Business disruption might delay procurement transformation, but shouldn’t derail it.
Up until very recently, when the current COVID-19 crisis became the dominant force in global affairs and business, organizations throughout the world were focusing on business transformation, including procurement. This overarching term for how a business organization runs actually results in transformation in every department and function of the organization. Now businesses are focused on facing the greatest threat many of them have ever faced.
But it is important to acknowledge that this pandemic will end…and when it does, businesses will have to reassess many aspects of how they operate. That means even though your business is coping with the impact of the virus, your management team should also be planning for what happens after the crisis passes.
Answer the “Why?” for procurement transformation
Transformation is not a one-size-fits-all movement. For some companies, the procurement team may start with something small, like re-organizing the staff’s role of updating policies. For others, larger moves may occur, like rebuilding the entire procurement organization from the ground up across people, process, and technology. The first step to success is establishing the answer to a simple question: Why? What do you hope to get out of it? The fact is that transformation, without well-defined end goals, will likely achieve sub-optimal results. If each decision is made on its own, it becomes tough to see the bigger picture. Defining the goals beforehand and using them as a guiding light when it comes to decision support is key to a successful transformation. We like to refer to these as Target Business Outcomes.
What is a Target Business Outcome?
Target Business Outcomes (TBOs) enable groups to make decisions based on which choice will best align with one or more TBOs. A TBO is NOT ‘implement technology’ or ‘strengthen procurement policies.’ Those are potential means to an outcome. Instead, it is imperative to determine why you want those to begin with. When you start asking why you want to do those tasks, you get TBOs. A TBO defines the end goals. Maybe you want to implement technology to increase reporting capabilities, or you want to strengthen procurement policies to reduce maverick spending. This also ensures you are making decisions for the right reasons. A Target Business Outcome of ‘implement technology’ when the real goal is to increase reporting capabilities will often end with decisions going against the true end goal. Once the TBO is properly defined, decisions can be made to support it.
Imagine if the decision is whether to require all requisition line items to have a required commodity tree selection. A TBO of ‘increase reporting capabilities’ would mean the answer is “definitely”. A TBO of ‘streamlining the user experience’ would likely make the answer “no”. A key part of strong TBOs is whether you can define success and report off of it to show data-driven evidence that you were successful. Continuing the example above, increasing reporting capabilities can be demonstrated at the end by the types of reports you can generate, how much time it takes to clean up the data, or new insights that can be gleaned.
Planning now can help avoid problems later
Transformation can get off the rails quickly if you don’t keep your eye on the prize. Target Business Outcomes not only ensure you know what your end goal is, it helps you make decisions all along the way. So while you focus on what you face today, remember that tomorrow will come and you need to be ready to make the best, most informed moves possible to optimize results.
Business disruption will happen more frequently and more intensely as time goes on; see what you can do to prepare now to be more agile and resilient and contact us for a no-obligation demonstration, or speak to one of the transformation experts at Corcentric.