Category Archives: Best Practices

Process Transformation: How Do You Get it Right? Part III

We spent last week talking about how we drive technological advances, because it’s one of the critical three T’s of Supply Management success, with the other two being talent and transition to better processes. The big C’s call this “process transformation” and each of these (including, but not limited to PwC, Accenture, Hackett [Archstone], etc.) claims to have the best advice [for a price] to help you along your best in class journey.

However, as we outlined in our first post, it’s hard to tell if any of the Big C’s have WHAT you need when, for example, the difference between the four-step framework promoted by one of these C’s (PwC) and four of the first eight random mission statements generated by the mission statement generator at cmorse.org is pretty hard to discern.

Then, as we outlined in our second post, we made it clear that what you really need is a simple process that starts with understanding where you are now, moves on to figuring out where you want to be, then creates a plan to get there and, finally, executes it. We started by outlining what is involved in understanding where you are now, which is more involved than you might think, but not so involved that you can’t manage it without a team of 10K a day consultants.

The next step is to figure out where you want to be. This will involve:

  • highlighting the process (steps) that are the most critical for improvement
  • outlining efficiency and effectiveness goals (to get your procurement value engine running smooth)
  • determining why the options you select are better than others and making the business case

Where You Want To Be

In order to determine the process (steps) that are the most critical for improvement, you will need to balance the processes where there are the most opportunities for improvement (and increased efficiency and/or effectiveness), with where the is the most vocal outcry for improvement, and where there is the most process avoidance. Sometimes you will have to sacrifice what looks like a great ROI on paper for a small improvement that will actually enable a great ROI down the road. An improvement will only deliver an ROI IF it is used by the people who need to use it. If those people are avoiding, or will continue to avoid, the platform because they find it unusable, the process improvements will be for not.

In order to outline efficiency and effectiveness goals (to get your procurement value engine running smooth), you need to look at where you are now, where the best in class are, and what is a reasonable goal for your organization. A journey to best in class begins with one step, and, more specifically, one percentage increase on the ROI scale at a time. For example, if your average invoice processing time is 45 days, and your best-in-class peers have an average processing time of 15 days, expecting to go from 45 to 15 in 90 days, even with a best-in-class cloud solution, might not be possible. The goal should first be a reduction to 30 days, especially since it will take a long time to get suppliers on-boarded, AP staff trained, and approvers comfortable with the new process. Then a stage 2 goal can be set once the organization determines how long it took to get down to 30 days and what the eventual end goal is likely to be.

Finally, you need a good, believable business case, because everyone is going to want an explanation as to why their request for process or platform improvement isn’t first on the list. While there should be an ROI, the whole case should not revolve around the ROI because support for organizational initiatives, solutions for issues that cause people to avoid the process, and aspects that can increase adoption are just as important.

Then, once you have figured out where you want to be, you can move on to the next step of creating a plan to get there. That will be the subject of our next post.

Process Transformation: How Do You Get it Right? Part II

We spent last week talking about how we drive technological advances, because it’s one of the critical three T’s of Supply Management success, with the other two being talent and transition to better processes. The big C’s call this “process transformation” and each of these (including, but not limited to PwC, Accenture, Hackett [Archstone], etc.) claims to have the best advice [for a price] to help you along your best in class journey.

However, as we outlined in yesterday’s post, it’s hard to tell if any of the Big C’s have WHAT you need when, for example, the difference between the four-step framework promoted by one of these C’s (PwC) and four of the first eight random mission statements generated by the mission statement generator at cmorse.org is pretty hard to discern.

At the most basic level, process transformation is the process of:

  1. Understanding where you are now.
  2. Figuring out where you want to be.
  3. Creating a plan to get there.
  4. Successfully executing it.

So WHAT you need is a roadmap that takes you through each step, outlining the key interchanges, stops, and information stations along the way. And if it’s your first time driving a big rig through the route, possibly some advice on how to drive that big-rig effectively.

