Are your procurement tech solutions fit for purpose?
Developing a bespoke technology solution is more practicable than ever thanks to reduced technical development costs.
Using technology solutions in procurement is a part of daily life. But solutions – such as company-wide Enterprise Resource Planning (ERP) systems or procurement-specific tendering tools – can be a mixed blessing. Strong functionality or standardization is often accompanied by poor usability or a lack of granularity.
Below are three of the traditional compromises associated with technology solutions.
1. Rigid systems
Staff members in procurement are spending up to 40% of their time managing systems – entering and extracting data and ensuring compliance – found a recent client study by Efficio. A significant share of this time spent was ‘because the system needs it’ rather than for any direct benefit. This often stems from systems being rigid, to the point that the original business need is forgotten or neglected.
2. One size fits all
Technology firms are often product-focused. Huge amounts of time, money and effort are ploughed into the development and redevelopment of their solution. Sales pitches may emphasize how tools are configurable, but the focus is on how an organization can adapt to a tool or product, not how a tool or product can adapt to that organization.
3. Limited reporting capabilities
Highly structured technology tools, designed to integrate with ERP and Peer-to-Peer (P2P) systems, often focus on procedure and governance. They also often collect data in the way required by finance.
While this is valid and necessary, it can mean that the reporting capability and operational usefulness of tools for decision-making can be limited. Procurement decisions require data at a different level of detail than finance. To enable better decision-making, data needs to be available instantly, not at a time dictated by reporting cycles.
To get around this issue, procurement leaders often turn away from system-based reporting. They ask their teams to find workarounds, or build complex spreadsheets and a plethora of PowerPoint decks. Yet this brings its own challenges:
- Excel is localized – often held on desktops or a badly maintained shared drive – and hard for multiple people to input into the same spreadsheet and therefore difficult to use for ‘live’ reporting purposes.
- PowerPoint is an excellent tool for presentations, but represents a ‘moment in time’. Data quickly changes and the deck becomes obsolete, meaning decision-making is compromised or lots of time is spent rerunning reports periodically.
Despite the three aforementioned challenges, bespoke technology solutions are becoming increasingly commonplace.
In recent years, open-source software, new approaches to coding and the rise of cloud computing have slashed the cost of developing technology solutions. Web applications and online tools that would once have been prohibitively expensive for procurement departmental budgets are now well within reach.
This means procurement teams can access bespoke or highly tailored solutions that meet their nuanced needs, rather than expensively tweaking a ‘one-size-fits-all’ solution.
Efficio has recently supported clients in implementing complex contract management applications, simpler e-tendering tools and automated analysis dashboards. The approach can also be applied to tracking performance measures, understanding spend, or structuring supplier management.
Businesses reluctant to sign off new software spending should remember that external goods and services can make up two thirds of company costs. A moderate investment in the right technology and accompanying processes can offer massive returns.
Author: Dan Peck, Manager at Efficio