In his fifth blog of the series, Peter Smith discusses how best to go about managing successful procurement change. Read on to learn about how to start your procurement change program and what it takes to that successfully.
In this series, we’ve looked at why procurement change is often difficult and described the benefits of having a clear long-term vision allied with a focus on quick wins and early deliverable improvements. We looked at the people issues, and then picked up on some of the nuts and bolts of change management around governance, reporting, and benefits tracking.
But of all the questions I’m asked about this sort of program, I think the most common is “how do we get started”? That can apply in a couple of different ways. In some cases, it is a new procurement leader who is faced with a highly sub-optimal situation, where we might politely describe the function as “a bit of a mess” (I have heard much stronger words used!)
Address “the mess” and drive through the change
In others, the question is addressed more specifically at the technology situation. This may be a somewhat more mature or capable organization in procurement terms, but there may be only a limited use of procurement systems, or it may be that the picture across the organization is variable or confused, with multiple ERP and P2P systems, maybe some use of sourcing platforms, but little consistency. Even if there is some clarity in terms of a desired technology endpoint, there are often tricky issues around how to get there.
When faced with that first situation (“the mess”), a leader will need to consider the points we talked about in the second article of this series, defining some long term vision and looking for some quick wins along the way. But the question of capability must be faced too. Unless we’re talking about a very small organization, even the strongest procurement leader is going to need some help. So, they have to quickly assess the existing procurement team or perhaps others in the organization who might be able to help and work out if there is enough talent, knowledge, and enthusiasm to drive through the change.
Even if the longer-term development of those existing staff is part of the plan, then if the capability is not evident in the short term, either recruitment or supplementary resource from consulting firms or the interim market may be required. And the best procurement change managers I’ve seen are very clear on this. They don’t hang around, but quickly build a team that is committed to the program, often telling existing staff “if you’re not with me on this, you might want to go now!” That sounds harsh, but I’ve also seen the stresses of trying to drive change when it is resisted from within.
Focus on the procurement process alongside the procurement technology
So, let’s assume that issue is resolved, and now the question about sequencing technology change may be central. However, issues of process also need to be considered alongside the systems. Here, there are divergent views. Some organizations look to define the key processes (for sourcing, purchase to pay, contract, or risk management) they want to use and drive the process change first. Once that has been embedded, they then look to find technology that best supports their process, perhaps looking to tailor the systems to meet their requirements.
In other cases, organizations will simply adopt the “standard process” as defined by the technology, so the process and the technology change are in effect simultaneous. New systems are implemented, and staff adopt the new processes that fit the particular system.
Historically, that second option was seen as high risk, particularly if the process change was significant, as two variables could prove troublesome: the new process and the new technology. But for some organizations, it may work well. The technology can force the change – if the only way you can buy anything is to follow the process and use the system, then people really have to comply. But if your organization can’t or won’t apply that sort of mandate, then attempting too big a change can rebound, and it may be better to implement a process change than implement the technology.
If you go for the two-stage approach, then it does make sense to align your initial process change with what is likely to be appropriate once you do bring in the technology. So even if you feel you need to make some process changes before a major tech investment, then do get familiar with how the leading systems work, what they can and can’t do. And do make sure your process design is appropriate; the worst of all worlds would be trying to tailor the technology to meet your bespoke yet ineffective processes!
Quick wins from procurement technologies
The other point to re-iterate from earlier articles is that there are many aspects of procurement technology that are relatively self-standing and can bring benefits quickly. Certainly, you need to get visibility of spend quickly, but even here there are different potential routes. Spend analysis gives you a historical view, but you could focus on invoicing initially, allowing rapid control and analysis of current spend. That could be a quick win compared to totally re-engineering the whole purchase to pay process. Or making use of an auction platform in some appropriate areas could be a quick win whilst you restructure the end-to-end category management approach.
The goal is to drive benefits in months rather than years, and make sure there are successes to report, whilst also having clarity about the long-term goals. That suggests getting this sequencing right is an important success factor in any major change program.
Read the whole series!
Feel free to revisit each one and take note of their wealth of useful information and insights.
Learn about Basware e-Procurement.
Read the first blog in the series, “Managing Procurement Change – Introducing Our Insight Series”
Read the second blog in the series, “Procurement Change – Speed or Rigour? Or Can We Have Both?”
Read the third blog in the series, “Managing Procurement Change – Taking People with You.”
Read the fourth blog in the series, “Managing Procurement Change – What Gets Measured…”