What are the challenges of digital procurement transformation?
Like any major change in a large organization, digital procurement transformation
can be tough to get right. When you’re making fundamental changes to established business processes and
ways of working, there are always risks. But the dangers can be avoided if you know what to look for.
Many procurement teams invest precious resources into digital transformations that
fall short of expectations, usually because they fall foul of one or more of these common pitfalls.
Pitfall 1: Failing to align digital procurement transformation with strategic
goals
A classic trap many organizations fall into is embarking on their digital procurement transformation journey without considering how it will contribute to
strategic goals.
To deliver meaningful value, your digital procurement transformation must be
tightly linked to the needs of your procurement function as well as the overarching strategic objectives of the
wider business.
Transforming procurement is a means to an end, not the end goal. To deliver the
outcomes the business needs, you must begin with a clear understanding of how your digital procurement
transformation will help propel your organization toward its primary goals.
For example, if a business is relatively small but rapidly growing, procurement
transformation should focus on ensuring a stable and scalable supply of essential goods and materials. On the
other hand, large, established businesses in highly competitive markets might need to focus procurement
transformation on cost optimization or supplier management.
Pitfall 2: An inadequate data foundation for digital procurement transformation
If you build a house without laying strong foundations first, it will quickly come
tumbling down. The same can be said for digital procurement transformation; without a strong data foundation, it
won’t deliver on its full potential.
This issue has been exacerbated by hype around AI-powered tools that promise to
solve every procurement problem, making it tempting to rush into implementation. But even the most powerful AI
tools are only as good as the data you feed them.
To unlock the potential of AI in procurement, organizations must first establish a
solid foundation of high-quality data. It’s also essential to integrate data from the systems that power
the entire procure-to-pay process. Ideally, you should also augment internal data with trusted external data
sets to provide vital context for supplier, spend, and risk management decisions.
Pitfall 3: Creating a patchwork of solutions rather than a holistic digital
procurement transformation
With so many procurement solutions promising to reduce costs, create efficiencies,
and reveal deeper insights, many organizations rush to deploy multiple tools without considering how these
systems will talk to each other.
An effective digital procurement transformation requires a more considered,
holistic approach, underpinned by careful tool selection, rigorous planning, and seamless backend integration.
By considering interoperability and integration early in your transformation
journey, you create opportunities to break down traditional silos and build a more effective procurement
function. Without this strategic, connected approach, it’s likely you’ll just create even more
silos, and tools working in isolation won’t deliver their full potential value to your business.
Pitfall 4: Not empowering people to realize the benefits of digital procurement
transformation
Even if your digital procurement transformation is aligned with your business
strategy and supported by high-quality data and tightly connected tools, the results will be disappointing if
people aren’t empowered to make the most of the new capabilities.
Empowering people should start long before new digital solutions are launched. In
many organizations, procurement teams and business users have been following the same processes for years, and
there can be a reluctance to change. Effective change management involves continuous communication to highlight
the benefits of new tools, along with training on how to get the most out of them.
Procurement professionals will need more in-depth training on new systems and
processes. And when routine parts of their day-to-day activities are automated, they’ll need new skills to
assess AI outputs, make data-driven decisions, and play a more strategic role in the business.
Pitfall 5: Not putting content behind new digital procurement capabilities
Finally, one of the biggest mistakes organizations make during their digital
procurement transformation is launching new digital catalogs without enough relevant content.
Catalogs should guide buyers to make smart spending decisions. But unless
they’re quickly populated with up-to-date content, people won’t find what they need. Without access
to relevant information in the catalog or dashboard, people are much more likely to source what they need
elsewhere, leading to substantial rogue spending that’s beyond procurement’s control.
To maintain complete oversight of spending, it’s vital to launch fully
populated catalogs that allow people to easily find, compare, and request items and make cost-effective and
compliant purchases.
Conclusion
Digital procurement transformation can have a profound impact on your entire
organization – if you can get it right. By avoiding the common pitfalls outlined here, you can set
yourself up to drive costs down, increase supply chain agility and business resilience, and turn procurement
from a cost center into a value creator.
To learn more about WNS Procurement’s digital procurement transformation
services, and discover how we can help you navigate a successful transformation journey, visit click here.