Procurement Transformation: Corporate Alignment and User Adoption Are Key
Recently, a colleague of mine, John Thompson, posted a few suggestions on how to best bring IT, finance, and procurement together for the most optimal selection and implementation of a source-to-pay solution. His recommendations are particularly important to organizations that are going through a digital transformation of their procurement operations.
His suggestions are spot on, in my opinion. Zeroing in on common objectives, agreeing on business outcomes, selecting an integrated solution rather than several point applications, leveraging a business network, and measuring results with clearly defined metrics are all important.
In fact, the recommendations correlate significantly with what procurement, finance, and IT executives shared on the collaboration of their functions at a recent customer panel session that I moderated at an industry event in Madrid. A similar panel session was held at another event earlier in the year in Las Vegas – both sessions provided valuable insights on how these teams can work together to successfully and sustainably transform their operations.
Here are a few highlights from these sessions on what works and doesn’t work in source-to-pay transformations, along with a few other tips to ensure the best business outcomes.
Close alignment is definitely key
Like John noted in his blog, the people that are in the trenches agree that the most successful digital transformations occur when IT, finance, and procurement work closely together. When these functions are in alignment, they can make their source-to-pay processes simpler, faster, and more effective. In fact, people in both Madrid and Las Vegas made this very clear: early involvement of all stakeholders – well before and during the solution selection stage – and ongoing collaboration is critical.
Case in point: One audience member shared how catastrophic it can be when IT and procurement don’t work together during the solution selection phase. In this person’s company, because IT wasn’t involved in selecting the solution, procurement subscribed to a software package that did not support the company’s browser standards – and it was therefore unusable.
This kind of mismatch often occurs when a single department goes off and selects a point solution to meet its individual needs. It’s not surprising this happens, because after all, procurement, finance, and IT each inherently want different things out of a new source-to-pay solution. Procurement wants a modern system that drives savings by taking the complexity out of the sourcing and procurement process. Finance wants to get invoices through the system faster so it can take advantage of early payment discounts and optimize cash flow. IT wants to be a valued partner to the procurement and finance functions, but at the same time, this department is chartered with keeping the complexity of its landscape under control. IT must also ensure easy integration to its company’s current infrastructure, and simplify connectivity with business partners.
However, it’s only when IT, finance, and procurement work together to define a compelling business case that the underlying objectives – operational efficiencies, reduced complexities, and cost savings – can be achieved to the benefit of all.
Everyone agrees: user adoption foremost
During the Las Vegas and Madrid sessions, there was a lot of discussion around the topic of how to evaluate success. Since IT, finance, and procurement each have different objectives, they are all logically measured against different KPIs. So when they work together, what is a common ground for measuring the best outcome?
One point everyone acknowledged as critical for the success of a transformation journey was the adoption of the technology by the end users.
When it comes to a source-to-pay solution, a user-centric solution will make it easier for procurement to realize negotiated savings, increase spend-under management, and avoid maverick buying. Finance can take advantage of touchless invoice handling when their new business processes are easy and intuitive. And for IT, of course, a solution with high user adoption will require much less ongoing support.
Several executives in the panel sessions shared how they are achieving greater user acceptance. Tactics such as joint alignment of priorities, relevant intuitive user interfaces, a simplification of processes for internal stakeholders and suppliers, and better reporting have all contributed to a high user adoption in their organizations.
Clearly, as audience members voiced, using a KPI based on a user adoption metric makes sense and would help all involved achieve both corporate and individual department-level goals.
Working together – from the top on down
One final piece of advice from those at the sessions was to get early sponsorship at the board level for any significant projects like a source-to-pay transformation. While IT reports into the CIO, procurement and finance typically report into the CFO. And when both the CIO and the CFO are on board and in agreement, it is more likely that their teams will successfully work together to achieve the best overall outcome for the company.
To gain more insights from these executives on how to successfully transform source-to-pay by closely aligning procurement, finance and IT, you can listen to the Las Vegas session audio and view the Madrid presentation.
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This blog first appeared on CIO Knowledge of the Digitalist Magazine.