Let Procurement's internal customers drive eProcurement Strategy

For a number of years I have seen P2P briefs which include reference to internal stakeholders desire for an 'Amazon like' user experience. Exposure in domestic life to how easy the 'electronic shopping experience' can be through the use of Amazon has raised individuals expectations of what the procurement process could be within the business environment. Having said that, even with that domestic experience, it still surprises me when Procurement staff tell me that the 'AsIs' process for Requisition to Purchase Order takes on average two weeks - my response is "Why aren't you aiming for two hours max?". What I see and feel on the ground is evidence that internal customers are pushing for change as opposed to Procurement staff shaping driving the change.

I have also met opposition from Procurement staff to the use of eAuctions. However, when you ask the individuals concerned if have they used eBay - the 'lights go on' and you can start to help them understand how eAuctions could deliver benefits in a business environment. In parallel, I've discovered that internal customers of Procurement have a greater appetite for the use of eAuctions than their Procurement Team.

Tonight I was delighted to see an advertisement on television for MyCarNeedsA. Perhaps some of you have been aware of this site for some time, regardless, it is a domestic electronic RFP solution. The domestic car owner specifies what work is required for their car and bids are then invited. I'm sure, given what I have outlined above, you will not be surprised that I have experienced opposition from Procurement Teams for the use of eSourcing tools. So I am delighted that internal customers of Procurement will now have an opportunity to experience eSourcing within a domestic environment and then hopefully push for their adoption within the business environment.

We have recognised for many years that individual's domestic experience influences their work expectations.  Of course there are many understandable reasons why Procurement staff may want to oppose the use of eProcurement tools but I find it disappointing that Procurement are not pushing harder for improvement and adoption of what are now basic tools.

Procurement should encourage internal customers to cry louder for the transfer of domestic eProcurement tools into the business environment. Procurement should see the domestic tools as part of a skills development plan. Yes, why not let Procurement's internal customers drive hard for an eProcurement Strategy. Would that not help Procurement?

You need to get suppliers on board for your S2P journey (4) - Closing thoughts

Over the last few weeks I have discussed the need for supplier engagement in implementing a S2P. In this, the last post, I draw together the main points.

Effective S2P implementation cannot be viewed as something which the implementation organisation has ultimate control over, as it relies on the supply market also choosing to own the solution too. Implementers of S2P solutions need to understand that implementation is a boundary spanning challenge and can represent major change to suppliers.

Since S2P implementation is a change initiative, ensure it is used as a opportunity to contribute to wider strategic objectives, for example, responsible procurement and supplier rationalisation.

The lack of supplier engagement and ownership represents one of the greatest risks to any S2P implementation and requires significant management. Supplier engagement also needs to start early in the implementation – waiting until ‘go live’ is a serious under-estimation of the work required.

Successful implementation is dependent on creating a solid foundation, which includes budget allocation for supplier engagement and the designation of an empathic champion.

While there are many approaches to supplier profiling a simplistic approach, profiling suppliers as either ‘Users’, ‘Converts’, ‘Willing Novices’ and ‘LateAdopters’ can prove to be just as effective and fits well with the communications and training and skills development plans.

Suppliers will be faced with new training and skills development needs. These shortfalls will impact on the implementing organisation and can be reduced through the useof a Skills Framework, a Training Needs Analysis, and agreeing who hasresponsibility of the specific elements of training and development.

I hope you found the posts useful. 

You need to get suppliers on board for your S2P journey (3) Comms & Skills Development

In previous posts I highlighted that the lack of supplier engagement is one of the highest impact risks with a S2P implementation. To mitigate that risk a strategic approach is required which includes creating a sound foundation and taking a wave approach to supplier engagement.  In this post, I discuss the need for a communications plan, and a training and skills development plan aimed at the supply base.

The communications plan needs to be considered as soon as discussion on the potential implementation of a S2P solution is mooted. There needs to be some flagging that change is anticipated and that the organisation intends to ‘work with’ the market as opposed to ‘doing it to suppliers’. That early reassurance will pay dividends later and signal that the organisation has a strategic approach.

In a previous post I advocated that a categorisation of suppliers as ‘Users’,‘Converts’, ‘Willing Novices’ and ‘Late Adopters’ could be applied. That categorisation flows from the first stage of a Change Impact Assessment – identifying what the implementation of a S2P solution will mean to suppliers. If suppliers are unclear what the changes could mean to them, then it is not possible for them to make the necessary commitment to those changes. The change readiness assessment will draw on the change impact assessment and statement of technology requirements to contribute to the categorisation of suppliers as ‘Users’, ‘Converts’, ‘Willing Novices’ and ‘Late Adopters’.

