In our New Rules of Procurement Engagement series we are engaging with leading thought leaders and practitioners, from global powerhouses to tech wizards, to gain insight into the changing landscape taking place in finance and procurement.
In the latest eBook: Reevaluate Sourcing, we asked the changemakers to share their thoughts on the best practice approach to adopting and implementing technology into procurement and finance. Here are their insights.
Whether you have a full ERP system, a proprietary solution or use best-of-breed tools for specific functions, technology unquestionably delivers immense value.
It delivers real time-data and insight to make sense of complexity. It processes big data sets and identifies opportunities without preconception or bias. It streamlines workflows, eliminates manual tasks to drive greater efficiency. It optimises processes, reduces error, ensures consistency and compliance, and accelerates timelines.
Can you honestly say that you are truly leveraging the tools and technology available to strategically achieve optimal results?
“We have to adapt and adopt the new technologies or else we’ll never become the true business partner that I think most procurement functions are striving for.” Jacob Gorm Larsen, Moneyball CPH
The question of ‘what is the best technology?’ doesn’t have a ‘one-size-fits-all’ answer!
Technology needs to solve the problem you are trying to fix, in the context of the current environment. It should not require users to conform or ‘fit’ to the technology.
Second, it needs to work fast. The business world is moving too fast to be able to accommodate lengthy implementation timescales. Results and value need to be rapid and tangible.
Third, can it deliver on the short term objectives while supporting long term goals? Does it provide a clear path to scalability? Will it future-proof your existing tech stack? Will it support interoperability, resilience and growth?
“In my opinion, the best of both worlds is the idea of modularity. You need a platform that will have a series of tools—sometimes it can be used as the best-of-breed solution to solve some of the problems that you have/the quick fixes… but will also allow the organisation to evolve towards a different way of working—supporting collaboration across departments, exchange of data, and just really working on transforming the organisation as a whole.” Emmanuel Olivier, Esker
The last aspect related to finding a good fit, is with the technology provider.
“You have to look beyond the technology. Who are you partnering with? Is the service provider not only providing the technology, but do they have the expertise in my industry to be able to work as a partner with me to extract the greatest value, and be strategic?” Jon Hansen, Procurement Insights
Another balancing act is complexity over usability. As discussed, technology should work for people, not people working for technology.
“People get drawn into requiring a multitude of features that you may only need in one tender in a hundred or a thousand. That makes the tenders very unwieldy, complex, reduces supplier liquidity, and invariably you end up with a tool which no one knows how to use.” Alun Rafique, Market Dojo
Adoption levels of any technology will be low if it’s overly complex and monolithic… and this is true with both internal users and external suppliers.
“The mistake that we’ve seen is to try to find tools that can do all things at once. But that’s not really the way you want to go because it alienates a lot of suppliers and the users in the business will find it challenging to grasp hold of.” Alun Rafique, Market Dojo
Even the simplest of auction engines and sourcing solutions will provide value add. Not only does it force a more structured approach to sourcing, but it builds a ‘collective memory’ that will pay dividends in the future.
Once a tender is built, it’s repeatable and the knowledge stays with the company even when individual members have moved on. This provides another layer of resilience to sourcing activities, which is important due to the rapidly evolving demographic of procurement professionals.
According to a study by retirement technology solutions provider Dunstan Thomas, in the UK 1.2 million Baby Boomers left the workforce during Covid. In the US, nearly 29 million Boomers retired in 2020, (three million more than in 2019) and 75 million Boomers are expected to retire by 2030 based on findings by Pew Research Center.
What is becoming known as the Great Retirement is resulting in a loss of tribal knowledge, especially in procurement that has been dominated by an older generation. When processes are managed with spreadsheets and emails (and in some cases in people’s heads) it is very easy for this tribal knowledge to get lost or stuck in the Inbox of departed employees.
“(A sourcing platform will tell you:) How did we structure the tender last year? What suppliers were invited, which ones quoted? What were the clarifications back and forth? What was the input? The lessons learned etc.? It can be run quicker and better the following year. So there’s a huge value for the organisation.” Jacob Gorm Larsen, MoneyballCPH
For global enterprises, the more sophisticated sourcing solutions will be able to identify opportunities that would otherwise be missed to unlock value, especially when there’s complexity in the supply chain.
“Complexity, if you address it right, can be flipped into an opportunity.” Jacob Gorm Larsen, MoneyballCPH
According to a survey conducted by Ernst & Young, “The most critical leadership priority among senior supply chain professionals is focusing on becoming digitally enabled,” and there are a wide range of technologies that the 200+ supply chain respondents are evaluating.
Big data analytics, robotic process automation, drones, and machine learning/AI are the key technologies that companies are planning to adopt within the next three years.
How Organisations Use or Plan to Use Technologies in the Supply Chain (Source: Ernst & Young)
Like many professions, artificial intelligence (AI) is a game-changer in sourcing but it’s important to separate the hype from the reality.
“AI is fantastic, it’s going to change technology, it’s going to change business processes, it’s going to change people’s lives. There’s no question about it. But as always, when we talk about AI, we go way too far. We create way too many expectations just to be disappointed a few months after, and that’s already happening. AI is not magic, it’s a tool, it does what it’s supposed to do and that’s it.” Emmanuel Olivier, Esker
“At Market Dojo and Esker, we’re trying to build technology that responds to people’s needs, with as little hype as possible, and focused on what the business requirements of the people we work for (our customers) are. And that’s our way to help the people that we work with in the Finance and Procurement departments. Technology works for people. And if people do not embrace technology, then it’s no use to anyone. It serves no purpose. So you have to get people to embrace technology. It’s another place where you’ve got to ‘win the hearts’.” Emmanuel Olivier, Esker
To learn more about the impact AI will have on sourcing, specifically to streamline workflows, eliminate manual tasks, and drive efficiency, download your copy of the Reevaluate Sourcing eBook, or visit the New Rules Hub.