Procurement has always been an ad-hoc role, often emerging with someone from the finance team being roped in to start managing the process.  

However, while this approach served many companies over the last few decades, the modern mindset brings with it completely reinvented perceptions of procurement. 

 Organisations have realised that with solid systems, efficient processes and the right people in place, huge sums of money can be saved. Then, with the correct use of AI, best practice automation is at your fingertips. 

With digitisation and modern procurement approaches, all the long-ignored holes of rogue or maverick spending can be plugged, and redundant historical contracts (which are often allowed to continue renewing - at significant cost - in the background) can finally be challenged. As a result, with due diligence and targeted digitisation comes massive growth and marked savings. 

So, the questions that remain are, in the face of such entirely new approaches, how can the associated challenges be successfully managed? 

🍀 Laying the Groundwork 

One of the primary hurdles that organisations face when implementing this new way of working is forgetting to fix the processes that already exist, before moving on to adopt a more advanced approach. 

According to Thierry Ojezyk, Head of Accounting and Tax at CarOnSale, many older and larger companies have fallen into the trap of replacing the system, but failing to first address issues in their current processes. 

Commonly, he explains, they make this investment, but are still stuck with too many checkpoints and approval steps, and this continues to ruthlessly slow everything down regardless of the new system. So, all the system achieves is creating an extra bottleneck. 

Long before the question of what software to incorporate is broached, a purchasing process needs to be implemented. Ojezyk urges that, without the foundational financial elements in place, purchasing controls cannot be correctly or accurately implemented. 

This is because, without the basics, there is no way to allocate budgets, approval limits, processes, and so on. Then, in larger or older organisations, even if those processes are in existence, they often get to a state where they have become unnecessarily complex, creating a structure that has grown its own arms, legs or features that (although would be beneficial in theory) are no longer being used properly. 

This is a journey that all organisations will need to embark on at some point. But, it’s an obstacle that is commonly hampering modern procurement efforts. In order for these initiatives to be successful, the organisation’s technology, people and processes need to be in place, driven by leadership, and fostered through consistent communication training. 

💡 Managing Changes to Organisational Culture  

The first challenge of getting teams on-board with modern procurement is managing the legacy system (or in some cases, the absence of a legacy system). 

In instances where there is no legacy system, everyone in the organisation is essentially creating ad hoc, unlinked processes that best suit them. While this may be an effective way to keep morale high, it’s far from the most efficient approach. 

Deborah Staphorst, Senior Buyer at Derivco, explains that as organisational culture evolves towards new ways of spending, change management will be imperative. She outlines how her organisation approached this shift by starting stakeholder engagement meetings. Her team members all selected a department to work with, and started a weekly, one hour, face-to-face session. 

During these sessions, they discussed ‘What are your issues?’, ‘What are my issues?’, and ‘Why are my issues affecting your issues?’. Not only did this enable all parties to work towards a middle ground, but it also fostered a far better understanding of what changes were happening, and why they were necessary. 

Then over time, the assumption that procurement would just act as another roadblock was eased, which meant that people would actually be far more willing to go to procurement. 

Organisational culture and change management are commonly forgotten, or left to approach at the last minute. As a result, when these large programmes are introduced, users get frustrated with the changes that are being implemented, despite the fact that they will, ultimately, save them time and make their lives easier. 

Messages of future benefits often get lost when you’re telling users that the way that they used to work is no longer applicable. So, the advantages of modern procurement need to be communicated strategically. 

For instance, Staphorst explains that through these stakeholder engagement sessions, users could understand why each step was required, the risk that incorrect processes posed to the company, and the benefits of doing it the correct way, including (but not limited to) the cost savings gained for the company. 

Then, when modern procurement management is implemented, it can actually serve to shape the company culture, in a way that aligns with the wider organisational vision. Fixed spending control mechanisms and a strengthened procurement process govern spending without making users feel like the ‘guard rails’ are omnipresent, thereby encouraging employees and executives alike to become more frugal and considered with their spending. 

🤝 Securing Stakeholder Support and Communicating the ROI  

Equally, Ojezyk adds, strong collaboration and communication are equally as important at lower levels. After all, if anything, less senior team members are more likely to use these tools on a daily basis. 

Of course, employee engagement initiatives are imperative, but users have to be genuinely motivated to make the switch to a new tool, and invest the extra initial effort. 

If all departments understand the advantages of new systems, the thinking behind the system change, and the benefits that it will unlock for them, then they will be far more supportive of the change. By communicating the benefits in their specific context, users will see the change as a tool brought in to assist them, rather than an extra burden implemented from above. 

For example, as Ojezyk puts it, people always understand changes when it’s a question of money coming into their pockets. 

So, management drawing a link between the success of the software at making savings, and incentives at the end of the year, is one of the most effective ways to illustrate the benefits. Simply put, people will understand that the more the process is used, the greater the cost savings will be, and the higher the savings, the more will be available for bonuses. 

Supporting this, there can also be an element of championing people that are adopting the software, and are taking on the right behaviours. Beyond the incentivisation purposes of this, it also serves to showcase the approach that you want others to follow. 

Ojezyk advises that, for the instances of change resistance that inevitably do occur, commitment from the leadership will complement these communication efforts. 

The combination of leadership commitment with communication and ongoing training will ensure a strong, clear and future-proof approach to the implementation. Finally, Staphorst adds, the last piece of the puzzle is adopting a scaled, gradual approach. 

We’re starting small and just easing everyone into it, and the fruit that has been born already has been next level, she explains. 

 

By scaling modern procurement solutions over time in a waterfall approach - rather than trying to change everything at once - the best results can be secured, and everyone can successfully be kept on-side. 

This discussion was part of our research for the Pivot x ProcureTech The Modern Procurement Opportunity whitepaper. The full whitepaper - including contributions from other procurement thought leaders - is available to read now.