Digital Procurement – Pack your bag, you are going on a journey

The Hackett Group and Ivalua have been working together for some months to assess the status of Digital Procurement transformation and lessons learned from early adopters.   CPOs in many organisations have progressed beyond the planning stage, with Ivalua actively working with many of them and supporting their journey.

The Hackett Group published this Report,  State of Procurement Digital Transformation, Part 1: Value Drivers and Expectations  in April 2018 and Lessons Learned by Early Adopters, Part 2 in September 2018  and over the course of this year we have been lucky enough to have Amy Fong, Associate Principal at The Hackett Group present the findings of the report on two webcasts, one in July and  the second of which took place on the 30th October.   You can watch the webinar replay here which also featured Ivalua’s VP of Product Marketing, Vishal Patel.  

Here are the top takeaways from that Webinar and from the full research.:

1. Digital Procurement – a place we are planning to visit soon (and hopefully stay)

There is no doubt that Digital Procurement is a reality for many organisations.  It is no longer a question of if, it is about when organisations move more into this model.  Ivalua has seen among its customers a huge appetite for innovation, not least because it is making the role of Procurement so much more strategic and also, put more bluntly, it’s becoming a much more interesting role.  However, as with any bold step, it is better not to walk into the unknown and Early Adopters and Top Performers can light the way for other organisations coming through on their Digital Procurement Journey.

Early Adopters are putting particular focus on data and analytics and Amy Fong says that Procurement groups understand the importance of clean and harmonized data that can be used to monitor, analyze, and even predict outcomes, for better decision-making.  You will see from the slide below that Top Performers are putting strong emphasis on this and you may want to follow that example.

2. Getting Everything Shipshape before you Depart

It’s boring, and it’s so not sexy, but everyone knows that adage, rubbish in, rubbish out and this just as true for Digital Procurement.  A staggering 73% the organisations that The Hackett Group surveyed have ongoing Master Data Management initiatives. Remembering that these are Early Adopters, this is worth taking note of.  If your organisation does not get the data side right, all of those clever things you want to do further down the line with AI, RPA and so on are in jeopardy. The biggest completed action, according to The Hackett Group webinar setting up a Procurement Centre of Excellence, and 23% of Top Performers have started with this. So the message seems to be, make sure you have the right set-up, in terms of your teams and then look at your current analytics toolkit and implement a data strategy.  What’s interesting is that these Early Adopters are all starting with fairly pedestrian initiatives but getting the basics right will mean having time and energy further down the line.

3. Make sure you are Taking Your Team Along for the Ride

In many cases Ivalua customers talk about the serious issues they had when trying to engage their internal stakeholders.  Sylvie Noel CPO, Covéa talks about how people used to complain about the Procurement Black Tunnel and both Deutsche Telekom and Maxim Healthcare had so many issues getting users and/or suppliers onboard with previous solutions that they ended up moving to Ivalua to help them with user/supplier engagement.  Early adopters to Digital Procurement recommend keeping digital channels as simple and intuitive as possible. Although Procurement and its customers lag behind other business functions, they are catching up fast. Procurement can use technology to give that modern digital experience and positive feedback from users is often cited as justification for further investment.   No system is worth the money you invest in it if your users and suppliers will not engage.

4. Not Everyone May Want to Go on This Journey

No-one likes change, and for sure some members of your organization will feel highly threatened by Digital Procurement.   Many will feel that this is an excuse to take their jobs away. In fact, there is a significant skills shortage (source) to help drive Digital Procurement forward.

Early adopters give the following advice.  Develop a culture that is open to change and collaborative.  Develop your own plan and strategy of how you are going to get team members to accept change and also to step up to taking one of the many new roles that are being created as we move to Digital Procurement like Head of Digital Procurement, Head of  Cognitive Sourcing, Head of Digital Transformation. Find and develop subject-matter experts in areas like AI, blockchain and RPA Modernize your team’s analytics, category and sourcing capabilities to become more data and intelligence-driven The more empowered your teams are by having the tools, a clear strategy and also the trust in the Procurement Department’s Digital vision, the quicker your progress will be.  

The Top Performers are investing in role-specific business application functionality to effectively execute work, and once again you see this backed up by Analytics capabilities.  However tools need to be supported by training, and organisations need to help employees transition to new roles and help them to develop new skills to perform at their optimum. In the webinar she touches on the use of micro-learning as a way of enabling employees on the job to learn in bite-size chunks.

5. We are heading toward Digital Service Optimisation, but beware the bumps in the Road.

Once you have got your house in order, you will be ready to move forward. The advice that Amy Fong offers, from having surveyed those already further down the line, is be systematic and focus first on core automation for sourcing, contracting and performance management  Don’t be tempted to jump into AI first. There are many highly reputable and experienced cloud vendors, among them Ivalua, and they will enable you to deploy changes really quickly and affordably. We have many examples on our Youtube Channel of customers who have already successfully travelled this road with Ivalua.   You will have to fight hard to prove that Procurement is a strategic investment for the company. Taking out some of the more process heavy tasks will free up your teams to deliver more value and you will also have examples to point at of Early adopters who are doing this already and also of modern cloud technologies like Ivalua who are developing these solutions as we speak.

In conclusion, many organisations are already leading the way in embracing Digital Procurement, but you must do some basic housekeeping before starting on that journey.  The Procurement Community is highly collaborative and Ivalua counts among its customers leading CPOs from many high profile organisations. Bringing together the smartest minds in the industry and sharing learnings, mistakes and experiences is key to your organisation’s development and we would encourage you to join us at Ivalua NOW in Paris or Chicago where we will be showcasing our Digital Procurement offierings and hearing from our customers and partners, as well as Analysts such as The Hackett Group about how we are all shaping the Digital Procurement Future.

You can read the reports here – State of Procurement Digital Transformation, Part 1: Value Drivers and Expectation and Lessons Learned by Early Adopters, Part 2

And you can see The Hackett Group Webinar Replay here – Value Drivers and Expectations For The Digital Transformation of Procurement

If you would like to discuss your digital procurement projects with Ivalua, get in touch