…without resorting to destroying your computer. Implementing new software often comes with a whole world of pain. But it doesn't have to be this way
Faced with a project that is likely to overrun on time and spend, pull the focus of some of your top team away from their day job, demotivate staff, oh – and only has a five in 10 chance of delivering what you actually wanted at the outset – would you decide to go for it?
Most people would probably be saying no at this stage. But this is exactly what it can feel – and be – like implementing a large-scale technology project in procurement.
It’s not that anyone disagrees technology is changing the face of the industry and that even bigger wins are around the corner. In its Predicts: 2018 Procurement and Sourcing Technology report, analyst Gartner says that within the next four years there will be major changes in tail spend, spend-analysis software and purchase-to-pay (P2P) solutions thanks to digitisation.
Consultancy Deloitte adds in a report of its own that in just two years, new capabilities and competencies will likely be mandatory, adding: “Organisations that fail to embrace new procurement models may fall further and further behind the competition, jeopardising overall competitiveness and viability.”
In other words, if you aren’t embracing technological change, you will become obsolete. But if it is the case that, as Deloitte’s head of procurement Michael McAdam believes, only five in 10 big procurement technology implementations deliver what they set out to at the outset, what can you do to ensure your project is one of those five?
Follow Supply Management’s six steps to surviving a big technology implementation, coming out the other side with an efficient system and your sanity intact.
1 The business case: clear, detailed and realistic
According to Daniel Cox, head of group procurement at the AA, the expected deliverables, benefits and return on investment must be clearly outlined in the original business case and expressed as key performance indicators or outcomes that are capable of being subsequently measured and reported. The objectives that the organisation is trying to achieve should be prioritised and agreed by key stakeholders, based on the ‘size of each prize’ and/or the criticality of the issues that will be addressed.
Cox warns that too many solutions providers claim multi-million-pound savings after modelling based on generalised principles, factoring in assumptions that would not pan out in the real world. “I think it’s a lot more credible when a provider is able to focus on how a broader suite of supplier management benefits will result from successful implementation and adoption, rather than focusing relentlessly on ‘savings’,” he says.
Sarah Abbott, executive coach and co-founder of The People Practice, has been involved in a number of big technology programmes. She says while it is important to sell the ‘why’, the project scope is of equal importance. “You can start with a fundamental reason to do it but then lots of things appear that are interesting yet don’t answer your initial question. So, you end up with lots of add-ons. You need to talk as much about what is not going to happen as what is going to happen. Look at ensuring it doesn’t creep in or you end up with much bigger programmes than originally planned, taking away from the value you were seeking in the first place.”
2 Ownership: finance or procurement?
This is a contentious but vitally important issue: you need to be clear on ownership. David Ford, global head of procurement at legal firm Freshfields Bruckhaus Deringer, firmly believes ownership sits with finance when it comes to P2P. “The business case is that you can save some heads in accounts payable,” he says. “So, the business case is not procurement, it is accounts payable – which is a finance process. We have a role to play because we are interested in the front end and it’s linked to our contract database so that we’re only buying from approved suppliers, but the ownership of the whole cycle sits in finance.”
Cox believes that procurement should ‘own’ any technology programme that addresses the full source-to-purchase (S2P) lifecycle, but agrees that finance must lead the P2P element. “For all other elements of an e-procurement product suite, procurement should partner with the other key stakeholder function to internally ‘lead’ and deliver the module,” he says.
Why is this important? According to Abbott, 80% of conflict arises because roles are not clarified in the beginning. “People have expectations of each other that are never articulated, then people don’t meet these expectations and frustration arises. Who owns the enablement? I believe ownership needs to sit with the ‘doer’.”
3 Choosing the right system: whom can you trust?
With a plethora of providers to choose from, all touting their systems as the best, you need to do your homework. The starting point is to get the right functional and technical people involved in reviewing and agreeing exactly what the business requirements and priorities are, and then comprehensively testing the solutions available against this clear brief. To do this correctly will take significant time and effort upfront, which will need to be budgeted for.
Cox explains: “If, for example, the focus of a new P2P platform is to drive process efficiencies enabling functional headcount reduction, that is a very different business case to driving compliance to centrally negotiated contracts.”
It’s often assumed that it is easier if your ERP and P2P systems are from the same provider but it is not always as simple as that in practice. Cox says it is essential to have the right IT architecture people on the project group who can properly assess this element and give a considered view.
Credentials and testimonials are key. McAdam suggests ensuring your provider has proof of impact in companies that are roughly the same size and in a sector that compares to your own profile. Cox advises asking for comprehensive demos, allowing you to critically appraise the functionality and outcomes of the solution rather than just accepting what the provider says, and ideally observe the technology in a live environment. “Integration and testing is crucial and must not be rushed,” he adds.
