Tag Archives: e-procurement

Procurement Process Technology: 3 Keys To Adding Clarity Post Covid-19

Here are three keys to conceiving, deploying and using technology to elevate the performance of your procurement process operations from IBM’s Chander Vashistha


Procurement organisations depend on technology to manage their source-to-pay (procurement) functions most efficiently and effectively. Technology also provides exceptional services experience to their requestors, buyers and suppliers. However, organisations often find the process of selecting, implementing and using technology platforms and applications challenging. While procurement technology provides many benefits, organisations that do not select the right technology, integrate the technology to create a connected ecosystem and create processes to use the technology often do not realise the full benefits.  

Clarity is the cornerstone of successful procurement practices, and procurement technology must support and enable clarity between both parties. When organisations do not receive full value from technology systems, the issue often comes down to clarity. However, it’s essential that clarity exist before adding in the technology. Technology doesn’t create clarity, but improves and enhances clarity already present in the process.

Organisations with good clarity in their procurement practice see significant competitive advantages, business continuity, resilience and digital transformation. While these aspects are essential for a successful business, the COVID-19 pandemic and resulting business disruption significantly increases their importance.

Here are three keys to conceiving, deploying and using technology to elevate the performance of your procurement process operations:

1) Align the purchasing strategy with operations and vision

When organisations lay technology on top of disconnected strategy and vision, the new platforms and systems often magnify the misalignments. Before focusing on technology, organisations should review their current strategies to ensure alignment. A well-connected procurement strategy and vision drives implementation of a frictionless technology ecosystem rather than a patchwork collection of discrete point solutions.

The purchasing process works within both your procurement process and overall company operations. On an even more granular level, the purchasing strategy tightly connects with procurement operations’ vision and procurement operations strategy. Before making changes, especially in processes and technology, practitioners must step back and consider strategic alignment.

After understanding your organisation’s purchasing strategy, procurement vision and procurement operating strategy, the next step is ensuring they all align with one another. After making any necessary changes, your organization will have the foundation to begin looking for technology that supports all three.

2) Understand the four types of procurement technology

Procurement professionals often assume — incorrectly — that all procurement platforms and systems fall into a single category. By understanding the different types, organisations can ensure they are researching and purchasing the best type of technology for their needs. Without clear understanding of the different types of procurement technology, organisations may purchase multiple technologies performing very similar functions, which creates waste and redundancies, not to mention wastes funds.

Procurement organisations use the following four types of technology:

  • ERP software and blockchain equivalents – SAP-MM, SAP-FICO, TYS blockchain, IBM Temp labor blockchain and RSBN blockchain
  • Commodity or process-neutral procurement technology – SAP Ariba Solutions, Coupa, Tradeshift, Sourcematrix and IBM SpendIQ
  • Commodity or process-specific procurement technology – IBM Oniqua, SAP Concur, SAP Fieldglass, Amazon Business, Alibaba 1688, Uber for Business, Service Now and JIRA
  • Cognitive e-procurement applications with intelligent workflow platforms – IBM Procurement Service Desk, IBM Watson Virtual Buying Assistant, IBM B2B Marketplace and IBM Direct Spend IQ

Organisations often invest in one or two types of procurement technology, which does not typically enable achieving their procurement strategy and vision. Often these organisations assume they fell short due to the technology implemented. By deploying relevant technology from each of the four types, organisations achieve the clarity needed to meet their goals.

3) Focus on cognitive e-procurement applications

Organisations find a wide range of choices in technologies, especially in cognitive e-procurement applications, which use artificial intelligence to open procurement transformation processes. This type of technology helps organizations transform the procurement process experience for buyers in direct, indirect, MRO and capital purchasing.

Because cognitive e-procurement applications are relatively new and come with a large amount of hype and innovation, organisations should fully understand what features they need as well as the features offered by each solution. By selecting the right application for your specific needs instead of the most feature-rich product, you’ll significantly increase your ROI and strategy improvements.

For example, Trust Your Supplier blockchain, which came to market in 2019, helps procurement professionals automate and digitize supplier information like a “digital passport.” The application also provides the immutability and trust that comes with processing transactions through blockchain. Because the application shifts the process out of procurement operations, the technology reduces cycle time, lowers transaction costs and improves reliability of supplier information management operations. Additionally, suppliers streamline their process by only submitting information to a customer once and can share the same information to other customers using a digital key for record access.

