Category Archives: Procurious News

Making It Stick #3: David MacDonald on Benefits Realisation

The Faculty Roundtable Members speak about benefits realisation and how to Make it Stick.

Hear David MacDonald talk about Benefits Realisation in the third of four videos from The Faculty.

The Faculty Roundtable is pleased to release its new research report, “Making it Stick”, on benefits realisation for your Procurement team.

Five reasons why procurement savings don’t stick

Earlier this year, The Faculty Roundtable commissioned an investigation into best-practice benefits realisation, and its researchers have conducted a series of interviews and data analysis to unearth the factors that prevent Procurement’s savings from hitting the bottom line. The results were boiled down to five key hurdles to Making savings Stick.

Download your free copy of this exclusive research on Procurious today.

5 Key Findings From The ‘Making It Stick’ Research Literature Review

Making it Stick

Have you read The Faculty’s Making it Stick report yet? As part of the investigation into the challenges and opportunities presented by benefits realisation, our researchers undertook a literature review to understand the present state of play for CPOs worldwide.

There’s some excellent material out there on benefits realisation, predominantly in the IT space where organisations want to ensure they extract the full value from significant investment in technology and systems. The amount of literature confirmed that this topic is front-of-mind for CEOs, CFOs and CPOs in procurement functions all over the world.

Boiling down the literature review to a handful of key findings produced the following five recurring themes:

  1. Globally, benefits realisation levels are poor and remain an enduring challenge for organisations.

Four years ago, Aberdeen produced a stand-out piece of research that contained an assessment of benefits realisation levels across 130 organisations.[1] The Aberdeen Worldwide CPO survey found that the industry average (middle 50 per cent of aggregate performance scorers) achieved an average of only 8 per cent realised contract savings. The best-in-class (top 20 per cent) organisations had an average of 17 per cent, while “laggards” (the bottom 30 per cent) realised only 4 per cent of contract savings.

Eight per cent is a truly alarming figure and by all rights should have sent the procurement profession into a panic. To illustrate, imagine you have a staff member who works hard, seems extremely productive, yet at the end of the year, someone from Finance taps you on the shoulder and informs you that only 8 per cent of the staff member’s claimed achievements have actually made their way to the bottom line. You’d be furious, and that person’s job would be on the line. The same applies to procurement teams as a whole – this statistic brings the effectiveness and credibility of the function into question.

Findings from an earlier survey published by Gerald Bradley (UK, 2006) estimated that 10 per cent to 25 per cent of potential benefits are achieved from investment in change, costing the UK over £50bn per annum.[2] The Faculty’s own 2015 survey found an average of 50 per cent in unrealised savings across our research participants [3] – an improvement on Aberdeen’s 2011 figures, but still representing a lot of money being left on the table.

  1. Benefits realisation is inextricable from change management

The Making it Stick report makes the point that there’s no quick fix to improve benefits realisation. It requires an organisation-wide change management program to encourage shared ownership of procurement’s targets, drive cross-functional collaboration, improve end-user compliance and build a cost-conscious culture. C-level support is integral to this process to mandate change from the top.

A report from the Great Britain Office of Government Commerce entitled Managing successful programmes (2003) defined the necessity for change very succinctly: “The fundamental reason for beginning a programme is to realise benefits through change”, [4] while Gerald Bradley also framed his definition of benefits around change: “A benefit is an outcome of change which is perceived as positive by a stakeholder.”[5]

Stay tuned for part two of this article, and be sure to download Making it Stick if you haven’t already.

[1] Limberakis, Constantine G. Procurement Contract Lifecycle Management: Assessing the value of contract automation, Aberdeen Group, December 2011.

[2] Bradley, Gerald. “Why more CEOs are turning to Benefit Realisation Management”, CEO Magazine, August 2006.

[3] The higher figure is likely to be due to the relatively small number of research participants drawn from The Faculty Roundtable, with higher-than-average functional maturity across the group.

[4] Great Britain Office of Government Commerce, Managing successful programmes, Norwich, The Stationary Office, 2003.

[5] Bradley, Gerald. Benefits Realisation Management: A practical guide to achieving benefits through change, Hampshire, Gower Publishing, 2006, p.102.

Making It Stick #2: Michael Rose on Benefits Realisation

The Faculty Roundtable Members speak about benefits realisation and how to Make it Stick.

Hear Michael Rose talk about Benefits Realisation in the second of four videos from The Faculty.

