Implementing a digital transformation program for the procurement function extends beyond choosing a suitable e-procurement technology solution. There are several key pre-requisites to keep in mind before embarking on an e-procurement implementation:
You have to recognize, that using a technology solution will necessarily result in changes to the way you do things and the way your processes run. Your technology solution should not simply be digitizing your old processes. Instead, you should be anticipating creating some new processes, new standard operating procedures, new key performance indicators, and new routines.
The shift from manual, paper-based processes or hybrid, semi-digitized processes to a fully digital procurement process requires a mindset shift at both the user and the organization level. Many processes, workflows, organizational structures and standard operating procedures become redundant once a process is digitized.
This requires your organization to be willing and able to adapt to and shift towards a new way of working. Inertia and resistance to change often results in users focusing on reasons why a new system or new approach will not work. The mindset needs to shift, from top management, down to end user, to proactively work to make the digital transformation initiative a success.
Digital transformation helps improves efficiency and increases transparency, both of which can be quantified in their financial benefits. However, digital transformation is also increasingly imperative for large scale businesses to maintain continuity of business and coordination across distributed locations, or during times necessitating remote-work.
While your organization should focus on achieving immediate short-term financial benefits from cost savings, efficiency, and economies of scale, the longer-term benefits in terms of increased agility, better data and intelligence, and fast decision-making are much larger, albeit less quantifiable.
Maintaining the longer-term picture in mind is necessary to keep your organization positively focused on ensuring success for the duration of the implementation and teething period.
When shifting to digital process and technology solutions, you want to ensure you are optimizing your return on investment. This means a) clearly understanding what you want out of your technology solution in terms of results, savings, efficiency and returns, b) being discerning in selecting the overall solution that is best for you and your needs, and c) being discerning in selecting the right set of modules, functionality, and features that you intend to use in your day to day operations.
As discussed above, you can quantify some of the financial benefits of procurement digitization. These include manhour savings, cost savings, cost control, and improved insights leading to better buying. These tangible benefits plus the intangible or longer-term benefits of digital transformation need to be weighed against the costs of the solution. Solution costs include not only the upfront cost and running costs of the solution, user licenses and implementation, but also the training required for users, their required learning curve, and any customizations needed to configure the solution to meet your requirements.
SaaS and cloud-based solutions reduce a lot of the upfront capital expenditure on hardware and user licenses, but even within SaaS solutions, there is high variation in usability, implementation timelines, customizability, and user-friendliness, which needs to be kept in mind.
To keep costs in check, you also need to ensure that you are selecting the right modules and set of functionality. Procurement teams tend to ask for feature rich solutions that have functionality to digitize or automate every single process step and element of procurement work. This is a slippery slope and often leads to extensive scope creep, cost-overruns, and implementation delays. It is often not necessary to digitize every element of the procurement process, and in most cases, it is not feasible to go from a purely manual process to an overly digitized one. For example, automating the creation of a comparison sheet to evaluate offers is helpful. However, automating the scoring of offers may be an unnecessary step that costs more than this saves in time. Choose the functionality that meets all of your core needs but always sanity check to see what is a must-have and what is a nice-to-have.