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If you talk with most procurement professionals today, they’ll tell you Digital Transformation is high on their list of priorities for 2021. Yet, they likely were saying the same thing 20 years ago. So, why is there still so much work to do? It’s certainly not for lack of technology. Our industry is teeming with digital tools promising to solve all that ails your procurement ecosystem.
After participating in dozens of transformations and observing many more, I’ve concluded that the problem isn’t the technology itself. The friction typically involves people and processes. Let me explain by sharing three common mistakes I see over and over again with digital transformation.
I can’t emphasize this enough: Technology is NOT a strategy; it is an enabler you employ to achieve your strategic goals. For example, if your strategy is to drive compliance, there is a platform to help you with that journey, but it is not the only way you are going to go after that goal. Similarly, if your strategic objective is to save money and manage cash, there are various tools that can help, bot solely relying on the digital solution is guaranteed to be unsustainable and ineffective.
How to do better: In my experience, technology eventually shines a light on broken processes and inefficient organizational designs. There is no longer any place to hide these inefficiencies and so the digital technology fails to solve the issue. It makes better sense to first identify the issue(s) you want to solve for, analyze and fix existing processes, and then employ the technology that best enables your team to succeed.
Bigger, shinier, more complex technology solutions may seem designed to answer all possible challenges, but oftentimes they only serve to muddy the solution. Simplicity is where the magic happens. Afterall, the goal of technology is to make life easier, not more complicated.
How to do better: It’s always best to start with the strategic objective you are looking to address and then search for the simplest, most straight-forward technology tool to help solve for it. As your organization becomes more mature, there is always a “fit-for-purpose” application or feature you can add. If you just starting out on your digital transformation journey, I counsel starting with a project that doesn’t require a vast resources, expense, or heavy lift for the IT organization; think RPA, chatbots, AI/ML tools to help cleanse and improve the quality of your data. Start small and focused and build from there.
At the end of the day, your technology solutions are only solutions if they are adopted well within your organization. You can have the best-looking user interface, but if no one uses it the digital tool, it will not deliver the promised business value.
We recently worked with a large financial services company that planned to implement a digital system to help drive productivity. The client bought the tool but only saw single-digit adoption. Why? Because end-users felt confused and unsupported. They struggled with out-of-the-box training, lack of an established help desk protocol, and an underfunded engagement and communications plan.
How to do better: You can avoid this fate by taking a user-centered approach at the onset before you purchase or deploy any new technology. How do you do that? First by involving a mix of your targeted end users to help identify the business problem and design the solution. Depending on what you are solving for, this could include internal stakeholders, your finance team and even your external suppliers. Anyone who is expected to interact with the digital tool should be represented in this design phase.
And second, by investing more than you think is needed in the change management program designed to foster broad-based adoption. It always costs more than you initially might care to budget for this second piece, trust me. Consider a phased approach to the roll-out, rather than a big splash to allow for feedback and real-world learnings that can be used to improve the tool before it goes out more broadly.
In summary, when considering a digital solution, I encourage a focus on ability of the tool to address your business need, simplicity of the solution, and usability for the end-user. To hear more context behind these ideas, I invite you to listen to a recent talk I gave along with Mert Kacmaz, VP of Indirect Procurement at Mars, as part of the ISM World 2021 meeting. Also, consider downloading our Digital Roadmap Handbook.
Corporate Executive Vice President & Head Procurement Services
Alpar Kamber is the Head of Procurement Services at WNS. He was the Founder and CEO of Denali Sourcing Services (now a part of WNS), a next-generation procurement services provider that enabled procurement organizations to influence more spend, and execute more effectively and efficiently. Prior to Denali, Alpar developed his cross-industry expertise in procurement value chain while in management positions at Ariba, FreeMarkets, Diamond Technology Partners and E&Y. He holds an MBA degree from the Tepper Business School of Carnegie Mellon University.