The jury is out on whether bespoke or off-the-shelf is better. The benefit of bespoke is you have a lot more control over contracting and governance. However, says Cox, as long as the solution is demonstrably best practice and achieves your objectives, resist the temptation to bespoke if it’s going to cause cost and hassle issues for future upgrades and support. That said, don’t overly compromise if there is a business critical element that’s not included in the out-of-the-box version. And you must always have an eye on the future. Talking of which…
4 Future proofing: today, tomorrow, and beyond
Blockchain, artificial intelligence (AI), automation… the speed of technological change in procurement is increasing. And, believes McAdam: “P2P is where the bots will take over”.
He warns CPOs not to underestimate AI and believes that, as technology improves, benefits desired at the outset will soon be delivered in six out of 10 cases – and in the not too distant future in eight out of 10 cases.
James Tucker, managing director of procurement recruitment specialist 1st Executive, notes that a number of larger FTSE100 organisations are already investigating the potential applications of technologies such as AI, automation, machine learning and robotics across their procurement or supply chain functions, though he adds: “It’s too soon to report any serious investment of systems roll-outs.”
However, he has numerous clients, particularly in the financial services market, who have “tweaked” their hiring requirements for IT procurement roles, to focus on candidates with experience of procuring application development, big data and cloud-based solutions that support new product development initiatives in fields such as mobile applications and e-commerce.
Buyers need to balance the need for a provider who has one eye on the future with appropriate evidence and credentials. As McAdam puts it: “People are asking how to make it feel like an Amazon experience for customers – that is all very well but this is not just about a shopping experience.”
5 Integration: big bang or bit by bit?
You never know how bespoke your own ERP system is until you start to integrate things. Ford is in the middle of a P2P implementation that should have finished last year but has been dogged by internal issues, notably that the company was trying to integrate into a system that had been ‘customised to death’ and had to be scrapped. Now the P2P project is secondary and securing time and resource to make it happen is challenging.
Be realistic about resources, days of effort required, budgets, timings and dependencies. Tucker says that many of 1st Executive’s key clients are still investing in the implementation and optimisation of traditional P2P and S2P platforms and the majority of these projects are staffed by teams of contractors. Day rates for these projects are at a premium, typically with a rate uplift of 15-20%. You may also be using a consultancy business to lead the project in a systems integrator capacity.
Either way, all key stakeholders and impacted parties need to have sufficient agreement and understanding of what successful implementation will look like and require, otherwise bottlenecks, delays and apathy will inevitably occur.
McAdam says a typical implementation should take between 12 and 24 months and advises not doing it on a category-by-category basis as it causes confusion among users. Ford, however, is taking a category approach, but admits he has been advised to go ‘big bang’. “It’s an easier message to communicate. If you’re trying to do it by category, it becomes confusing because then you say, ‘okay so over here you have to use a system but over here you don’t’.”
Internal project management capability is critical, as is the experience and capability of the implementation partner. Cox says significant time and effort should be put into sourcing an external implementation partner with the ‘right fit’ for your business.
Ford notes that having an effectual steering committee is vital, as is a close relationship with the supplier, especially if the project is being held up and you still need support services. Abbott suggests building in quick wins so that your people have some success early on, giving them positive association with the technology and process.
6 The people piece – the biggest issue?
Change can provide a great opportunity to move away from old habits, freshening up processes, but it is so easy to disengage people. This is a problem: if you don’t get engagement from the outset, you might get the system live only to lead to problems later on.
Avoid this by involving people early and often. Ensure they know change is coming down the line and get them attached to the project by asking their opinions at the start. After all, they are on the ground so know exactly where anything new may trip up existing processes.
Be clear how people can help – what role can each person play, who will be your champions and who will resist change? But, says Abbott, focus your efforts on the middle 60-80% of your people, as this is where all the work is done and the people on either side can be swayed either way by this group. If you appoint change ambassadors, make sure they are kept in the loop little and often.
If a tech project overruns there is a challenge around working weekends or holidays, so it’s best to consider hygiene factors from the start. Be warned, adds Ford, if you overrun and your external project manager gets frustrated, you could lose them – and their vital knowledge. He is also rotating his team to “make sure it’s not always the same person doing the interesting bit and always the same person doing the boring bit”.
Seek feedback on a weekly basis. Build a simple, online tool asking no more than five questions such as: is this new system working? Is it more efficient? Has it helped you add more value? And read the answers – that way you can quickly discover and tackle any confusion and issues.
Perhaps the most important part of any software implementation, which is at its heart a change management project, is to communicate, communicate, communicate. Make sure everyone gets new information at the same time and knows where they can get their questions answered. “Space always gets filled with gossip, so companies need to take control of empty space,” says Abbott.
And finally, don’t forget about your suppliers. Bring them on board early, talk to them about the change and how it will affect them. If possible pilot the system with a few key suppliers to see how it will really work in practice. You need to convince them that this change is of benefit to them.