BPO Thought Process

BPO Thought Process

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What to do when your eProcurement solution doesn’t live up to expectations

Category : Procurement
How well is your eProcurement solution performing compared to projections in the initial business case? If it’s falling short of expectations, you’re not alone. Many procurement leaders suffer from underperforming KPIs and missed timelines. 
 
There are many contributing factors to these issues. One of the most common that I come across is the delay between the implementation of the eProcurement system and the increase in both the quality and volume of content, especially with a large number of suppliers. This lag can result in increased frustration and thus lower usage by stakeholders. Consequently, business case-busting numbers of FTEs are tasked with ensuring content is produced in order to counter the slow ramp-up. What’s more, the resulting system ends up being used only as a portal to host punch-out links to suppliers’ portals. 
 
So how can you prevent such issues? The following four scenarios outline the common challenges and potential solutions to make sure your investment lives up to its expectations:
 

1) Poor adoption by users

As a buying organization, you assume that the eProcurement solution you select will be all-encompassing and foolproof. However, the core functionalities and buying channels to capture the bulk of spend may not have been readily available following implementation. 
 
This lag time before buying channels become fully operational has a huge impact on the future effectiveness and usage of the system because it disrupts user adoption and irreparably damages their confidence in the solution. Internally, the solution may become branded as “not useful.” The fact that we operate in an enlightened age, where procurement adoption is meant to be led by end users and facilitated by providing the simplest, smartest, and fastest route to purchasing, only compounds this situation. 
 

Recommendation: 

One of the key success factors for a procurement initiative is the use of effective order and invoice automation, which occurs when spend capture is maximized through the eProcurement system. These also contribute to the bulk of business case benefits. 
 
When adopting a procurement solution, a business must first focus on establishing a strong foundation with robust order and invoice automation capabilities. This happens when all optimum buying channels are available to be used by the casual and professional buyers to maximize spend capture. Buying organizations should ensure that their eProcurement solution partner is enabling the usage of all optimum buying channels immediately following the implementation of the eProcurement solution.
 
 

2) Stalling growth

You bought an easy-to-use eProcurement solution that ticked all the boxes, but did not have a plan to ensure high supplier activation and quality content. As a result, you’re not meeting the expected KPIs or getting full coverage of addressable spend.
 

Recommendation:

Realizing the full potential of your eProcurement solution business case is dependent upon the usage of the system. Easy-to-use technology needs to be paired with approaches that ensure the quality and flow of the content in the system, which will in turn drive higher usage rates. Buying organizations should demand support from their eProcurement solution partner in order to guarantee the quick onboarding of suppliers and content during the actual implementation while outlining well-defined KPIs.

 

3) Resource drain

Your eProcurement solution does not have sufficient capabilities in content management, either because the extent of your requirements was not fully taken into account in the original business case or because solution expectations have not been fulfilled. To close the gap, human resources have to be recruited or reassigned to carry out these content management tasks.
 

Recommendation:

Automation is at the heart of the business case for eProcurement solutions. Automation also needs to be used in the content management process. Manual content management is very demanding on resources and means that the benefits received from other contributors to the business case may be lost. 
 
The onus to periodically create and upload catalog updates should, by default, be passed on to the suppliers even though the buying organization retains the responsibility of approving the catalogs. Casual users should only buy from approved supplier catalogs. In exceptional cases, for categories like IT or SW licenses, buyer-managed catalogs should be created. 
 
Your eProcurement system should support automated content management processes with functionalities such as difference reports, catalog scoring, and version control of catalogs in order to minimize the manual effort needed during the process.
 
 

4) Insufficient change management

Sufficient weight-age to the change management issues was not provided for your procurement transformation initiative, nor was a single point of ownership for the eProcurement solution identified. Consequently, momentum decreased, impacting usage and benefit levels.
 

Recommendation:

A procurement transformation initiative usually demands significant changes in the operating models of an organization. A skilled and experienced change management owner should manage these modifications. The change management owner will need full commitment of the senior management. Also, to sustain the change over time, a solution owner for the eProcurement solution needs to be assigned, whose key responsibilities should be to drive increased usage of the solution with higher quantities and improved quality of catalogs in order to achieve the conditions of the business case.

 

Summary

We know that fulfilling the business case of an eProcurement solution generally means achieving higher productivity in procurement and invoice management teams.  This can be achieved through harmonized processes, higher automation in the order and invoice management processes, greater compliance through reduced maverick buying, and effective tail-spend management through better visibility and control over such spend. 
 
Although it is not difficult to understand where the benefits should come from, implementing the solution in the right manner and managing the change process effectively remain the keys to ensuring that the relevant targets are actually met.
 
How many of these common disappointments have you suffered from? I would love hear about your experiences.

About the author

Sujay Dutta
Sujay Dutta

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