Digital Transformation: Procurement & IT Working Together
For this webinar on ‘Digital Transformation: Procurement & IT Working Together,’ Duncan Clark, Head of Content & Product Marketing at HICX, was joined by Karthik Rama. Karthik, otherwise known as ‘The Procurement Doctor,’ is a procurement practitioner with years of experience in the industry, who uses his deep expertise to help various organizations around the world transform their troubled procurement processes.
Procurement digital transformation & IT digital transformation often have the same high-level corporate objectives, however, their emphasis on how to reach these goals can differ. It means that fostering a culture of mutual understanding and collaboration between these key stakeholders is a vital component for ensuring successful outcomes within digital transformation programs.
Karthik has been on both sides of the process, giving him that crucial insight into the language of technology on the IT side and the language of Procurement on the other. He joined us to discuss:
- The data foundation and stakeholder considerations
- Best practices for involving IT
- Maintaining the relationship between Procurement and IT throughout a digital transformation project
- A case for conducting a Proof-of-Concept (POC) exercise and Centers of Excellence
The data foundation and stakeholder considerations
Karthik starts the discussion by providing insight into some of the past transformation projects he has worked on. One of the biggest challenges and issues he identifies is how, although most organizations realize they have a problem, they often don’t know how to identify it specifically and implement the steps required for change. Data is also often an issue, as it is frequently not streamlined or standardized.
“That’s the basis of a lot of my projects as well because there are a lot of people who want to change but they don’t know how to change. They want to just look at the tools and think our issues are resolved. That isn’t the case unfortunately all the time. You need to know where you are at first, and from there you get the tool,” Karthik explains.
Looking at transformation from a stakeholder standpoint, Karthik describes how all the functions are important due to their specializations. He highlighted Procurement and IT as the baseline, with Legal, Finance and also Suppliers as essential in ensuring that the transformation is successful. All their input is important as, for example, the project needs to be profitable which is where Finance comes in, while Suppliers are the end-users who can advise on what their challenges are.
When it comes to involving IT in a digital or procurement transformation project, Karthik notes that it is often forgotten that both functions have a day job, which cannot be cast aside for the sake of a project. Additional tasks should therefore be made part of the job, as well as a proper support process being put in place.
Karthik reiterates that it is essential for IT to be involved and consulted from the beginning of the project. He suggests having a designated person who will be in charge of communications and co-ordination between departments.
“The other thing is, we need to understand the opinion of IT as well. You know this concept, when they say ‘What’s in it for me?’ So, you need to understand their piece of the pie as well, and show that it’s a mutual exercise. Unfortunately, Procurement often says ‘I need this, this needs to be done.’ That’s how the communication is – and that doesn’t work for the large extent.”
Maintaining relationships between Procurement & IT
Being overworked is a case in point for professionals within both functions, which is why Karthik stresses the importance of setting aside specific time for the project itself. Karthik also claims that picking the right people should be a strategic task. For example, an IT category manager should also work with the same lead for the technology, “They’re also facing the vendor, meaning, for instance, if they hired a particular software provider, they’re the ones who negotiated the contract, who know the vendor as well, and understand what is involved in the contract process itself. They know what the requirements are, what promises have been made in the beginning and then how it gets delivered from the business process standpoint,” he adds.
Selecting the person who has the most time is often a tactical rather than strategic decision. Karthik believes that it should be a person who is closest to the business and who manages day-to-day operations. It should be the person who is familiar with common issues and the requirements needed to solve them.
Implementation of these steps should, in Karthik’s experience, put the least strain on the relationship. “There should be clear alignment in the organization and communication is key, without which all of this would fall flat,” he concludes.
A case for Proof-of-Concept (POC) and Centers of Excellence
A Proof of Concept (POC), Karthik explains, is an effective way of ensuring the success of a technology implementation, provided that it is planned for correctly. He states that organizations must be sure of what their requirements are and what the problem that they want to solve is, and that defining those as part of the process will yield better results long-term.
Karthik also speaks to the benefits of Centers of Excellence. Some of these include cost savings, reduction in additional work, increased accuracy and better reporting practices, he explains.
Karthik’s last pieces of advice to ensure the success of any digital transformation are ‘to learn to be in each other’s shoes’ by trying to understand the perspectives of the various functions, to choose the right team members and to involve each other thoroughly throughout the process.
If you’re interested in finding out more, listen to a podcast episode with Karthik on Transformation in Procurement & Technology.