Making the move to integrate technology

As organisations continue to manage change and disruption due to the pandemic, creating clarity in your procurement cycle remains a high priority. Through using cognitive technology driven by intelligent workflow platforms, in conjunction with the three other types of technologies, organisations can create the most effective and efficient processes that drive business value. By aligning strategies, understanding the types of technology and implementing cognitive e-procurement applications inclusive of the technology ecosystem, organisations can improve performance, maturity and outcomes.

Chander Vashistha is the source-to-pay practice leader at IBM.

Are You A Procurement Starter Or A Finisher?

Are you a starter or a finisher? According to IBM’s Barry Ward, you’d better be both! Barry discusses the key skills most critical to procurement in the coming years.

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Barry Ward, Procurement Brand Manager, Global Business Services at IBM is a keynote speaker at Big Ideas Summit 2017.  He’ll be explaining the big ideas behind Watson and the opportunities that cognitive tech presents to procurement. When we spoke to Barry ahead of the event he was keen to remind us that, despite rapid tech developments, traditional procurement skills are far from being made redundant.

How do you stay productive and current in a world of fast-paced innovation?

  • Collaborating with colleagues
  • Networking with others – using social media and other channels
  • Building and nurturing an ecosystem of organisations that are leading or developing solutions that may have or will have an impact in your function

What key skills are critical for procurement in the next 5 years?

We will always need traditional procurement skills such as the ability to be a strong negotiator, to communicate well internally and externally, to be a starter and a finisher. But, on top of this I think the importance of an open mind and curiosity in terms of the role that technology can play in the future is going to be more important than ever.

There will be an increasing need for project management skills, change management, relationship management skills. This is on top of the usual and still critical traditional procurement skills such as category expertise or negotiation skills. I can also say that there is a growing importance in soft skills: communication, teamwork and collaboration and problem solving.

How has technology, the Internet of Things and e-Procurement affected IBM?

Technology has placed a key role in IBM’s transformation over the past 20 years or so. Its importance is perhaps more critical in the the current phase of our procurement transformation. Understanding how digital technology can transform the supply chain and our source to pay activities is critical in terms both driving our efficiency and effectiveness but also to showcase how procurement can drive value throughout our organisation.

This positions Procurement in a much more strategic role than ever before. Procurement data is much more visible than ever before.  Insights through combining unstructured and structured information augment our knowledge, with alerts being posted to mobile devices instantaneously means that buyers can have much better assurance of supply continuity, of being able to understand price opportunities and to focus their time and energies on higher value activities than ever before. Lower value work will become automated or systems-driven. This is all good news for Procurement.

One clear impact of this transformation is that our key stakeholders now have very high expectations of high performance from Procurement personnel, perhaps more so than ever before, but the rewards are clearly evident in terms of the value that individuals can bring as well as the procurement organisation as a whole.

How valuable have mentors been in your career?

Mentoring is a highly personal thing. Some people need to have guidance and direction particularly in an organisation that may be widely spread and fast-moving, and if you are looking to move around different functions. Similarly for those who are in a smaller organization, mentors can bring an external, broader perspective.

Others are confident of their own abilities in charting a course for their own development and progression. I have had mentors in the past, particularly when I was in the early stages of my career. The more confident you are of your attributes and ambitions the less I have found that I needed mentoring. I spend time mentoring others mainly from within IBM and mainly from other geographies.

How did you first become interested in procurement?

I didn’t know very much about Procurement in my time as an undergraduate. It was not a profession that had much coverage when I was at University, unlike Finance or Engineering.

My first job as a business graduate was as a Purchasing Analyst running Bill of Material queries in a MRP system for a large manufacturer. This brought me into contact with many parts of the organisation including procurement. The procurement manager at the time was quite an intellectual and gave me a broad view of the role that procurement can play in an organisation.

Clearly he influenced me as I have spent my subsequent career in procurement and supply chain roles!

How will cognitive technology impact procurement professionals?

Cognitive technology will transform the role of the procurement professional and the impact that he or she can make for their organisation. It will be able to remove some of the more prosaic parts of the procurement role, such as data gathering and analysis, together with augmenting a buyer’s knowledge thus enabling them to spend more time on higher value tasks and ultimately make better decisions and be more effective.

