Transformational Procurement: Digital Transformation’s enabling cousin
Written with guest contributor Alastair Lord.
Transformational Procurement: Digital Transformation’s enabling cousin
Digital Transformations are an exciting time for many enterprises. They are also often fraught with tension as the enterprise changes to accommodate new systems, processes and ways-of-working that emerge.
Whether the transformation is to address new business drivers, market changes or to fix technical debt, it will usually involve acquiring new technology/services and often demising the old, too. This is much more than simply the process of buying technology/services. And what’s more, it is pivotal to delivering success in most technology transformation journeys, to ensure the transformation doesn’t get bogged down, or disappoint in delivery. We call this Transformational Procurement, and let us explain why and how.
Key issues for the Chief Procurement Officer
Enterprises procure technology all the time. And often this is relatively simple and transactional: renewing contracts, adding licences, securing incremental reductions in cost. Enterprises rightly set up their procurement functions to support this transactional procurement work efficiently and effectively.
But during a technology transformation, the demands on procurement are often different, greater and more complex. Accordingly, the Chief Procurement Officer might be worrying about the following:
Are we clear on what kind of relationship we are seeking with new suppliers? Should we be investing in a strategic partnership?
Will we be able successfully to terminate the legacy contracts, and how will this affect our relationship with the new and old suppliers? Does this leave us exposed?
How demanding and complex should be the contract? I’m worried that it might be too costly to administer and manage.
The enterprise will change significantly over the life of the contract, and I am concerned that the contract might not be able to flex to reflect that.
The procurement may secure a good price for day one, but what about the price in three years? I’m not sure the contract will recognise and respond adequately to enterprise cost pressures.
I’m not yet convinced that the chosen contract and supplier(s) will deliver the desired outcome over the coming years. How can we be assured?
Enterprises are rightly not set up to respond effectively to the demands of such infrequent transformational procurements. And so, often it makes sense to support the enterprise’s transactional procurement team with transformational procurement specialists such as Refractis. We also have expertise in rolling out the technology that is procured, so we can help you to judge during the procurements what is actually deliverable.
Key issues for the CIO
The CIO will have a broader range of concerns about whether and how the procurement supports the transformation business case; they might include:
I’m not sure what technology would best deliver the transformation. Have we looked at the available products and services to determine the most suitable?
I want to be assured that the business case stacks up. Are there better ways to achieve the business objectives? Can we be clearer on what success looks like?
I’m uncertain whether we have the right balance between in-house and outsourced staff for steady state. How can we optimize this?
We know the transformation will involve risk. But I am not sure who will own those risks, or that they have been fully thought through and valued. How can I be sure the supplier will manage their fair share, and that I have funding to cover the remainder?
I can’t see how we will manage this contract effectively; have we aligned the supplier contract fully with our transformation programme?
Our legacy contracts might be going, but I am worried that their quality of service may degrade prior to their demise. How can we guard against this without costs spiralling?
I can’t see a credible view of the costs, inhouse and outsourced, to deliver the transformation and run it in business-as-usual over the coming years.
We believe that a transformational procurement should be supported by a business case or equivalent document that addresses such questions head-on. From our expertise in planning and delivering transformations, we are ideally positioned to advise in such planning work.
Where to start?
Just as an enterprise’s transformation teams are often augmented with specialist consultancy, we often see that an enterprise’s procurement teams are similarly temporarily augmented to help deliver the transformation. This doesn’t dilute the primacy of enterprise procurement in the transformation, rather in our experience it strengthens their role and integrates them more closely into the transformation programme.
How much specialist help is needed? We can offer a quick assessment. We look at your hot topics, touching on the sorts of areas outlined earlier. And in just a few days we can give you a clear indication of what support might be needed, and agree with you how best to deliver it.