So let’s take this step by step.

Understanding Where You Are Now.

This is a little bit more involved than one may think. One needs to understand:

  • where the processes are efficient and inefficient,
  • where the pain-points are for the team members,
  • where a different process could unlock hidden value, and
  • where the processes are being circumvented at each and every opportunity.

One needs to understand efficiency and inefficiency because efficient processes should not be change without deep consideration and analysis (because attempts to fix what isn’t broken don’t often go well), inefficient processes cost the organization time, resources, and money. So how do you do this?

Benchmarking. While benchmarking is not the be-all and end-all, and SI has even written a paper on The Dangers of Benchmarks and Trend Analysis) (as too much emphasis on benchmarking often blinds an organization to the real opportunities that are hidden in the organization), it is the starting point for an organization that doesn’t even have a good grasp of where it is (or could be).

The organization will start by identifying standard KPIs for the processes it is evaluating and benchmarking internal performance. Then it will look to third parties that maintain industry benchmarks for that process to get a general feeling if it is worse than average, average, or better than average. Any process phase where it is noticeably worse than average is a process phase it should focus on.

Then it will identify the pain points for the team members. It will do this by, surprise, asking them! And it might find that the places they have the most issues are where the organization is average, or even a bit better than average. For example, maybe the primary pain point that the team complains about is Travel & Expense. It could be the case that the team members get their requests in, approved, and expenses submitted just as fast as the industry average for their peers, but if they find it painful and it aggravates them, it should be looked at. Maybe your peers are even more behind the eight-ball than you and your team knows of a solution that makes it so quick and easy that it could be orders of magnitude faster, freeing your team up to work on more value-generating activities.

Then it will review published case studies that relate to the processes under consideration and identify results that are leaps and bounds ahead of where the organization is act, prioritize them, and evaluate whether or not they could work for the organization. (Not all will!)

Then, and this is critical, it will identify where team members are trying to circumvent the processes at each and every opportunity. This is a sign of a broken process that definitely needs to be fixed, even if there is no obvious detriment to the team members circumventing the preferred process (because there always is, even if it’s not immediately apparent).

And, finally, it will incorporate all of this into a cohesive whole — and that is how it will understand, more or less, where it is now.

But this is just the beginning. In our next post, we’ll talk about how it goes about finding out where it needs to be.

Process Transformation: How Do You Get it Right? Part I

We spent last week talking about how we drive technological advances, because it’s one of the critical three T’s of Supply Management success, with the other two being talent and transition to better processes. The big C’s call this “process transformation” and each of these (including, but not limited to PwC, Accenture, Hackett [Archstone], etc.) claims to have the best advice [for a price] to help you along your best in class journey.

PwC, for example, offers you a comprehensive approach to IT-enabled business transformation that combines:

  • an integrated design model,
  • “Right-sourcing” the delivery model,
  • Transforming the operating mode,
  • Driving [the] organization for change,
  • Managing technology choices, and
  • Defining a value capture plan

in order to help your organization optimize

  • business process fitness,
  • program value realization,
  • enterprise resource planning, and
  • customer relation management.

and do this through a four step framework centered around

  1. strategic alignment of cost structure and investments,
  2. end-to-end process redesign to isolate complexity and defect sources,
  3. a functional business architecture to align capabilities, organization, processes, and technology, and a
  4. continuous improvement culture.

But is this what you need? Is this even close to what you need? Heck, can you even understand what they are saying? In fact, can you easily tell the difference between this and a four step framework that:

  1. pursues performance based infrastructures while endeavoring to globally embrace interdependent data,
  2. operationalizes virtual meta-services while dramatically recontextualising functional paradigms,
  3. embraces paradigm-shift services while pursing business methods of team empowerment, and
  4. implements market-driven methods in order to continue to competently coordinate low-risk high-yield technology platforms.