Regardless of suppliers engagement with S2P it is unlikely they will not have some level of training needs to match the new ways of working. Therefore it makes sense to complete a Supplier Training Needs Assessment.

Categorising the supply market is an acknowledgement that each category of suppliers will have fundamentally different needs. The Communications Plan therefore

You need to get suppliers on board for your S2P journey (2) - A wave approach

In the previous post I discussed the need, when planning a S2P implementation, to createa sound foundation for supplier engagement. Now we move on to the supplier profiling and development of waves for supplier engagement.

Using a ‘big bang’ approach to supplier adoption is unlikely to be effective. It will demand a lot of resources and loses the benefits of lessons being learnt which can be transferred quickly. Most of all it frequently fails to recognise that not all suppliers are starting from the same position and tailored journeys to ownership are necessary.

A phased approach is therefore recommended with suppliers being on-boarded in waves.  Of course, that begs the question, ‘What does the wave choreography look like and what sequencing of suppliers should apply?’. 

Some advocate the use of spend analytics and detailed mapping.  But those approaches fail to recognise that a frequent justifications for the implementation of a S2P solution is that it will provide clarity of spend – in other-words, the reality is that spend analytics are unlikely to be available. Secondly, even if the data were available, is the investment in time required justified, given that the objective is to develop a wave plan which will lead to maximum adoption as opposed to a comprehensive scientific approach to ‘who and when’.

Don’t mistakenly think that the wave approach focuses on just one wave of suppliers before moving on to the next wave. Like waves hitting the shore as one wave hits the shore the next wave is already building up, so all waves are worked on simultaneously albeit with differing emphasis. A simple approach to wave designation is to categorise suppliers as ‘Users’, ‘Coverts’, ‘Willing Novices’ and ‘Late Adopters’.

1.     ‘Users’ are existing users of the chosen S2P solution who need to be on-boarded but with will face minimal change to their existing ways of working;

2.     ‘Converts’ are existing users of a S2P solution although not existing users of the chosen Solution;

3.     ‘Willing Novices’ are businesses which see the merits of using the proposed S2P Solution but as yet have no experience with S2P; and,

4.     ‘Late Adopters’ are those who lack enthusiasm to embark on the use of S2P.

It should also be noted that the wave approach advocated is based on an assumption that contracts are not currently in the process of being renewed. If however, contract renewals and re-letting are taking place, those sourcing strategies should be used as a parallel first wave means of ‘winning commitment’ through the award process. Equally, wasting resources on on-boarding suppliers who are unlikely to gain future business will ultimately lead to a perception that the organisation lacks a coherent strategy.

Some ask how many suppliers should comprise each wave and how long should be required? There is no simple answer to those questions as it depends on how large the supplier base is and the supplier state of readiness.

In the next post I shall discuss the need for a communications plan and a training and skills development plan.

You need to get suppliers on board for your S2P journey (1) - A sound foundation.

There is a need to think about supplier engagement when developing the S2P business justification – the lack of supplier engagement is one of the highest impact risks with a S2P implementation. Supplier engagement is a change management issue and needs to be managed as such. First create a sound foundation, then a concurrent three-strand approach is merited, namely, identifying the waves for targeted adoptions, a communications plan, and a skills development plan. In separate blogs each will be addressed.

Without a sound foundation the probability of an effective implementation is seriously compromised and, at worst, highly unlikely.

Be clear what the  future will look like and any organisational restructure, changes to processes and procedures before starting a discussion with the supply base. An absence of clarity will contribute to a lack of supply market confidence and reluctance to embrace the proposed changes. 

Critical to success is ensuring that the business case has recognised that one of the key risks to a successful S2P implementation is the failure to gain supplier ownership of the proposed new systems and processes.  Suppliers are one of the main stakeholders of any procurement change initiative, particularly a S2P implementation.

It is understandable that many suppliers will adopt a ‘wait and see’ approach with a S2P implementation and delay commitment.  After all, ‘what’s in it for them’, especially if ‘no change’ also means no loss of business? 

