Simplifying Procurement Technology

8/8/2019 Simplifying Procurement Technology

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SimplifyingProcurementTechnology

www.globaleprocure.co

Compliance Maximized | Savings Realized

Issues, Challenges & Trends

[email protected]


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Is Technology to Blame?

Simplifying Procurement Technology

Compliance Maximized | Savings Realized [email protected]

www.globaleprocure.com

Technology is an enabler for procurement transformation, but it is

certainly not the only means to reach the end goal. Along with

technology, we need the right combination of people and processes, to

ensure that we derive full value, at every step that we take in the

procurement transformation journey. It is a fine balance.

The challenges of successfully deploying procurement technology

have been well articulated in many thought leadership sessions till

date; and stories of multi-million dollar failures have also spread

through the grapevine. But has there been a fair representation of the

core issues?

Consider the poor rate of adoption of electronic procurement systems.

Who is to blame? Users complain that they cannot find the exact 'item'

they want to buy, especially when they need to get their job done in a

hurry. The procurement team, on the other hand, has no 'easy' way to

find out what the users plan to buy ahead of time, to be able to

effectively aggregate demand, negotiate with suppliers and on-board

preferred suppliers with their catalogs. It has been a classic

conundrum. Consider the poor standards of purchasing compliance

(that no one wants to talk about). Who is to blame? Users complain that

they are not aware of changing procurement policies and preferred

suppliers, and emphasize that every purchasing decision is unique,

given the constraints and scenario at any given point of time.

Procurement teams complain about the violation of preferred vendor

and pricing policies, that appear routinely, and the seeming

intransigence of users to understand and appreciate the merits of

standardization.

Consider the poor standards of visibility? Who is to blame? Users

complain about imposition of abstract definitions and standards to

describe products, parts and service items, when they already have

existing systems that works. Procurement teams grapple with

islands of data (each locked to their own standards) and fail multiple

times when attempting to build the utopian data management

infrastructure powering global visibility on a dashboard.

Technology is an enabler for

procurement transformation,

but it is certainly not the only

means to reach the end goal.

Along with technology, we

need the right combination of

people and processes, toensure that we derive full

value, at every step that we

take in the procurement

transformation journey. It is a

fine balance.


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So who is to blame?




Is it the User Community, the Procurement organization, or the

Vendors? Or is it just BAD technology?

Procurement technology has evolved as a series of responses to

challenges articulated by the user community, but we have possibly

lost sight of the big picture trying to translate the minutiae. Time-

tested, manual, paper-based processes have been internet-enabled,

with a mandate for automation, promising enhanced productivity.

Enterprises have jumped on each new bandwagon that have come

their way, and built silos of procurement process automation, failing to

connect them as one meaningful whole entity. Projects have been kick-started after early failures. Consulting firms have been shown the door.

If there was a survey, one would certainly like to benchmark the

median number of vendors and tools that have failed in the path of the

procurement transformation juggernaut. 3, 5, 10 Hazard a guess!

The responsibility for failure certainly lies with all of us. As users we

have refused to 'buy-in' to the big picture; savings mandate have never

been a personal responsibility, and no one held us accountable. As

Procurement heads, we often failed to understand the needs of our

internal customers, and were insensitive to the needs of the user

community. As vendors, we have focused on solving the problem in

parts and pieces, and overemphasized the use of technology, at the

expense of people and processes.


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Technology can make or break our lives. Consider the spectrum of

usability experiences in our personal life. On one hand we spend

hours on the couch with a remote control and get to know only 20%

of the (50+) control keys over its lifetime; on the other we have theTM

Apple iPOD with its minimalist design that we adopt in a split

second, and have no need to learn beyond the click-wheel. We

struggle to locate a missing folder on our desktops that we are

positive lies hidden somewhere, while on the big white page ofit takes less than a second to locate anything

anywhere on the web. Technology can be simplified, and that in turn

can make our lives simple. Wouldn't you agree?

Is it easy to make things simple? Positively not. The massively

distributed computing architecture along with complex web

spidering and indexing algorithms at the Google back-end, power

the simplicity in the front. Billions are expended by Apple R&D, in

their search for simplicity in UI design. Simple does not equate to

trivial. This is the reality we need to wake up to within an enterprise.

Simplified procurement technology can spur adoption. That in turn

can accelerate the entire transformation process.

www.google.com

Technology can be simplified,

and that in turn can make our

life simple.

Wouldn't you agree?

Lets simplify Technology!


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We will submit FOUR (4) key issues that need to be addressed in the new

generation simplified procurement systems.

DATAMANAGEMENT

DATA MANAGEMENT

FEATURE MANAGEMENT

COMPLIANCE MANAGEMENT

VISIBILITY MANAGEMENT

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Enterprises cannot afford to build multi-million master data management

infrastructures using spaghetti code that fetches data from multiple disparate

systems, maintains one clean datapool, syndicating it back to source systems

when needed. It is easier done on paper than realized in the real world. We can

all learn to live with bad data, as long as we have efficient tools like Google to

help us find what we want, when we want. We could turn the Procurement Data

problem on its head, and adopt a simpler approach to managing the same.

