So, you’re about to embark on a digital procurement transformation in your organization.
You’ve read lots of articles, listened to a few of the best procurement podcasts, maybe been to a conference or two, and networked with some of your peers.
Great. So, you’re well informed and ready to set out on your journey.
Well, not quite.
Digital Procurement Transformation: why you may fail
In this piece, we focus on the 10 main reasons why a digital procurement transformation may fail. Forewarned is forearmed, as they say.
And don’t forget, if you’re struggling with the plethora of digital procurement tools out there, schedule an initial free consultation.
We can help you gain initial clarity on the breadth of solutions on the market. Plus, we can also perform the entire end-to-end research, due diligence and hold your hand during the sourcing process for your procurement software.
OK, so let’s get dive into what could potentially trip you up on your digital procurement transformation journey. Avoid these potential banana skins, and amplify your chances of success!
1. Unclear goals: Focusing on digital for the sake of digital
The number one reason your digital procurement transformation will fail is because you don’t have an over-arching drive and vision.
How do you see the end of the process? What is inspiring you to implement a digital solution?
Are you looking at implementing digital procurement tools because your peers are? Because everyone is talking about it at conferences and in industry publications? This is not good enough. You need a vision and some entrepreneurial drive behind the whole project.
What’s your “I want to make humans an interplanetary species” (Elon Musk) or “a computer on every desk and in every home” (Bill Gates)?
In Simon Sinek’s classic business book “Start With Why”, he outlines the mistakes many business leaders make by focusing on the “how” and the “what” rather than the “why”.
Like many authors, he cites Apple as a case study of how they concentrate on the holistic goal of why they exist. Their marketing doesn’t focus on the minutiae of features and technical specifications. Rather, it creates feelings and easily conveys what their products accomplish.
You’ll also need to take the organisation on the digital procurement journey together with you. More on that in point 7.
2. Setting up the digital team to fail (lack of resources)
You’ve got the budget from your CFO.
You’ve waded through the different all the different options and finally decided on a solution you feel is the best fit for your organisation.
Now all you need to do is implement it and ensure that its ongoing adoption is a success. This is where organisations often slip up through deciding to cheapskate on this part.
You need an A player to source, deliver and implement the software alongside the solution provider or an external IT consultancy.
Not a Category Manager you’re going to reward with a “development opportunity”. We all know this is management speak for “do the work of an extra FTE with no extra pay”, with the dangling of a promotion as a carrot.
Don’t do it.
The person who takes this on will feel stressed and burnt out. They can only possibly do the job half as well as a full time, experienced digital procurement specialist running the show for you. If you can’t afford that luxury on an ongoing basis, then hire an experienced interim manager to get you through the implementation phase.
But, remember, digital procurement transformation is a mindset and a journey. It doesn’t start with the RFI and finish at the end of the hyper care period.
Getting users (and suppliers) to adopt it, use it, provide feedback and become evangelists is an ongoing task which required continued monitoring.
3. Managing digital in silos
The sure-fire route to failure is thinking of digital procurement transformation as a procurement issue, rather than a wider business issue. Back to the “what’s in it for them?” question, you need to be influencing and persuading Finance, IT and Operations how they will benefit.
You may be thinking “I want my team to be free of admin work”, or “I want better supplier and spend data”. Your stakeholders frankly don’t care, except perhaps the CFO and your Accounts Payable colleagues.
Speak their language. Avoid acronyms and procurement-speak.
Engage them in what you’re trying to do. Understand what their goals and objectives are. Spin the storytelling into how this will help them achieve what they need to deliver more effectively. Talk like a marketer, and less like a technocrat or engineer.
More importantly, you need to be having these conversations at the beginning of the process. Yes, you’ll have IT at the table from the start. Maybe finance. But what about the other departments who have stakeholders who’ll need to use the software.
And let’s not forget suppliers. Consider inviting a small group of trusted suppliers to consultatory meetings to understand what features they like or dislike about certain software solutions. What good practices have they seen when their other customers have gone through similar implementations of digital procurement software.
4. Ignoring the need for cultural transformation
This is a big one, and unfortunately is also one where you can’t really choose which hand you’ve been dealt. In other words, you don’t choose your colleagues.
Closed-minded colleagues and a deep-rooted resistance to change are common in decentralised organisations and more traditional industries. Whereas in tech companies and more forward-thinking organisations, you may be blessed with open-minded and progressive stakeholders.
Either way, you need a plan for how you’re going to influence and persuade them to buy into the digital procurement vision. Giving them software that’s easy to use will increase your chances. We cover that in more detail in point 8.
Part of the journey is bringing them into a lean and more data-driven mindset.
- How much time is wasted on non-value-added administrative tasks with the current process?
- What is the cost of poor data?
- How many more projects could budget holders execute, if only IT systems were in place to facilitate better spend management?
5. Under-investing in digital capability building
This one is kind of an extension to the previous point. Cultural transformation goes hand-in-hand with building capabilities for the new systems being implemented.
It’s essential that both users and suppliers are given the training and the skills to get them up to speed. Furthermore, it’s about helping them to understand the why behind the what and the how, going back to the first point.
We’re not expecting that entry level stakeholders and blue collar workers will become experts in robotic process automation (RPA) or data analytics driven by machine learning.
