IT Sourcing – How to Get Your Arms Around Cloud Services

When it comes to the digital transformation of your supply chain, is your head in the cloud(s)?

It is virtually impossible to read an article, attend a webinar, or for that matter, talk about supply chain today without the discussion turning to digital transformation and cloud computing. Some pundits are now even talking about moving beyond the cloud to “the edge.”

With all this energized talk, it is easy to get lost figuratively as well as literally in terminology and concepts. This uncertainty is probably the reason why several surveys and studies such as the one from McKinsey report that the majority of companies are in a “holding pattern” regarding their digital strategy.

So, let’s try to unpack this cloud business.

Forget the cloud

As is the case with any “technological” breakthrough or innovation – and believe it or not, there have been a few of these over the past century that at the time rivaled today’s digital frenzy, you must look beyond the technology. In other words, forget the cloud and focus on the foundation of your procurement practice.

If you do not have a consistent data governance policy, proper risk management strategy, or a quality education and development program for procurement staff, being in the cloud will have little if any impact.

The above may be a shocking statement for some of you, but no matter how impressive, technology alone will not create a more effective and efficient procurement practice. One might even suggest that when introduced into an immature environment, technology could even make things worse.

If we learned anything from the old ERP days, it is the fact that mixing technology with an inefficient procurement practice is like being the driver of a high-speed Formula One car without a steering wheel while heading towards the edge of a cliff. The outcome will not be pretty!

A sound practice foundation

For anyone who has been in our profession for any length of time the following core or “feet on the ground” operating principles transcend time and innovation. Specifically, common sense and a clear understanding of procurement’s role in delivering value to the enterprise remains relatively constant give or take a few tweaks.

To start, an organization must invest in its people. Training is a great place to start. An earlier post here on the Procurement Foundry blog pointed out that CPOs generally feel that their teams do not possess the necessary skill sets to execute on their strategy. However, the same article reports that training budgets are on a steady decline. Technology, whether in the cloud or on the ground, will not bridge this divide.

Risk management is another area that needs attention. In a recent workshop, 100 procurement professionals were asked the following; “who is responsible for risk management in your organization?” The answer almost to a person was that risk is a “legal department issue,” but when things go wrong “procurement usually shoulders the blame.” Do you think being in the cloud will fix this disconnect?

Finally, what about dirty data and the absence of a data governance policy? Talk of the importance of having clean data is bordering on sounding like a broken record. However, it is a continuing problem that will, almost single-handedly, undermine any cloud or digital strategy.

Feet on the ground

Beyond raising the points in the previous section, there are other areas of challenge that a “modern” procurement practice must address before taking off into the wild blue yonder of digital possibilities.

The point of this article is to remind you that the success of a cloud strategy begins and ends with having your feet “firmly” planted on the ground. What this means is that you have a clear procurement practice strategy that recognizes and adheres to the core values and operating principles of success.