What if we could

?Let people live with multiple products and services taxonomies

?Free users from the burden of categorizing data at source

?Free vendors from the burden of submitting product catalogs

supporting multiple taxonomies

All users care about, is discovering the product or service that they want to buy,

within an electronic procurement environment, when they need it.

All procurement teams care about, is ensuring that the user stays informed

about preferred products and services that are contracted within the

organization and prompting user about

purchasing guidelines on the same.

The inventory folks want to notify the user, if a similar item is in stock and the

sourcing experts want to get alerted, when a lot of similar items are being

bought, because that represents a significant sourcing opportunity.


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FEATUREMANAGEMENT

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Enterprise cannot afford to keep writing custom code to solve all their business

problems. We have seen the rapid rise of packaged applications and death of

bespoke solutions that mired the enterprise in the nineties, but even

packaged solutions came with their own little bag of secrets, a.k.a the 'feature

list'.

Every enterprise procurement process is wired differently and business

analysts insist on mimicking these processes on new platforms, to minimize

change management issues. However most packaged applications have very

little flexibility to re-wire a process (packaged as a feature), and customization

translates to expending millions of dollars in professional services.

So enterprises learn to either live with problems and limitations (read lack of

features), or face huge slippages in project timelines as code warriors battle it

out translating business requirements into additional software features for

the next release. Over time, this further fuels the classic 'feature-warfare'

between vendors as unsuspecting buyers 'buy' features which others paid-for

to 'build'.

Business Users could care less about the published feature-set of COTS

(commercially off-the-shelf) procurement technology to cater to their

procurement and sourcing processes, if given a choice.

Work-flow need to be flexible, giving ability to re-wire processes on the fly,

without changing any underlying code. The control of the process has to pass

back to the business user from the vendor. Data and analytics need to be

available every where. Business users need to be empowered to self-publish

'actionable information' as per their choice, through a corporate dashboard,

enabling collaboration and influencing the right strategic decisions.

Dashboards cannot afford to be hard-wired with pre-defined formats and

templates.


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COMPLIANCEMANAGEMENT

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Achieving 100% compliance with corporate procurement guidelines remains a

distant dream, as stake holders remain locked in conflict when it comes to

implementing 'controls' based on policies and guiding procedures, within a

sourcing and procurement technology platform. Over time enterprises have

matured and employed visionary leaders as change agents, who rally support

for a common cause. Compliance today is thus driven exceptionally well by

people and extremely poorly by technology. Left to technology, very little would

have been achieved in terms of compliance management.

Master Data compliance policies that are governed by tight controls (ex.

explicit authorization on who is eligible to enter and edit a master data record)

translate to delays of several days, before a record can be entered on a system,

triggering a purchase process. Contract compliance policies that block every

requisition, means countless re-routes between users, buyers and supervisors

for approval. More Control for Better Compliance is the best that current

technology has to offer to enterprises today.

The reality of business is dynamic and rule books need to be rewritten every so

often, to stay in sync with the global supply and demand chain. Tax ruleschange, Supplier performance metrics change, markets change almost

everything changes in the real world. Procurement processes can no longer

afford to be driven from static policies and procedures hardwired as 'rules'

within a particular process environment.

A compliance framework needs to be flexible giving business users the ability

to edit policies and procedures in simple business language. An interim

translation layer is needed to convert policies and procedures into business

rules that guide and drive compliance. If rigid controls are put in place, the

system would become unusable and with time witness declining adoption

leading to a failed transformation initiative.


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VISIBILITYMANAGEMENT

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The concept of visibility within a procurement organization has been

traditionally limited to an archaic definition of aggregated historical spend. It is

a fact that enterprises have struggled to get spend visibility, shifting from ad-

hoc query based reporting to OLAP tools, and then flirting with dashboards.

The wake-up call about poor data quality came in quite late, but millions had

already been expended trying to scrub data using excel based tools with

expensive consulting eye-balls. Possibly lot more was spent in cleansing

supplier content, matching records against proprietary databases.

The problem of visibility is not just historical. Probably too much emphasis has

been put on spend analysis (for the right reasons though), that enables

discovery of savings opportunities. Discovery of opportunity is one thing but

harnessing these opportunities to formulate the right sourcing strategies,

revamp and renew contracts, and drive compliance to realize the savings

identified, is a totally different ball game.

The issue of visibility is not just about historical spend data, but 360? across

the entire procurement transformation value chain.

Users want visibility into prefer redsuppliers and contracts at the time of

making a requisition, Sourcing Experts want deep visibility inside commodity

categories and supplier performance metrics, Vendors want visibility inside

their electronic invoices and forecasted demand, and corporate chieftains

want visibility against their stated compliance drives.


