In our last two posts, which noted that an organization must master the three T’s in order to excel in Supply Management, and that a classic article in Chief Executive caught SI’s attention, because so few articles focus on the importance of technology to Supply Management success. This classic article was good, as it focussed on the importance of technology for a chief executive, but not great, as it didn’t really provide strategies for driving technological advances (as it promised), just advice that will help someone stay up to date on existing technological advances.
As SI noted in Part II, the key to technological advances is not just awareness, but acquisition and adoption – by all!
So how does an organization translate this awareness into acquisition and adoption?
First it has to acquire. Acquisition is tough, because it requires budget, which is something that the CEO doesn’t want to give and something that the CFO doesn’t want to give up. In order to get an acquisition approved, there has to be a benefit that the CEO or CFO wants. In other words, there has to be a quantifiably realistic ROI, visibility into data or processes that one of these individuals wants, or support for an organizational initiative (such as sustainability, home-sourcing, digitization, etc.) that the executive is championing. Hitting multiple buckets, of course, increases the chances.
The ROI doesn’t necessarily have to be 2X or 3X (although if the up-front price tag is big, or the technology falls into spend analysis, decision optimization, or SRM, it should), but it has to be there, and if it’s less than 2X, it should add a lot of efficiency.
One has to remember that technology tends to fall into two buckets:
where it streamlines time-consuming man-power based tactical operations like invoice processing, project time tracking, or RFX-like data collection)
where it advances the capability of the organization and delivers a fantastic ROI (like true spend analytics and real decision optimization that can deliver savings of 10%+ year after year after year)
If the technology falls into the efficiency category, then the ROI is not going to be huge, as its main benefit is to free up manpower for more strategic activities (that should be based on effectiveness oriented technologies) to find new sources of value. So an ROI of 1.5 to 2.0 is fine. But if the technology falls into the effectiveness category, the ROI should be a realistic 3X … otherwise, it’s not really that effective, is it?
Thus, to pass the acquisition threshold, it’s critical the technology can be properly bucketed and a realistic ROI model, and justification therefore, be presented to the CFO and the CEO.
But that’s the easy part. The hard part is the adoption, and, in advance, convincing the sponsors that adoption will happen. Since adoption is highly dependent on adoption en-masse by the workforce, that often has no input into selection, it can be tough to paint a realistic picture of this happening, but you can beat the odds that software will be adopted by choosing carefully (and even convey this during your supplication for silver).
How do you beat the odds? We’ll dive deeper into this in our next post, but some key points to address at a high level are:
will the software support the necessary (and not the current) process?
will it integrate with related applications to allow users to effect the proper process
does it look “consumerish” with an interface that users are already familiar with
it must enable collaboration between all parties affected by the activity the software is automating
More to come …