We recently had the privilege of speaking with Michael Whitman, Principal at PwC and an expert in all things procurement, who shared his insights on procurement and digital transformation. Specifically, we asked Michael for his advice on the top five things to consider for procurement and digital transformation. So, let’s dive right into it:
Don’t constrain the future state by today’s pain points, but instead focus on what you need in the future to enable long-term success. Michael shared that all too often, one of the challenges he sees as companies start a procurement transformation is that “they are looking to bring in a tool or tweak a process to address a short-term pain point marginally better.” But in short, Michael revealed that rather than look at this type of fix-it-for-now, band aid mentality, what’s really needed is to get to the root of the problem and remedy it from that level—the entire process. This long-term thinking—specifically understanding your process and how you want to use the system—can benefit you in numerous ways, particularly when it comes to being able to show internal stakeholders value.
As alluded to above, awareness of how internal stakeholders will use the application is paramount. For this reason, it is pivotal that you have a solid understanding of where your future is and how you want to use the system in what you’re trying to do as a company. According to Michael, “The approach that we take is looking at the business outcomes, [and asking] How do you need to perform? What is it going to take to be successful?” Then, once you have that solidified, asking, “How do we perform the business processes to support that, and finally, how do we apply a tool to that so that we are making tool and process decisions in the context of how our stakeholders are going to get value from the system [versus just addressing today’s pain points].”
In this new digital transformation era, data will be used to drive decisions. Basically, information is in the driver’s seat of the company car, and we’re all just along for the ride. Yes, information is that important in moving procurement practices forward—and only becoming more so with each passing day.
Understand how the transformation will deliver value to the overall organization, not just the procurement function, and enable it throughout the design. “A lot of times, people select a tool and assume that it will solve their problems.” Michael shared. “But what we really want to look at is: how does the tool complement and enable the procurement model?” A key way to do this, according to Michael, is by looking at how the organization is going to use the tool and associated process structure, really focusing on what key business and operational decisions the organization will make and asking how the new procurement model operation and tools will enable that. Finally, you start taking active steps to optimize that, based on your data, so that you are helping the organization make better decisions that add the most value.
Define what near-term value looks like and deliver it during the implementation—Don’t wait. “Even the fastest implementations take a little bit of time, [so] waiting for all of the value at the end is a risky move,” Michael warned. “There are too many business changes that will occur during the course of a transformation, and you really need to deliver incremental value throughout the implementation.”