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July 25, 2017

Making the Case for Procurement Technology “Upgrades”

Making the Case for Procurement Technology “Upgrades”

In Part 1 of this series I wrote about making a business case to bring in new procurement technology. All organizations have handled first-time implementations of some sort – whether they are switching to a full platform or adding a new piece of functionality to a system already in place. The thing about new technology implementations is that, after all the effort invested in vetting prospective solutions, executive teams generally accept the notion that having technology in place is better than not having technology in place.

Technology “upgrades,” on the other hand, don’t get that benefit of the doubt. When technology has already been implemented, and procurement is trying to make the case that they need a newer, faster “model,” a different kind of justification is required.

In my opinion, the best way to win buy-in for improved technology is to position it as a dual process/talent and technology upgrade. The best argument for new technology where some already exists is that the capabilities (and therefore the ROI) of procurement are being constrained by the limited scope and functionality of their current technology. Procurement should demonstrate this by pushing themselves forward even in advance of the upgrade approval. Nothing says “We desperately need new technology” like a team of procurement professionals creating macros and working in complex spreadsheets/shared drives because their current technology simply does not allow them to create more than transactional value.

The baseline for current technology performance is likely to be set along the same lines as procurement’s own performance is measured. If procurement can negotiate more savings, reduce maverick spend, and bring more spend under management with less hands-on time, the organization will see improvements in all three categories. Depending on the current level of performance, the increased savings may offset the cost of the upgraded technology.

In actuality, the potential for expanded ROI reaches far beyond procurement. While procurement may initially focus on maverick spend from a distributed buying perspective, there are many other benefits associated with technology that empowers buyers to act in line with procurement processes and governance on their own. More flexibility and faster, easier purchasing processes/approvals enabled by improved technology scale procurement’s impact far beyond the members of their own team.

Focus on the Positive

Beyond demonstrating shortcomings, a business case to upgrade procurement’s technology should focus on the positive. The upgrade request should not start as a bashing session where in-place technology is blamed for being bad, inadequate, or outdated . Instead, procurement should take the opportunity to illustrate that the potential benefit to the business reaches far beyond “what we are doing today, and better.”

Procurement technology may be owned by procurement but it should not be limited to procurement. By thinking beyond their own needs to include those of colleagues in other functions, technology requirements can be consolidated and budgets combined. The company can implement a platform solution that benefits everyone — even IT. Managing more data through one solution increases the benefit from analytics and reports and minimizes the impact of bottlenecks and redundancies.

The current technology may have been perfect when it was selected and implemented, but an ambitious leadership team should expect procurement to progress—and work inclusively with other functions to meet overarching business objectives. If the request process can validate (or create) the perspective that procurement is a team on the move—maturing, expanding, and becoming increasingly strategic—two positive outcomes may be achieved: 1) the request for the new technology is approved, and 2) procurement is able to have a positive impact on their personal brand in the eyes of the executive team.

Skin in the Game

During the selection and implementation process, procurement should constantly demonstrate what they are willing to do to ensure that the investment in new technology pays off. Any experience with technology gained up to this point should be used as a foundation, but procurement must consider all new data paradigms and alternate functionality with an open mind. After all, once procurement requests permission to invest in change, it will reflect poorly on them if they then try to limit the possibilities.

Any process or talent changes begun in advance of the purchase approval should continue in earnest during implementation. In fact, their progress should be included in implementation status reports. To reinforce the fact that procurement’s progress is being impeded by the current technology, it should be clear what additional improvements procurement will be able to roll out post-implementation.

While procurement can easily demonstrate how they will benefit from a technology upgrade, they must also anticipate the impact on others — IT in particular. No other force has the potential to stop an upgrade request in its tracks than a “thumbs down” from IT. Here are some suggestions for the points you will want to consider in advance, so that ideally IT becomes a champion for procurement’s requested change rather than a roadblock:

  • If the upgrade will introduce new functionality by integrating two solutions, look into how complex/straightforward the integration will be. How much risk is there of disruption and how much will be required of IT, both during the initial connection and ongoing?
  • Speaking of making things easier for IT, maybe the time has come to leave on-premise altogether and migrate procurement’s solutions to the cloud. The levels of security and support associated with cloud platforms have increased significantly, potentially eliminating the need to burden IT at all.
  • And don’t forget to think holistically. Is this your first integration-based upgrade or will it join a pre-existing conglomeration of solutions? How many point solutions and integrations should you manage before the right answer is to move everything to a more cohesive, single codebase platform?

Continuing the Trajectory

If procurement has been successful in making the case that their trajectory began with the current technology, and that it will be advanced by the new technology, it stands to reason that the executive team will want to know where procurement sees that trajectory leading them in the future. What talent investments, up-skilling, process improvements, and creative strategies will become part of the ROI moving forward?

Speaking of ROI, it is essential that procurement make use of any new functionality that was used as a justification for upgrading their technology. While the need is easy to feel and even express, making real changes is hard. Procurement should establish a schedule for rolling out new functionality and closely track the technology road map. Taking an active role in testing and providing user feedback right from the outset not only creates the opportunity for the team to shape their technology, it positions procurement internally as a power user – so that when they approach the executive team to request their next upgrade, there will be no question they are ready for it.

While it is easy to focus on savings and ROI, procurement should not forget to address costs such as the stress caused by implementations, integrations, and upgrades, the lack of scalability when procurement wants to allow more buyers or business units to leverage their existing technology, and the ability to incorporate functionality that has not yet been envisioned. Efforts to upgrade technology should focus on the options they keep open as well as the “boxes” they check off. Make the most of every upgrade request, as it will need to meet procurement’s—and the organization’s—needs for some time to come.

As Ardent Partners stated in their report CPO Rising 2017, “Transformative strategies designed to leverage the collective resources and capabilities of stakeholders, organizations and trading partners will be the keys to procurement’s ability to unlock more value in the future.” Those strategies will have to include technology for procurement organizations to become, and stay, best in class.

Check out Determine’s resources to learn more, or contact them to schedule a demonstration.

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