFPs and contract management; the sell was that in a one-stop-shop system you could take your RFP and easily convert this to a contract document. Perhaps nice in theory, but it ignores four fundamentals:

  • The audience is not always procurement - remember the RFP may be managed by procurement but often contracts are not managed by procurement, rather by someone operational in the business that ultimately needs visibility of the contract.
  • Management of the contract extends beyond procurement - procurement may spend up to three months agreeing a contract with a supplier, but the business could spend up to three years or more managing it.
  • The RFP does not drive the relationship – the RFP and contract are not the final output. Ultimately it is the supplier relationship and supplier performance that drives value to the business. The relationship you want with the supplier should drive the contract. The technology should be used to create a clear line of sight between the contract, performance, and relationship.
  • How it works in the real world – we would be interested in your thoughts, but in my procurement career I have never once converted the content of an RFP manually to a contract; why would I want to do this electronically?

Technology should lead to an easier life

Increasingly we are seeing procurement technology being split into three areas, which is driven by the audience, for example:

  • Requisition-to-pay - the key audience is business and accounts.
  • Sourcing – e.g. spend, eRFPs, eAuctions, procurement and category management process, savings tracking, here the audience is procurement.
  • Supplier management – e.g. risk, innovation, SRM, SPM and contract management, the audience being the business and suppliers.

This need to focus the technology to the audience is driven by ease of use and increasing usability. Think of all the investment that has gone into a system that is not embraced by the business. A lot of our clients talk about creating ‘an Amazon-like experience’ for their users. What they really mean is something that is intuitive and adds value to them in their role.

A difficult area is procurement’s sourcing technology. Procurement expects that the business will comply and use our requisition-to-pay technology, yet we haven’t been good at using it ourselves. For example, take eRFPs; a lot of organisations have implemented this technology, yet use it as a mail box, rather than using the functionality properly. Making it easier for procurement teams to understand and use would drive more compliance and ultimately the efficiencies that were originally expected.

Similarly supplier management technology should have a combined focus on suppliers and the business, making the lives easier for both internal stakeholder groups, as well as suppliers. Technology solutions should enable your supplier management processes, not dictate a rigid approach that works well for one part of the organisation.

You could argue that it should have always been about the audience’s needs, but that has not been the focus of large legacy system providers. With a prime focus on the procurement function, they have pushed unintuitive technologies, through their scale and market dominance, as add-ons to ERP systems. The result has left many procurement departments with uncooperative and unloved systems.

Solutions such as Single Sign-On (SSO) and secure live data feeds have led the way to alternative solutions for organisations. Instead of being forced to stick with the traditional one-stop-shop provided by legacy systems, collaborative ecosystems of best-in-class technology providers have evolved to provide a superior option. Within these ecosystems, each technology provider focuses on a specific, but therefore more intuitive, solution.

Making the lives easier for each user group of the system will allow your organisation to truly capture your organisational knowledge. Now is the time to do it.

 

(Alan can be contacted on  +44 2078420600 or enquires@stateofflux.co.uk)

Discuss this:

Your email address will not be published. Required fields are marked *