Procurement and sourcing's transformation has been a top priority, especially as many face a reckoning with legacy approaches now up against contemporary demands and disruptions. When you get to the heart of it, a transformation initiative means that you are advancing procurement processes by making changes that simultaneously involve internal practices, resource allocation, stakeholders, and enabling technologies.
Those changes should be noticeably for the better. There are multiple drivers for procurement’s transformation ranging from data-driven business objectives to the expanding scope of technology disrupters such as Artificial Intelligence.Such transformation efforts may be broadly encompassing, involving multiple aspects of the procurement function, or focus on specific areas of procurement such as supplier relationship management, spend analytics, or strategic sourcing. But all should align to support business and financial goals.
True Digital Transformation or Cosmetic Re-branding?
Projects in procurement digital transformation may very well be just a re-branding of what’s always been done, which is to update things as requirements evolve and change. Just like with home improvement projects (something many of us have embarked on during the pandemic), a true transformation is about making meaningful enhancements that deliver a more satisfying experience and better results. As examples: renovating an older kitchen that is lacking in function and utility; building that backyard deck you’ve always wanted, or converting a bonus “catch-all” space into a legitimate home office.
But like home improvement projects, business transformation initiatives also can be cosmetic only – even if it impacts multiple areas of the procurement function.
Changing out pieces of technology for a different tool that’s essentially 90% the same isn’t very transformative, especially if the new technology doesn’t have a strong future product roadmap. Sure, the consultants may like the project for the billable hours, especially if it involves a lengthy, exhaustive RFP and evaluation process, but does it move the needle more than a little bit?
Other considerations to take into account:
What will be the impact on internal and external parties (i.e. your business “residents and neighbors”)?
Will it impact integrated systems and data flows?
Will the disruption be worth it; is it taking us all to a new place with some great innovation and future-proofing us for years to come?
And how long will this project take, will it be a while before the big reveal, or can we start to enjoy benefits in the shorter term?
Procurement's transformation doesn’t need to be all-encompassing, lengthy, or significantly disruptive to be meaningful.
And perhaps the existing sourcing technologies are fine, but it’s the process around them where the focus is needed and certain functional gaps need to be filled. Or it may be the case that the current tool is holding things back, forcing processes to stay stuck and driving up opportunity cost.
The popularity of best-of-breed or specialist sourcing solution providers is on the rise because existing suite providers are struggling to keep up with technological advancements and support many key strategic activities. A recent Procurement Leaders’ survey found that 48% of respondents who currently operate with a single-suite model are now aspiring towards a best-of-breed approach.
Due to the specialized nature of the providers, best-of-breed solutions can also be an excellent catalyst for change and advancement rather than investing in a full-suite rip-and-replace. Here are some key advantages of looking at best-of-breed products in procurement:
Best-of-breed solutions that address a specific area – such as Sourcing Optimization and Sourcing Automation from Keelvar – can more rapidly drive value through modernization and scalability. Keelvar also has a defined customer on-boarding and success methodology aimed specifically at swift ROI and user adoption. Many customers also opt to integrate our products (via our open API) with key systems like SAP Ariba.
For procurement and IT leadership setting the requirements definition and scope for transformation projects, we advocate that point solutions be included in the umbrella. Those products may not be able to check as many boxes as the larger suites, but pay close attention to the boxes they can check – and how critical those are to moving your business forward.
Looking to transform your sourcing process? Speak to our expert team today and request a custom demo of our offering.