When advocating for Procurement’s role in supplier evaluation and management, we often deliver the following advice to our internal stakeholders:
“It is hard to be objective about the supplier landscape in a space you manage so closely.”
“We can provide the bandwidth and knowledge to help you evaluate all available options.”
“If you involve us earlier in the selection process, we can make sure your requirements are documented thoroughly enough to qualify and rank your options.”
“We understand that this project is already underway, but there is still time to improve your results by getting us involved.”
Though we make these statements often, Procurement sometimes needs a gentle reminder that we can benefit from our own advice. This is especially true when it comes to selecting and implementing procurement technology. While we buy for a living, Procurement’s core value proposition is based on the idea that objective evaluation improves award decisions. All spend (even ours) will benefit from being managed in the same way.
Working with a third party that specializes in selecting and implementing procurement technology offers a number of advantages, not the least of which is driving business outcomes. While completing a project on time and on budget are important considerations, the implications of prioritizing them over finding the right solution are significant – and long lasting. Although many procurement organizations have one or more IT category managers on staff, they rarely possess current expertise focused on procurement technology because their attention and effort are required elsewhere (like managing categories relevant to the business).
Here’s some good advice that will feel awfully familiar to procurement and which can improve our selection of technology:
The sooner (and more completely) you document business requirements, the better
The actual start of a project to select new procurement technology is often blurred by existing relationships, outreach efforts by providers, and the wealth of industry news dedicated to the topic. Despite all this, Procurement needs to be formal and deliberate about business requirements as soon as possible. It may be tempting to assume Procurement knows enough, but detailed business requirements are always necessary to evaluate, score, and rank prospective platforms. A third party advisor can ensure those requirements are in place and on paper before people start to stake out positions or pick their favorites. They can also allow their detailed knowledge of the market and qualified providers to shape those requirements so that they deliver against procurement’s business objectives. And even though sooner is better, it is (almost) never too late to improve the outcome of a technology selection project.
Separate ‘what’s best’ from what’s best for your organization
In some ways (e.g. cloud hosting), selecting and implementing procurement technology has gotten a lot simpler. On the other hand, business process management, increased automation, and advanced analytics are highly complex areas of functionality that hold a lot of value for Procurement. Under the circumstances, it is easy to feel overwhelmed and instinctively fall back on analyst-designated market ‘leaders’ as the preferred candidates. Experienced advisors can not only make recommendations about prospective providers (considered and overlooked), configuration, and implementation, they can also provide valuable input about any process or organizational changes that will be required to ensure the desired ROI and sustained adoption.
Know when to call in an expert
Within many spend categories, telecom for instance, it is considered a standard best practice to work with an objective category expert. These third parties are dedicated to a given market or industry and live it on a daily basis. They are intimately familiar with the latest and greatest solutions available at any given time, a challenge that is particularly evident in technology markets. S2P software providers do as many as 3-4 releases per year, so unless someone is dedicated to the space, it is very hard to keep up. Any knowledge that Procurement builds up during the selection phase quickly becomes dated, making it valuable to speak with an expert before going back to market.
Reflect all roles, responsibilities and inputs
One of the reasons Procurement plays such an essential role in everyday sourcing decisions is because we can incorporate multiple points of view and perspectives in the award strategy. The same is true for procurement technology selection. Although Procurement is the ultimate owner, many people in the enterprise will be affected. All of their voices should be heard: in the definition of business requirements, in the evaluation of qualified options, and during implementation planning. Finance, operations, and more should be represented, even taking an active role in user acceptance testing. It is more natural for an objective third party to ensure these are more than just ‘courtesy’ interactions.
Don’t place too much weight on an incumbent supplier’s advice
Procurement often works with stakeholders who insist they have sufficient market intelligence because of their close working relationship with an incumbent supplier. When it serves as the basis for an important decision, intelligence has to be validated against multiple sources. Procurement knows this fact all too well – and as such, we need to hold ourselves to the same standard. This is especially true when there is a high degree of integration between procurement technology and other internal systems. Suppliers know this; the switching cost is high and they benefit from a lack of incentive to change. Their advice needs to be considered in this context and taken with a grain of salt.
It is Procurement's job to help companies avoid the common pitfalls of supplier selection. In this sense, selecting and implementing procurement technologies is no different. Though many of these prospective pitfalls are the same, the set of decision-influencing factors that need to be accommodated will vary for each initiative and each company. These include maturity, user experience, spend volume, percentage of spend managed via purchase order, and (most importantly) where the organization is today and where it wants to go. Is Procurement focused on cost reduction, supplier management, compliance controls, transformation? Understanding all of these factors, and incorporating them into technology decisions, is critical to implementation success.
Working with a technology advisor allows procurement teams to truly know themselves and recognize their organization’s needs so they can pick the best fit for them - not just what they think is the best solution available. Balancing short-term goals and long-term vision requires a snug technology fit, one that can be vastly improved with an experienced (and objective) advisory partner.
For more information on Source One’s Procurement Technology Advisory Service, click here.