Last week we looked at eight of the most common reasons why digital transformations fail. Now let’s think about how to make them a success!
Making a complete transformation to a digital-first procurement operation is no easy feat. But with the right amount of dedication, planning, talent, any organization can make the switch.
The path begins with understanding the whole reason you’re engaging in digital transformation in the first place. Reevaluate the procurement department’s role in the organization—what are they buying and for whom? Once this is fully understood, digital processes can be built and tailored to fit the needs of internal stakeholders.
Reexamining the procurement team’s core functions not only helps an organization understand where it is now, but it’s also imperative for finding the right balance in the future between speed, cost, quality, and any compliance criteria. This helps set the foundation for a successful digital transformation.
The next step is to analyze your organization’s risks. This involves mapping out the areas that are currently problematic for the procurement process—from the early stages of sourcing, all the way through to payment and managing suppliers. The goal at this stage is to understand the department’s pain and pressure points so solutions can be considered during the planning stage.
Three main areas to consider are customer segmentation, purchase category grouping, and spend transparency, with the aim to develop an integrated perspective on the structure, processes, people, and technology needed in the transformation.
The risk assessment phase is also a good time to critically analyze your current data. What do you already have digitized? How robust is the data? Will it be able to perform the functions you want it to? Your data will be the lifeblood of your digitized procurement processes, so it’s always sensible to keep it in mind every step of the way.
The next step is to determine what types of resources you need to successfully deliver the project. The CPO needs to be a true leader and enable their team and stakeholders throughout the organization to buy into the transformation. This means knowing your team’s strengths and weaknesses and using that knowledge to determine when it makes sense outsource certain parts of the transformation to experts. Strong project management and stakeholder collaboration will be key, as will constant monitoring of progress against the initial reasons for doing the transformation in the first place.
It’s also important for change leaders to have a good understanding of the range of technology, as well as their strengths and limitations. Machine learning, artificial intelligence systems, and robotic process automation all have a potential part to play in a digital transformation and improve the source-to-pay process, but only if they are understood and deployed properly.
Remember, this digital transformation will ultimately benefit the entire company. Therefore, it shouldn’t be created in a silo. It’s important to include all areas of the business so each department feels they have skin in the game and see the transformation as a way they can improve their own work.
The procurement function is part of a complicated ecosystem that includes customers, suppliers, and, sometimes, even competitors. A digital transformation will be most successful if it incorporates all points up and down the supply chain. Procurement teams need to reach beyond their own organizations and collaborate as much as possible with their suppliers and peers.
Digitalization can provide procurement leaders and their organizations with a raft of insights and benefits they otherwise would never have had access to. All it takes is some thoughtfulness a thoughtful approach and a commitment to seeing it through.