90% of procurement software rollouts end in failure

posted by Stan Garber
9 September 2019

Once plans are developed and an implementation carried out, failure is never assumed to be a possibility.

The phrase “Failure is not an option” is usually associated with the fabled Apollo 13 moon landing, although the ideal is spread much broader than rocket science these days. The goal extends to nearly every plan with the best intentions. Even the rollout of CRM systems, which seemingly have reached maturity, end in an astonishing level of failure. CIO magazine reported that one-third of CRM projects fail, and some analyst reports peg the number at closer to two-thirds.

No doubt the rollout of a new procurement system occurs with these same ambitions, endless optimism and even hope for productive change. Unfortunately, most of these end in failure. In fact, the common industry view is that procurement systems have a very low adoption rate, traditionally around 10%. The sad reality here is that some 90% of procurement system rollouts end in failure.

Fortunately, times may be changing, and adoption rates could be on the way up. No doubt, there is a vast amount of room for improvement. Of course a pessimist might claim that they couldn’t get any worse.

Many of the rollout failures of procurement systems extend well beyond the features, benefits and implementation of a new procurement system. Failure ultimately stems from the overall concept that organisations have about procurement. For many companies, procurement is still based on an aging model of what procurement is, what value it can achieve and its overall role in the company’s strategic path forward.

If procurement is defined as a department and system for procuring goods and services for the organisations – buying stuff – while applying the governance and safeguards of policies and controls, then procurement is little more than an extension to the overall ERP. Only the most basic transactional details are systematised. The processes are simplistic and inflexible. It is not intended to bring out transparency, collaboration or engagement. There is no room to drive strategic cost savings or help bring about new procurement methods or partnering with suppliers.

If a company has this old, limited view of procurement, they face an uphill battle in getting a team to adopt new software. Usually such teams are overworked and stuck in “production mode”. Orders need to get processed. Contracts and approvals need to move along. Backlogs need to be diminished. In this endless cycle of just trying to stay above water, teams have little time or motivation to try something new. The centrifugal force of trying to keep up with demands inhibits the ability to break out of such a vicious cycle. Often, a new procurement system for this kind of environment is met with a pain-gain estimation, and usually the pain of disruption and trying something new outweighs the perceived small gains that could come about.

Many time procurement systems are not adopted or used because they are difficult to use, inflexible and do not reflect the reality of procurement needs. Ease of use cannot be overestimated. Systems need to be intuitive with an easy learning curve. Employees today are particularly influenced by software for personal use on their home computers and smart phones. Even the idea of shopping on Amazon, getting something on eBay or using PayPal for payment is a standard achieved without any requirement for training or know-how. These impressions set a new standard for enterprise software, including procurement systems. There is little patience for a poor user experience or having to master something that is not intuitive and cannot be engaged with immediately. A Harvard Business Review article entitled, “Make Enterprise Software People Actually Love” makes a point of advising experience over function and to create a software that brings enjoyment.

Despite whatever advanced features and benefits a procurement system may offer, if it is not intuitive and easy to use, it faces an uphill battle for adoption. A new standard is emerging beyond sheer simplicity. The most successful software today is not only easy to use but it is also engaging—users actually enjoy working with it and look forward to interacting with it. One aspect of this is flexibility. Does software force a single way to get work done, or can it accommodate multiple approaches? Ultimately, can the software make one’s job easier and address the specific requirements of a workplace and business?

New systems should reflect what procurement could and should be, even if the team and practices are not yet fully established—tools to help drive transparency, collaboration with stakeholders, strategic cost savings and closer partnering with suppliers. A new procurement system that meets such requirements may serve as a catalyst for change. A new system alone cannot accomplish the change, but it can be a fulcrum for achieving change.

In a way, there is nowhere to go but up. With the traditionally abysmal adoption rates of procurement software, we can all do better. But the bar is getting higher and so are the stakes. Take the opportunity now to get it right.

☛ Stan Garber is president of Scout RFP.

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