April 22, 2020

Build Your System On A Solid Foundation Of Data

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What’s your procurement problem? Is it colleagues who refuse to use technology and say it is “too difficult”? Is it overseas subsidiaries that do not link to corporate systems? Is it zero visibility and the impossibility of tying purchase orders with invoices?

No matter what the issues are, the chances are someone has offered you a one-stop solution. Someone has recommended or tried to sell you a procurement suite that promises control, efficiency, visibility, and ease of use, all from a single vendor.

It is an enticingly easy way out of the procurement puzzle that has led to an explosion in procurement software.

The problem with ‘single platform solutions’

The problem is the single platform solution does not always work. It has been the dominant force in procurement for some time, but plenty of organizations are wrestling with the fall out (ask global drinks company Diageo, which two years ago had to pay nearly £60 million to SAP, a leading ERP software provider, after using third-party systems to access data associated with SAP software).

Companies that had previously bought into the supposed magic of a sole provider are now discovering drawbacks. Maybe there is a hot new software service but they can’t use it because they are locked into a licensing agreement. Maybe they have outgrown the solution that worked five years ago, but it would cost too much to ditch it.

Maybe they are finding that systems bought from one vendor are still proving difficult to tie up because the vendor has grown by buying other software companies.

It is time to stop, step back, and think about what you want. Is traditional procurement still the best way for the future? No company is static; high growth companies will need different solutions, sometimes at a dizzying pace. Is one vendor always going to be the best provider?

Flexibility and agility are critical

Nobody can be good at everything, while businesses are so diverse that the best solution for one is far from the best for another; the procurement needs of a Middle Eastern retailer with revenues of £1 billion are very different to a multinational conglomerate with £100 billion of turnover.

Let’s face it; procurement departments are wrestling with a moving target. Not only is each company changing all the time, but there is constant technology innovation.

Flexibility and agility are critical to cope with corporate change, and a series of plug-and-play apps that will move, flex, and grow with your organization and its requirements may well be the best solution.

But it is worth remembering that there is no best solution in technology, only the best solution for today. What remains constant, however, is the foundation stone of data. Without good data, all the software patches in the world won’t improve the procurement function. Without good data, you can spend without achieving any of the promised efficiencies. Without good data, software integration is always going to fail in its outcome.

Technology is a distraction if it takes attention away from the real problem

Too many procurement functions jump at a solution, before envisioning the end result. But technology is a distraction if it takes attention away from the real problem, that for many firms there is no single “source of truth”. So the challenge for procurement is not finding the perfect technology solution but solving the problem of data management, enabling information to flow smoothly from one system to another.

Instead of focusing on outsourced software, many companies would do better to focus on what is demanded of their data. Data by its very nature gets corrupted over time; developing a process of data governance and continuous curation to ensure information is the bedrock of your ProcureTech could be the best investment you ever make.

It could lead you into a future outside the four walls of your company, to suppliers, partners, and customers interacting with common systems across the value chain. This is critical if there is to be a move towards “lights out” procurement, where automation replaces the fallible human. A plug-and-play model will allow solutions to be adapted to best suit the needs of those using them.

Solving the procurement puzzle requires good systems for specific tasks, seamlessly integrated. But whether those systems are bought from one or many vendors matters less than the management of the raw data on which those systems feed.

If you found this interesting then take a look at our other resources on data and supplier data management here

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