The Pitfalls Of A Two-Year Transformation in Procurement

In our discussion we discuss how you can bring IT and procurement together and avoid the pitfalls of embarking on a massive, two-year transformation. Often, as humans, we overestimate our ability to adapt to change, and similarly, our organizations may struggle to keep up. The danger lies in the common scenario where a company acknowledges the necessity of revamping its procurement practices, such as category management strategies, after years of inactivity, and then attempts to overhaul the entire procurement function within a short timeframe. Unfortunately, I’ve seen this happen too many times were well-intentioned but overly ambitious approaches can lead to more harm than good.

Speaking Different Languages

One significant challenge in this realm is that procurement and IT often speak different languages. They are distinct domains with their own specialized knowledge, and building a bridge between them can be challenging. Joël points out that his natural inclination toward a process-driven approach and a focus on business process management has enabled him to navigate the intersection of these two worlds effectively.

To unlock the full potential of procurement (a personal passion of mine ;-)), understanding the "why" behind processes and technology is essential. The most successful consultants, whether in SAP materials management or other areas, grasp the core business objectives and align technology with these objectives. It's not merely about implementing technology; it's about understanding the business's needs and how technology can serve them.

A Deep Understanding Of The Top-Line Business Objectives

Joël emphasizes the significance of having a deep understanding of the top-line business objectives, the company's mission, and how procurement contributes to these goals. Different categories may have distinct objectives, so tailoring procurement strategies to align with the overall business vision is crucial. The key is to define value collaboratively with business stakeholders and utilize technology to maximize that value for each category.

The conversation highlights the importance of starting with spend management and obtaining visibility into company-wide spending patterns. Joël shares a practical example where a client had a powerful tool but lacked granularity in their vendor categorization, hindering their ability to gain accurate insights into their spend. By introducing a taxonomy-based approach and enhancing the granularity of data, they transformed their procurement strategy and gained a more profound understanding of their spending patterns.

Craft a Visionary Roadmap 

For leaders in procurement or IT collaborating with SAP-based organizations, Joël offers valuable advice. He encourages leaders to craft a visionary roadmap that aligns with business objectives and translates into procurement policies. However, the execution should start small, focusing on manageable, achievable projects that build momentum and enhance digital literacy within the organization.

Overestimating the capacity for change can lead to adverse outcomes, so it's essential to take incremental steps and maintain a realistic approach.

The Conclusion 

In conclusion, the fusion of IT and procurement is an essential journey that requires a deep understanding of business objectives and the capacity to adapt to change. By starting small and building on incremental successes, organizations can successfully transform their procurement functions while avoiding the pitfalls of overambitious, rapid transformations. Remember, a well-considered approach is more likely to yield beneficial results in the long run.

If you want to learn more, I encourage you to check out Joël's newsletter (it’s a personal favourite, which I have been subscribed to for quite some time) ... and once again a huge thank you to Joël, who are continuing to show up online in a big way to help others navigate this space.

Until next time, keep climbing!