If you look closely, they both look for alignment (with the cost structure in the first case and the market in the second case); they both focus on improving the functional business architecture (called paradigm in the second case); they both look for continuous improvement (called team empowerment in the second case); and they both look for a drastic end-to-end transformation (called paradigm shifting services in the second case).

So what’s the difference? The first is the process description almost verbatim from PwC’s website. The second, 4 of 8 randomly generated mission statements from cmorse.org (which seems to have replaced the now-defunct Dilbert Mission Statement Generator. (Gone, but not forgotten!)

So is this what you need? Maybe, but first you need to understand WHAT you need.

How Do We Drive Technological Advances? Part V

This post concludes our 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.

Then, in Part III we focussed on how the key to acquisition of a technology (that an organizations wishes to adopt), which requires budget that the CEO and CFO does not often want to allocate, was to identify one or more benefits important to the C-Suite — namely a quantifiably realistic ROI, visibility into data or processes of interest to a key C-Suite member, or support for an organizational initiative being championed by a C-Suite member. And yesterday, in Part IV, we focussed on the 4 P’s that define key elements that must be present in a technology to enable adoption (and that define necessary, but not sufficient, conditions).

And we left off indicating that in this, our fifth and final post in the series, we would translate how you take an adoptable solution and begin your journey on the road to adoption.

While there can be no guarantee of success, as success ultimately requires not only a good process transition, but a talented person spearheading it, and even the best process can flop in the hands of an inappropriate individual, this process does provide a foundation for adoption and might just be your best class of getting an appropriate solution adopted.

Identify the value to each function you want to adopt it.

While a few people will be screaming, screaming, screaming (along with some guy screaming in a leather jacket) for a new solution, most will be very resistant even to the mention of a new solution. There will be a strong resistance to change. There will be many reasons for this. Previous solutions didn’t address core needs. Manpower requirements didn’t decrease or value extracted didn’t increase. The previous attempt at a solution upgrade was abandoned. Etc.

Unless there is a clear value, who would even want to look at it given the average organizational track record in solution selection? So if you want an SRM – what does Procurement, Operations, Finance, and the C-Suite, for starters, get out of it? (Hint: many of the answers can be found in posts in the extensive SI archives.)

Identify those who could be champions in each function.

People want to adopt software that will not only be easy to use, and make their live’s easier, but that their peers will use. Everyone ones a collaboration platform, but few want to be the first to adopt. You need to find the champion who will both be the first to adopt but also convince their peers to be next in line, so the collaboration happens and the benefits materialize.

Determine what each champion wants, really, really wants and identify, in detail, how the solution will give it to them.

Do they want ease of use? If so, prepare a short, sweet demo that shows them how to do their most time-consuming daily tasks in a matter of minutes, and with ease, in the new solution. Are they looking for savings? Work out how they can get their ROI from the solution, share that process, and walk them through a what-if. Do they want collaboration — get a few people from the selection team online and show them how great collaboration can be. Then show them and get them hooked.

Prepare an easy to implement train-the-champion program.

Once you get the champions on board, you will need them to get more people on board. You will need a program that will help them identify

  • what their team members need to do,
  • how their team-members will be able to accomplish it quickly and easy in the solution,
  • how they will put together demos that will get their teammates on board,
  • how they will get their teammates set up on the program, and
  • how they will help their teammates get quick and easy answer to questions that arise in the course of their work.

This is not a train-the-trainer program. That comes after there is wide adoption and you want to mass train on advanced features. You need adoption first — and you often need it reasonably quick — and that’s what most train-the-trainer programs miss. The champion should not be the one setting the team up or the expert, but the one who interfaces with the support team to get the team set-up and knows where to direct each person who needs help (and make sure that help is received, and understood quickly).

In other words, don’t skip to the train the trainer or show the ease step — you first have to find the champions and first users (who might eventually become the trainers, but might not — maybe the last to adopt are the best at training but the worst at selling, and convincing someone to try something new is really a type of internal sales), get them interested, and get them on-board. Adoption starts from there.

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!