Daily Archives: January 5, 2017

How Do We Drive Technological Advances? Part IV

This post continues are series in which we note that an organization, which needs to master the three T’s to excel in Supply Management, must not only get a grip on modern technology, but acquire and adopt modern technology (in daily use) in order to begin its best in class journey.

In Part I we noted that just having the right talent and transitional strategy is not enough, that talent and transition must be powered by modern technology. In Part II, we discussed a classic Chief Executive article that purported to provide seven strategies for driving technological advances, as there are not enough articles on the importance of the right technology in an enterprise (and, as such, it caught the doctor‘s attention), and noted that while it was a good start it didn’t really explain the process of getting technology acquired and adopted all it really did was emphasize the importance of technology, which is a good start, but not the end goal.

Then, yesterday, in Part III we focussed on how the key to acquisition, which requires budget (that the CEO and CFO don’t want to allocate or give up) is to identify one or more benefits that are important to the C-Suite. More specifically, a quantifiably realistic ROI, visibility into data or processes of interest to the appropriate C-Suite member, or support for an organizational initiative being championed by the CEO or CFO. The ROI doesn’t have to be large, and won’t be for an efficiency solution, but should be enough to make a solution attractive, especially if it is focussed on effectiveness.

We also mentioned that acquisition is not enough, the solution has to be adopted. On average, a modern Procurement solution only reaches adoption rates of 25%. This means that of every four individuals that should be using, or referencing, a solution in some way, only one actually is. A solution not adopted never reaches the expected levels of efficiency or effectiveness and never delivers an ROI.

But adoption is hard. People resist change. People resist new systems. People are tired of broken promises (as vendors have been promising to deliver value and usability for decades that never materialized in the nineties or noughts). They don’t need another piece of technology that doesn’t work.

So how do you ensure adoption?

We left off yesterday indicating the keys were the four P’s:

      • process
        will the software support the necessary (and not the current) process?
      • platform
        will it integrate with related applications to allow users to effect the proper process
      • polish
        does it look “consumer-ish” with an interface that users are already familiar with
      • portal
        it must enable collaboration between all parties affected by the activity the software is automating

Note that the first key is not to acquire a solution that supports the current process, but that supports the desired, lean, optimized process. Remember that the second key to Supply Management success is transition — even if your process was best in class and suited you well when it was instituted ten years ago, that was then, this is now. Processes have to evolve with your business, which likely isn’t the same as it was 10 years ago. Make sure to review and define all of your process needs appropriately and pick a solution that matches and enables them, not what you have now and not what your competitor uses.

Then, be sure to understand not only your current enterprise software ecosystem, but the desired software ecosystem you are working towards (as this defines your platform). You don’t have to know which solutions you want to adopt down the road (as the best today might not be the best tomorrow), but if you have identified CLM, SRM, and decision optimization as the next three technologies you need, and you start with CLM, make sure that it has the ability to output relevant supplier-related contract data to SRM systems using standard formats or APIs and that it can take in award allocations in standard formats from dominant decision optimization solutions. A Best-of-Breed solution in a vaccum is rarely used (and why the adoption rate of most Supply Management technology at firms that acquire it is a dismal 25%).

After that, evaluate the UI. While its true that sometimes the best and most powerful solutions are those that still look like they were designed in 2005 (including a few solutions the doctor recently reviewed that, power-wise, almost blew his socks off), you have to consider the psychology of the situation. While a power user will want the absolute best, 90% of the individuals who will need to use the solution are not power users and have been programmed by consumer platforms and social media to believe that anything that doesn’t look modern isn’t (and shouldn’t be used). Sometimes the 80% solution with a consumer-ish, modern, friendly UI is the best starting point. We’re in a culture obsessed with polish, so just embrace that fact and save yourself some major headaches.

(And you can always supplement it with an archaic looking BoB solution for your power users later. Some of the best-in-class organizations actually do this. For example, they’ll use a Zycus or similar modern looking S2P suite on the front end, but then on the back end the power users will be using Trade Extensions or Keelvar for decision optimization and TAMR or Spend 360 for spend analysis. And they get mega returns on the efficiency AND effectiveness charts — more than one would expect even though they pay two license fees. The easy to use suite gets buy in and efficiency goes through the roof when they get 90% utilization instead of 25%, and the power the super users get from the BoB solutions doubles average savings percentages. This isn’t to say that the BoB solutions aren’t user friendly, they are, but you again have to consider the psychology. Because solutions like Trade Extensions and TAMR have so much power under the hood, the average user — who just needs to check a contract, do a small spot buy, run a spend report — still believes that they must be difficult to use. While complex solutions were hard to use 20 and even 10 years ago, this is no longer the case, but the stigma is hard to overcome. Sometimes the best thing to do is adopt something easy, roll it out, get everyone on board, buy the killer app for the power users, let them get great results, let them show everyone else, now used to modern technology, that it’s not so hard, and then gradually replace the entry level solution with the powerhouse solution where appropriate. And if each gives a 3X to 7X return, paying two license fees is a no-brainer from a financial viewpoint.)

Finally, make sure it enables collaboration with built in messaging, document exchange, version control, etc. If it’s not the central portal (or virtual center of excellence) that connects everyone on the team in a collaborative fashion, it’s not modern, and its lifespan will be limited. And no one wants to learn yet another tool with a built-in expiry date.

And that’s the foundation of how your organization can select a tool that might actually be adopted.

But how do you translate adoptability into actual adoption (which is the real key to technological advance in an organization)? Stay tuned!