The buzz about digital in procurement is deafening.
Who hasn’t heard about the cost savings that can come with automating source-to-pay processes? But procurement organizations are getting distracted by “digital shiny objects.” So distracted that they lack a digital investment strategy rooted first in the fundamentals and inadvertently miss getting the outcomes they crave.
A much-needed reality check
Digital is a major force of change for procurement organizations, and it’s certainly worthy of all the buzz. The challenge, however, is that all this chatter influences how procurement organizations think about digital—and not necessarily in a constructive way.
Consider that many procurement leaders see digital as a silver bullet. They think that running a bot against some isolated source-to-pay processes can magically deliver step-change transformation across all of procurement. Others are so hyped on digital that they race to digitize a process without first ensuring that the data is sound and that the process is streamlined. This inevitably creates a “garbage-in, garbage-out” dynamic that wastes every cent of the digital investment and fails to move the organization closer to intelligent operations in procurement.
While there is no doubt that digital can potentially help improve cost savings, visibility, efficiency and compliance and control across source-to-pay, these outcomes do not come from digital alone. Digital is a means to an end—not an end in itself. Think of it as the “how” not the “why” of procurement transformation.
The question organizations should be asking isn’t about what digital technology they should implement. That comes later—much later. Instead, they should first ask what outcomes they want to achieve. This laser focus on outcomes is critical to driving sustainable and scalable change from digital procurement.
Start with the end in mind
An outcomes mindset means focusing first on the problems that your organization needs to solve, and working backward from there to make sound investments in digital technologies and data and analytics capabilities. Think of it as planning the journey by starting with the destination. Ask yourself, “What is my end goal?”
Of course, this destination should look different for every organization. However, there are several business outcomes that procurement organizations often center their transformations around. These include—but are not limited to—enhancing data capture to enrich insights, improving processes to reduce cycle time, taking advantage of intelligent tools to maximize resource use, and strengthening organizational readiness to stay ahead of change.
The irony in all this—and one of the most important takeaways—is that the most important part of digital procurement transformation has little to do with the digital technology itself. It’s about how the journey starts.
Pushing to the next level
A measured, outcomes-focused approach can deliver small successes. And it’s a great place to start. But a word of warning. Procurement should ultimately consider to “make some noise” and do bigger things with digital if they want bigger rewards. Because scalable and sustainable results beyond cost savings means getting disruptive with digital across source-to-pay. Starting with the fundamentals.