Procurement professionals will need to understand how cognitive technology works – so they can be alert to potential mistakes that can happen from cognitive solutions, so that data input from these solutions is relevant and accurate.  It will eventually help, and force, them with their career progression as well as developing their expertise.

Join the conversation and register as a digital delegate for Big Ideas 2017

The Smart Way to Buy Your First ERP System

You might not realise it, but you could be making a common mistake when buying your first ERP system.

When should a growing company start thinking about a formal, automated spend management program? At the same time you get your first ERP system. The two go hand in hand, but most companies put an ERP system in place and then, when they get to about 800 or so employees, they start thinking about automating spend management, starting with e-procurement and e-invoicing.

A little further down the road, they start thinking about systems for budgeting, travel, employee stock administration and maybe analytics.

The problem with thinking about all these systems separately and sequentially is that instead of thinking about the optimal way to handle each function, you’re thinking about how to solve each problem within the constraints of the systems you already have.

It’s like building a house without a set of plans, one room at a time. It’s an inefficient way to build, and you’re going to end up with a pretty funky floor plan.

You can save time and money, and gain a competitive advantage, by thinking about your finance system as a whole, and drawing up a set of plans for building it from the foundation up, starting with ERP and spend management.

It all starts with invoicing

Your finance system really starts when you start paying invoices. What most growth companies do is buy QuickBooks or some other inexpensive entry-level software to do that, and then shift their focus back to sales and revenue.

As the company grows, it becomes evident that this entry-level system is no longer meeting the company’s needs so they start thinking about an ERP system. These days that doesn’t have to be a multi-million dollar undertaking. Cloud ERPs such as NetSuite can work for businesses as small as 40-50 people, and they can scale up to work for as many as 100,000 people.

So, the CFO or Controller spearheads an effort to get an entry-level ERP system to address core financials, and then, once again, they shift focus back to sales and revenue.

The ‘flip the switch’ myth

Spend management – most notably, e-procurement and e-invoicing – are what people typically tackle next, but most postpone thinking about them until they get there. Or they think, “the ERP system has some requisitioning and invoicing functionality. We’ve got the license and we’ll just flip the switch on those when we need them.”

If only it were that easy.

Yes, many ERP systems do some basic requisitioning and e-invoicing. But their functionality will not come close to satisfying requirements for effectively managing spend, and there’s too much they don’t do, such as sourcing and contracts.

Flipping the switch will only expose those decisions you didn’t make at the outset. Don’t fall into the “flip the switch” trap. Nobody intentionally uses the requisitioning in their ERP to manage spend – they settle for it.

Or, they figure out they need more functionality than the ERP provides and launch an entirely new initiative to vet spend management solutions. But it could have all been figured out at the point where you went from QuickBooks to NetSuite, without taking too much more time, money and resources.

ERP and those first pieces of spend management should be done all at once, so bring procurement and AP to the table for that discussion. Not only will you make a better buying decision, but you’ll have an opportunity to streamline the implementation process.

It will only take fractionally longer to implement both at once, but if you do your ERP implementation and then come back later to implement spend management, you’ll end up doing a lot of the same work over.

A Biggish Bang

There might be reasons to do it that way, but those have to be weighed against the fact that when it comes to your financial management system, it’s not “if” but “when.” It makes more sense to implement ERP and spend management solutions together in a biggish bang because like peanut butter and chocolate, they’re even better together.

Spend management is a low impact, high return insertion that will make your ERP implementation better. The procurement piece can create all the purchase orders that get pushed into the ERP, where you’ve already got the right categories and accounting codes.

Why wouldn’t you want to feed your ERP good, clean data to begin with, in an easy way that people can use and understand? With the cloud, it doesn’t matter if you only have twenty people buying things, or if you’re only doing a few hundred invoices a month.

You probably won’t automate your whole financial system right out of the gate, but you should still think it through and draw a set of plans with the end goal in mind. So, think thrice before you buy that ERP system. Think about the next imminent piece, which is spend management. Think about how you build out from there. You’ll be way ahead of the competition that’s doing it the way we’ve always done it.

You’re not going to have a lot of messes to clean up because you set it up right from the outset, and you’ll be paying a lot less for transactional processing than the competition.