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So who is to blame?

Procurement Technology needs to morph and become more 'business

friendly' than its current state of being. Granted most products have

become mature in terms of feature sets and strategies, but the key

issues of underlying data, 360 degree visibility, compliance

everywhere and feature management, remain poorly addressed

resulting in slippage of projects, and retarding adoption.

One trend towards simplification is the shift to on-demand

procurement transformation platforms. This is a movement in the right

direction, though on-demand today, comes at a price.

Vendors are not able to leverage the multiple instances of software

that they setup for their customers, and in almost ALL cases, on-

demand is only about outsourcing the headache of infrastructure

management. On-demand could mean a lot more if the core

technology was simplified, and cast in the right framework.

For e.g: simplified services oriented architecture can help create

massively multi-tenanted procurement platforms, where participants

can leverage a common knowledge base.


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Procurement Transformation will never be a stand-alone exercise for any

customer; it shall succeed only through participation of partners and vendors,

and running a mix of processes both inhouse and outsourced. Both vendors,

partners and customers will stand to benefit if collaboration is enabled in a multi-

tenanted setting.

A simplified Data Management framework where an entire organization relies on

ONE standard (such as UNSPSC) to connect different processes, is a better bet

than building complex master data management networks. A light-weight

standards based crosswalk along with a coding engine embedded at-source will

help keep data clean, from the point of entry to the warehouse, and keep the data

business-friendly, enabling people to view the data in a format of their choice and

defining standard.

'Compliance everywhere' will not remain an utopian dream and can be realized

only when it becomes easy to wire-up a business process with a generic

compliance 'service'. Since compliance requirements are dynamic by its very

nature, a process manager or supervisor should be able to use business rules to

drive compliance, on-demand.

Feature Management will make the procurement transformation exercise very

investment friendly. Users should be able to pay for features on the tap. Users can

pick and choose modules to start the journey with the lowest investment

possible, but quickly spread their wings as they realize the benefits to their

bottom line. A very aggressive roll-out and deployment capability will mean that

customers are not penalized by the limitations of a stack lock-in.

The realization of this vision of simplified technology is not far away. Many

vendors are aggressively engineering services based procurement platforms,

and are driven internally by such a vision. Customers on the lookout for potential

solution partners must balance their search for credibility and proven solutions

with 10 demonstrable evidence to stay on the leading edge.

Technology is changing fast, and one has to safeguard against obsolescence. Yet

at the same time, one needs to safeguard the investments being made, by

putting the right combination of people and process expertise to harness the

benefits. Ultimately it always is a people, process and technology game.

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Tech Trends worth watching

?Procurement Technology will get increasingly simplified while

undergoing radical design changes to adopt a services oriented

architecture. It will be independent of underlying transactional ERP

systems. The technology will be thin and lightweight, and deployed

across a global virtual organization, on-demand.

?Business Stakeholders will drive the selection, design and

implementation of procurement software, and IT groups will be

increasingly kept out of the loop.

?Procurement Teams will prefer flexible software, delivered on-

demand. Feature Sets will give way for the 'ability' to drive using

business rules.?Procurement Technology will be built 'virtual organization' ready.

Procurement processes will move off-shore, co-locate, or be in-

sourced as the market demands, and software has to be made

ready to deploy anytime, anywhere.

?Data Management, 360 Visibility and 'Compliance everywhere' will

be the 3 key issues that will make or break a procurement

transformation initiative. Most other features will be a commodity

and may need to be custom wired to match the particular demands

of an enterprise.


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www.globaleprocure.co

Dr. Subhash MakhijaCEO, Global eProcure

About the author

CONTACT INFO

(732) 382- 6565

www.globaleprocure.comVISIT US AT

CALL US AT

EMAIL US AT

[email protected]

Global eProcure, 100 Walnut Avenue,Suite 304, Clark, NJ 07066

Do you subscribe to the vision of

simplifying procurement technology?

I look forward to your

comments and thoughts.

Email me at:

[email protected]

Global eProcure is a leading procurement services company offering

a unique blend of consulting, technology, and procurement

outsourcing. Our goal is to help our clients achieve their compliance

and savings targets through tailored solutions that combine the right

combination of innovative technology, industry expertise, and proven

best practices. Focusing on realized savings that directly impact the

bottom line is how we measure the value we bring to our customers.

Global eProcure is a privately held enterprise with global

headquarters in Clark, NJ and offices throughout Europe and Asia.

For more information, please visit www.globaleprocure.com

As the Chief Executive Officer of

Global eProcure, Subhash has been

instrumental in guiding Global

eProcure into one of the fastest

growing technology and consulting

companies in the U.S. Subhash

provides the vision and leadership

critical in building relationships with

investors, customers and strategic

partners.

About Global eProcure:

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Simplifying Procurement Technology

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