The Faculty Roundtable is pleased to release its new research report, “Making it Stick”, on benefits realisation for your Procurement team.

Five reasons why procurement savings don’t stick

Earlier this year, The Faculty Roundtable commissioned an investigation into best-practice benefits realisation, and its researchers have conducted a series of interviews and data analysis to unearth the factors that prevent Procurement’s savings from hitting the bottom line. The results were boiled down to five key hurdles to Making savings Stick.

Download your free copy of this exclusive research on Procurious today.

Procurious Big Idea #42 – Getting Involved With Risk Management

Matthias Fuchs, CPO at Boral thinks the procurement function needs to broaden its horizons.

Matthias talks about procurement broadening its horizons by getting involved with risk management and insurance management, adding the procurement rigour to the process.

See more Big Ideas from our 40+ influencers

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Did you know that Procurious is also on Facebook? Come and join our 14k+ fans!

There are many other ways to stay connected to Procurious – this post will highlight but one of them. Today we’re talking Facebook.

Like Procurious on Facebook

It doesn’t matter whether you’re a social media maestro, or tentatively dipping your foot into the cloudy networking waters for the first time – sometimes there are just not enough hours in the day to log on, contribute and share.

The folks here at Procurious know this, so that’s why we ensure all of our newsworthy announcements, talking points, notable events, and informative videos (along with the latest stories hitting the headlines in the world of procurement) are signposted across all of our social channels.

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Facebook is also great for those who might have heard of Procurious, but perhaps don’t feel comfortable being a committed member just yet.

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Social Sourcing, Talent Gaps And The Future Of Online Networks

A record of our Twitter chat with Xchanging Procurement #Procuretalk.

Twitter chat with Xchanging Procurement

Last week Procurious took part in a live Twitter interview with Xchanging Procurement (@xchprocurement). During the half hour we talked about everything from social selling to the future of social networks.

We present the dialog in its entirety below, just in case you missed it…

Making It Stick #1: Tarkan Koman on Benefits Realisation

The Faculty Roundtable Members speak about benefits realisation and how to Make it Stick.

Hear Tarkan Koman talk about Benefits Realisation in the first of four videos from The Faculty.

The Faculty Roundtable is pleased to release its new research report, “Making it Stick”, on benefits realisation for your Procurement team.

Five reasons why procurement savings don’t stick

Earlier this year, The Faculty Roundtable commissioned an investigation into best-practice benefits realisation, and its researchers have conducted a series of interviews and data analysis to unearth the factors that prevent Procurement’s savings from hitting the bottom line. The results were boiled down to five key hurdles to Making savings Stick.

Download your free copy of this exclusive research on Procurious today.

Member Exclusive – Make Your Savings Stick

The Faculty’s Research Consultant, Hugo Britt, announces the release of ground-breaking procurement research exclusively to Procurious members.  

Download the exclusive report on Procurious

Astoundingly, more than 50 per cent of contracted savings are not making their way to the bottom line of Australia’s leading organisations. This troubling disconnect between contracted and realised savings has the potential to undermine the very credibility of the procurement function.

The Faculty’s latest research paper ‘Making it Stick’, is a call to action for procurement teams, CEOs and CFOs to address the fundamental shortfalls that are costing organisations hundreds of millions in unrealised savings.

You can access ‘Making it Stick’ from the  Procurious community feed.

Our report highlights exactly where organisations are coming unstuck in the process of realising savings and provides actionable pragmatic steps that can be followed to ensure contracted savings hit the bottom line.

What we uncovered

Our research, currently available exclusively on Procurious, identified that:

  • 29 per cent of organisations have no defined benefits realisation program for tracking savings
  • 58 per cent of interviewees were unable to estimate the precent of negotiated savings that actually reached the businesses bottom line
  • Only 20 per cent of organisations incentivise their staff on savings delivery beyond contract execution
  • Weaknesses in benefits tracking programs are shared across public and private organisations
  • Significant change management needs to occur before organisations can fully realise the savings they have negotiated
  • There is a lack of definitions and measurements around savings tracking and benefits realisation that undermines procurements efforts in this area

Why you should download “Making it Stick”

This timely and practical research report will enable you to:

  • Understand why organisations fail to deliver on contracted savings
  • Access a roadmap to ensure that your contracted savings hit the bottom line
  • Hear from industry-leading organisations that have got it right
  • Access checklists, tools and measurements in order to define and validate your success in this area

Download our latest research from the Procurious Community feed www.procurious.com/community and make your savings stick.