Time for Some Executive Myth-Busting
So, the CEO says to the executive team: “We are not unique. Every organisation buys things. It can’t be that hard. Let’s just buy a best practice system to give us best practice procurement processes.” No one in the room objects.
This is the sort of comment we hear time and time again from senior executives. The thinking behind it is understandable, but it is half the truth. It’s mythical, more than it is reality. All organisations do buy things and there are some common patterns to organisational behaviour.
The half that is not true is that organisations are not unique. Each organisation has unique qualities and ways of doing things, and not appreciating this can be expensive. It also usually leads to a general underestimation of the challenges in getting procurement technology working to truly support the business. We see this infecting technology strategy, technology selection, design & implementation resourcing, and change management efforts. This line of thinking has cost organisations a lot of money, wasted a lot of time, and reduced the velocity at which they can progress.
Yes, every organisation indeed buys things – often the same things – but it is also true that every organisation is unique, and the subtle differences add up to a lot. All organisations have unique histories. They have been created at different times, in different times, by different people, using different thinking for different reasons. They have also developed in different ways since their inception. This means they are unique in many, often difficult-to-see, ways.
When we as ‘experts’ come along to improve procurement processes we have a choice. We can take account of the unique context in which procurement exists within each organisation, or we can ignore that uniqueness and apply a generic, one-size-fits-all approach to new process design under the banner of best practice. We usually do more of the generic stuff, but we should be doing more of the unique stuff instead.
When we assume procurement processes should largely be the same across all organisations, it means we are also assuming that all organisations are not unique, or that their uniqueness is somehow not relevant to procurement processes. Patently, we all know this is not true. So, let’s consider for a moment how different organisations can be when it comes to their procurement practices.
A laptop is a laptop, right?
Let’s take an example as simple as buying a laptop. Here are just some of the differences we have found that influence the process of buying a laptop.
- Treat a laptop as opex and some as capex
- Are happy to buy for the employees directly from a catalogue, while others want the requests to go to a specialist buying team that aggregates requests and purchases periodically, while a refurbished laptop is issued to the employee in the meantime
- Want to image new laptops themselves, while others want the supplier to do it and apply an asset tag with a barcode
- Lease all their laptops, while others buy them outright
- Have standard configurations, while others allow their employees to select options
- Need the delivery to go to the IT support group, while others want it to go directly to the employee’s desk but with an IT ticket automatically generated
- Have laptops received through a receiving dock and receipted in the system by the dock staff, while others want it received and receipted by the employee
You get the idea. Indeed, different preferences can exist even within the same organisation.
Which preferences constitute best practice? They could all be part of best practices if they meet certain criteria. Which ones are better? They could all be appropriate. Do you think the generic procurement packaged solutions can accommodate these different scenarios? Can they handle the lease scenario, where the client organisation orders and receives the laptop, but a different financing organisation is invoiced?
Let’s say, the packaged solution you chose, cannot. Will you walk into the corporate treasurer’s office and tell them that they need to change the hardware financing arrangement because our P2P system cannot handle it? Probably not a career-enhancing move.
Defining best practices for your unique situation
The variations are amusing, but they also highlight the truth of the matter, and we’re still only talking about buying a humble laptop. So, it is easy to imagine how different the practices, systems and culture can be from one organisation to another. Taking the time to understand and address these nuances, rather than wishing them away, is a key to success in procurement technology.
Multiply the laptop scenario across all the other spend categories, many far more complex, and it should become clear that organisations are indeed unique. And this uniqueness should be central when designing and executing a procurement technology strategy. Assuming there is one right way to go after, is not true. Myth debunked.