Off-the-rack or tailor-made?
When it comes to procurement technology, what suits vendors may not suit you
Procurement technology vendors have done a good job claiming ownership of the term ‘best practice.’ Unfortunately, it is misleading and a little mischievous as it implies that there are specific processes that are best and deviating from these means deviating from best practice. Why let facts get in the way of a good argument?
These claims serve solution vendors well because their systems are relatively rigid and provide processes already built-in. They are not about to accept that any of these processes are anything but best practice.
Of course, you might be able to take the waist in a centimetre or two and cuff the trousers so, yes, there are some configuration changes you can make but, in reality, you cannot change the processes they have sold you.
What is wrong with that? Well, for some companies it may well match their processes and the nature of their business. However, for many, it means that your business has to change the way it works to suit the system, not the other way around. This suggests that you cannot be applying best practice processes now — because they are not our system's processes — so the path to best practice is to change what you are doing and start working according to the processes that are built into our system.
It’s good business for solution vendors, but it’s not best practice
This amounts to a bonanza for solution providers because it means they can build one system, stick it in the cloud, and sell it time and time again. It’s good business for solution vendors, but it’s not best practice for you.
Best practice isn't a process. It's a set of outcomes that the process should deliver. And, if we think about it in this way, a best practice purchase-to-pay process should deliver the following outcomes:
- Only buy what is needed
- Buy approved items from approved suppliers (when important)
- Buy under conditions and pricing arranged by specialists
- Get what was asked for — no more, no less
- Pay on time but only for what was delivered
- Satisfy tax and accounting requirements
- Generate rich data for analysis
There are an infinite number of process variants that can deliver these outcomes.
Of all these possibilities, which process variant is the best? Well, logic would have it that the best process variant is the one that fits most neatly into the way people want to work to achieve their objectives, and that is the fastest and easiest for people to use.
The off-the-rack solution vendors can only ever offer a small subset of the process variations most organisations need across their business. No off-the-rack system can take account of the unique context of your business and your unique non-procurement processes that trigger the need to buy something in the first place. If you ignore the unique context of your organisation, you get resistance from employees, non-compliance, longer cycle times, poor data, higher risk, and a world of pain for management to deal with the fallout.
So, when considering implementing an off-the-rack procurement solution, you need to understand the costs, risks, and benefits of asking all of your people to change the way they work to suit a specific, prescribed process that has been built into the technology package. Like all types of one-size-fits-all products, the benefits are overestimated, and the costs, shortcomings, and risks underestimated. Indeed, in this market, some players hope to capitalise on the fact that the risks are poorly understood.
You can generally do better than that — you can achieve best practice — with tailor-made technology and processes. Just like a suit, tailor-made fits properly and looks smarter.
We all know analogies only work to a certain point and, in the case of this suit analogy, that’s a good thing. Because, unlike a tailor-made suit, tailor-made technology is no more expensive than the off-the-rack version. Knowing that makes the choice a lot easier.