A S2P system is a two-way communication system and suppliers have to make a conscious business choice that they are prepared engage in that system and with the new ways of working.  Those new ways of working can be both new systems and new processes. For suppliers this could mean new investment in both technology and skills is required without any contribution from the customer organisation.

Part of mitigating the risk of a lack of ownership is the need for the implementing organisation to allocate a budget for supplier engagement. A second mitigation is to be clear which suppliers ‘need to be on-boarded’ to build up a critical mass which will enable the S2P implementation to be justified. It is a mistake to assume that there will ever be 100% supplier adoption of the new ways of working but there needs to be clarity of what the breakeven point of supplier uptake is.

Another critical success factor is the designation of a senior level champion who will be the public face of the initiative.  That person needs to be credible, empathise with the supply market and ensure their ‘voice’ is heard.

In a future post I will discuss Supplier Profiling.

eWorld30 Procurement & Supply: Celebration or a cause for concern?

Today it was Happy Birthday to eWorld Procurement & Supply - the free to attend conference. Always worth attending in these days when so little is allocated to training budgets.  Anyway, here's my selected view of the day which overall represents a good day.

Way back in 2006 I delivered a presentation on 'Selling Procurement Internally'.  I was amazed to hear the Keynote address from the Hackett Group's, Chris Sawchuk, still found it appropriate to deliver similar messages - okay, my presentation was to a public sector group but is it really okay for the profession to still struggle gaining internal ownership? That should be a cause for concern!

I then attended an excellent presentation from Simon Dadswell of Proactis. Now some headline statistics were revealed which are also a cause for concern:

• Only 28% of organisations are using Contract Management eProcurement solutions;
• 13% of organisations are using supplier management procurement solutions;
• 51% have P2P;
• 61% feel constrained by Policy!

Do you not find that startling? How long have we known about the business justification for eProcurement solutions - is it less than 15 years? What's the obstacle?

You can make our own judgement on Sawchuk talking about the need to adopt internal marketing approaches and Dadswell's eProcurement implementation statistics. Some may find it a wake-up call, others may find it reassuring that they're in amongst the laggards, while others may just let it all pass them by.  I think we really need to say that by this 30th eWorld Procurement & Supply should be a line in the sand and that by this time next year there has to be a transformational improvement. If not what are the real benefits delivered through attending eWorld?

Don't consider me to have a negative view of eWorld. I did actually attend other more encouraging presentations. For example, Conor Mullaney from exceleratedS2P shared some excellent lessons learnt on the need for an integrated approach to S2P - I think his credentials shone and he presented a compelling case. In a nutshell, lot's of interfacing of solutions within Source-to-Contract and Purchase-to-Pay but the future requires more integration.

Sam De Silva seemed to have had too many quadruple espressos as he raced through Legal Matters. His content is always first class but perhaps he would benefit from trying to say less and making the audience feel as if they are in the Dock. I noticed many using mobile phones to take pics of his slides. This is a man who certainly knows his subject and his enthusasim shines like the Pharos of Alexandria.

Finally I attended a double session workshop led by Lisa Malone of Procurious on '5 ways procurement should start to use social media'. I detected a lot of honesty among the attendees and an enthusiasm for moving forward - I even witnessed one delegate signing up to Twitter during the workshop. Digital Procurement Strategy, I think, will deliver a paradigm shift in procurement - hopefully eWorld will ensure that eWorld31 helps accelerate that shift and that Procurious continue their leadership.

Case studies in Procurement fraud for Dummies

Who would immediately spot the likeness between a Sony Vice President and an NHS learning & technology manager. Yet, apart from both making the news today, both carried out simple procurement frauds.

The Sony VP submitted false invoices and pocketed the dosh, while the NHS manager was slightly more creative in that he set up his own company and supplied the Trust at inflated prices.

These types of procurement fraud are straight out of the introductory pages of Procurement Fraud for Dummies and could have been easily avoided. Three-way matching is the traditional protection: the person responsible for the Purchase Order, the person confirming delivery and the person authorising the invoice payment need to be different people. An effective eP2P system is another solution - when you're dealing with £1m fraud the business justification easily stacks up, but the system needs to be properly implemented with the right protections.

Slightly more protection is needed to protect against the likes of the NHS fraudster, yet still fairly basic. He was able to invoice for services received from his own company at inflated rates, for example, invoicing £10,750 for a service which cost £1,500. Why on earth did the organisation not require a 'ballpark' estimate of the price compared against the invoice price? Although I am not a great fan of low thresholds for RFPs, it would be interesting to know what the Trust's thresholds were and whether those internal rules were policed. Then again, how was it so easy for an employee to sell to his employer - it may not have stopped the fraud but signing an annual declaration of interests may have helped.