But…
One final point on up-skilling. The easiest route to success is ensuring that any software you do implement has an easy user interface. Ideally, it shouldn’t require training beyond a couple of hours of videos or online courses.
If you need a team of super users or consultants to get the most out of it, perhaps the software is the issue and not a deficit in capabilities among your user base.
6. Not cleaning your dirty data before implementing software
We’ve explored in a previous article the cost of poor procurement data (link) and where it often bites us on the backside.
It could be either a lack of master data maintenance, or your spend data being unintelligible as a result of free text purchase orders.
Tech can indeed provide the solution to certain data challenges, such as a contract management system or a vendor intake and central repository for master data.
However, dirty data can also be a curse that diminishes the success of your procurement software implementation. Especially if you’re looking at spend analytics or P2P software.
The bottom line is this. Whatever budget you’ve been given for digital procurement transformation shouldn’t just be spent on procurement software.
First of all, you need to get your data clean enough for any software to provide useable, actionable insights and data that’s able to drive business transformation. Don’t spend your budget on consultants to implement complex software. Why not choose a better value platform instead? Then, leave some of budget left over to invest in cleaning your data.
Think of expensive software with garbage data being fed into it as being like someone who gorges on junk food all day purchasing an exclusive gym membership.
For more on dirty data, why not check out the podcast episode I did together with my good friend and data classification guru, Susan Walsh.
7. Lack of effective internal communication strategy
If you want your team and wider stakeholders to be interested in what you’re doing, focus on what’s in it for them.
A couple of examples:
Finance – if we have good supplier and spend data, we’ll be able to substantially improve DPO, reduce inventory and have more predictable cash flow.
Accounts Payable – would you like to reduce the number of queried invoices, after-the-fact POs, urgent payment runs, administrative tasks and invoices getting lost?
Stakeholders who need to buy something – wouldn’t you prefer to go into an easy-to-use system yourself and order what you need, with an agreed price and lead time?
Legal – would you like to spend less time on routine supplier contracts and NDAs, while increasing the visibility of what contracts and terms we have with our suppliers?
Investing in clear communication techniques is also essential. Have you ever explored producing informative content with the help of graphic designers, podcasts, videos and brochures?
Well, then maybe it’s time to talk to your marketing department. Then, talk to your internal comms team to get the message across to the right people, through the right channels.
Procurement is terrible at this. Think how well Sales, HR or Environmental, Health & Safety teams communicate compared to us. They’re not perfect by any means, but they’re way better at it than we are.
8. Underestimating user experience as a core requirement
Give your stakeholders and suppliers software that is easy to use. It really is that simple.
Sacrifice features and complexity for ease of use. The younger workforce will demand this.
While legacy ERP systems have a user interface (UI) straight from the 1990s, business-to-consumer (B2C) apps have invested heavily in user experience (UX).
Have you ever used Uber, Tinder, Audible or Airbnb?
Would you rather have software with fewer features, but which everyone wants to use? Or a platform that does everything but looks horrible? And requires extensive training to figure out how to get the most out of it?
Sure, your digital procurement transformation needs good data and the “why” as a bedrock. But the easiest own goal you can score to sabotage your digital procurement transformation is choosing clunky software.
9. Inadequate budget to plan and execute successfully
Executing digital transformation from start to finish isn’t just about having a budget to go out and buy some software.
You’ll need to consider a budget to clean your data as part of the cost. Perhaps, depending on the solution and the problem, you’ll also need consultancy to implement it and train users.
An experienced interim manager or freelance expert may be a viable alternative to a consultancy. Someone who knows what they are doing, working with you as a subject matter expert (SME), may offer better value. A team of fresh graduates from a major consultancy, with little hands-on experience of cultural and political issues, may not be the best choice.
Choose wisely in terms of software partner, and you may not need to spend a fortune on consultants. As we mentioned above, user friendly, easy-to-implement software can save you in the long run. Implementation, integration and ongoing support are often where cost creeps in to any project.
This can be avoided if you think smart and ask the right questions during the sourcing process. Do your due diligence, or get us to help you with it! Speak to existing customers. And don’t blindly trust reviews and research.
10. Expecting unrealistic results
Digital transformation takes time.
Procurement is a function which has typically suffered from under investment. Both in terms of talent and systems. You’re not going to turn things around on a sixpence. Nor will digital procurement tools solve all of your other underlying issues, which may require a lot more patience.
It took Margaret Thatcher until well into her second term as Prime Minister to show significant results and successes.
What’s my point here?
It’s a marathon, not a sprint. Even the most eagerly awaited change often doesn’t materialise. Not everything you want to do will be a resounding success.
Digital transformation takes courage. Some messy compromises will probably be necessary, to hark back to politics again. You’ll also need the vision and the grit to take unpopular decisions. Think like an entrepreneur, not a technocrat.
One area where you do have full control, however, is in the choice of solution provider. You can’t pick your stakeholders. Depending on where you’re located, you may also be restricted to what extent you can hire and fire in your team.
But the choice of provider is completely within your hands. Choose wisely. Take time to understand the market and what’s out there.
We can help you with that. Schedule a call here if you’d like to discuss your thoughts and concerns in more detail.
