It’s Digital Jim, But Not as We Know It
“It’s life Jim, but not as we know it,” was never uttered by Spock in Star Trek. It comes from the novelty band The Firm, in their 1987 hit Star Trekkin’ as a parody of the TV series.
With so many of us attributing the line to Spock, it has become a factoid: a piece of information that becomes accepted as a fact even though it is not actually true.
Today, when people talk about organisational transformation, many assume they mean a digital project. Another factoid.
When considering the next generation evolution of the procurement function within organisations, we like to say, “it is digital, but not as you know it.”
Digital technology will be part of the transformation, and it will do important, transformational things, but we can’t have the tail wagging the dog. Indeed, far too many IT projects fail or underperform because they are not led from the top.
The next generation, or Next-Gen, of procurement is first and foremost concerned with strategy, followed very quickly by value creation, and then operational capability. Technology will be put to work, to varying degrees, across all three areas, as the transformation strategy requires.
There must be a clear line-of-sight from strategy to performance
With strategy, we want to know that there is a clear line-of-sight from the organisation’s articulated strategy to every major procurement decision and the performance of every aspect of the function. Indeed, every part of an organisation should have that degree of alignment. Procurement can play a big enabling part in achieving this objective.
Strategic alignment dovetails into value. Next-Gen teams are super-enabled. They have multidisciplined expertise, responsive and reliable processes, modern governance, an unambiguous operating structure, and high quality data – much of which comes from carefully deployed technology. Interestingly, once value enhancing resources are in place, they tend to build momentum and get better and better through continuous improvement.
We should not be surprised to see Next-Gen teams extend their expertise beyond price, savings, and other traditional financial metrics. Such teams can be pivotal to building supply chain resilience. They enable more productive supplier collaboration, bring early intelligence to product or service innovation, contribute to the identification of new market opportunities, and can support sustainable profits.
Strategically aligned, value-enhancing resources result in more effective and efficient operations. How? Firstly, by simply being more purposeful, being informed by the strategy.
Next, the strategic use of technology means lower value, labour intensive tasks and processes can be streamlined or automated, freeing up expertise that can be redirected to higher value activity: like proactively supporting other parts of the organisation. Like enhancing relationships with key suppliers. Or, like deriving insight from new data analysis, which the transformation has made possible.
Resources will be allocated differently to the past paradigms, especially if new capabilities are being developed. And keep in mind, some changes are less tangible than others – such as the way business perspectives change, and the way relationships are conducted.
A Next-Gen procurement team is easy to do business with. They are more interested in helping colleagues to achieve business goals than enforcing compliance. More interested in insights and innovation too, than reporting trivial metrics.
It is also likely that some services and reports will be moved to a self-service model, while the team attends to high-value tasks.
Next-Gen people have recalibrated their organisational outlook. They are less operationally focused and more strategic. The team is multi-disciplinary and collaborative ideation happens, possibly where there was little to none before.
Technology must serve strategy
And yes, digital technology enables and enhances delivery. Even third parties may play a role performing functions the team has ceased to perform – as they may be core for those providers but a distraction for the team.
In all of this, you can see how technology must be strategically deployed across the function. Many like to think modern technology is an out-of-the-box solution that just has to be plugged in and people will use it. It is simply not the case. Indeed, it is dangerous to think a unique organisation can be transformed by installing generic software. Rather, the right technology in the right hands, deployed in a highly considered way, to achieve strategic goals, is the right approach.
Like the characters in Star Trek, their mission is to go boldly where no person has been before. And just like Star Trek, with its warp drives, phasers, and transporter beams, there is some cool technology involved, but the story is always about the crew.