Be wary of price comparison sites

"I'm very wary of the comparison sites because they are all gamed .."

It will hardly surprise you that those are not the words of a furry meerkat or the lyrics bellowed by some torturous moustachioed 'tenner'. However, I suspect it may well surprise you that they were the 'off-the-cuff' remarks of the Chief Executive of the Financial Conduct Authority to parliament yesterday. It will also hardly surprise you that the FCA quickly tried to distance this 'personal view' from that of the organisation.

Off-the-cuff remarks have made the news quite a bit recently and you may question how much credence should be given to them. Yet it strikes me that this particular remark, unlike a sanitised press statement, is probably closer to what the FCA Chief Executive actually believes and practices, than the more diplomatic rhetoric. So if the CX is wary of 'comparing the market' perhaps there is really some cause for concern.

In my private life I honestly haven't used the sites but I do carry out my own market research online and value the ease of access to information from the internet - yes, that approach helps me beat the price comparison sits in achieving the best deal for me.

But let's think about the mantra that greater transparency of actual spend data improves public sector efficiency as a result of 'empowering the armchair auditors'. As someone who has tried to interrogate some publicly available public spend data, I don't believe for one minute those publishing the data pay any more than lip-service to primary objective. I view it as the victim of obfuscation, protectionism and defensiveness. Think 'turkeys and Christmas'. Yet the aspirational transparency brings a cost paid for by  the very armchair auditors who don't appear to be using it in droves. Therefore,  I would really like to see the evidence that the desired outcomes of the 'transparency' have been achieved.

However, as a procurement practitioner I am also wary of the procurement version of price comparison sites.

'Smaller, Better, Faster, Stronger' - Raises the bar for public procurement?

Today's Times declared "Switching from paper to online might save Government £70bn" and there was mention made of procurement. The Title: 'Smaller, Better, Faster, Stronger: Remaking government of the digital age"  was captivating, and Twitter implied the Policy Exchange's report was a must read for anyone interested in public procurement. The scene was set of a document raising the bar for procurement.

Set aside that the Foreword is filled with political point-scoring. You discover in the Executive Summary there are three big opportunities espoused, one of which is electronic purchasing. Reference being made so early to 'purchasing' should have rang warning bells, but hey, we're still talking about BIG OPPORTUNITIES in the government use of digital and this "is primarily concerned about the big-picture priorities for the 2015 parliament" (p.14) regardless of who governs.

A fairly selective literature review comprises Chapter 2 - strange not much reference to the body of knowledge. policy and strategy relating to eProcurement in the public sector!

76 pages - yet really only page 36 and part of page 37 discuss the BIG OPPORTUNITY of 'purchasing'!

The missed opportunity of P2P implementation

More often than not P2P implementation is being driven by a motivation to streamline and automate the Accounts Payable function – transaction cost reduction in the Purchasing and Accounts Payable administration is the focus. However, while the administrative costs need be reduced much more could be achieved, and potentially longer-term costs avoided, if a more strategic perspective were taken. Unfortunately, the involvement of some Strategic Procurement Units is not always recognised as being fundamental to the success of a P2P implementation and as a result their input is not sought. This is a serious mistake and Procurement need to ensure that this opportunity is seized for procurement improvement.

The starting position is that you should not focus on automating the existing process; the ‘As is’. Instead you should use the disruption as a procurement transformation opportunity. It is an opportunity to revisit Policy, Strategy, Procedures, and Structure.  It is an opportunity to introduce best practice strategic procurement. It is also an opportunity to demonstrate to the market that you should be treated as a preferred customer and to get the market to make the necessary financial investments too.

Automating the existing processes may sound sensible, but it is far better to take a longer-term perspective. Implementing a new IT system and then having to change again in the short to medium term is costly – staff and suppliers can understand managed change but their patience will be quickly exhausted if you subsequently want to make changes which, in their view could be been predicted at the earlier implementation. 

So it is wise to clearly define how procurement will be carried out in the future and design the implementation to reflect the future ‘To be’ state. This will require agreement on the future Procurement Strategy. Included in the Procurement Strategy will need to be clarity on whether you intend to increase or reduce your Vendor Base.

Your P2P system will not work in isolation of