We’re continuing our foray into the top barriers to success that we outlined in our top barriers post that chronicles the barriers that keep coming up over and over again in every Procurement survey in our effort to ensure that you don’t have to read another state of procurement study for the next 5 years. Our barrier today is lack of funding.

A Brief History …

This ties into the barrier of insufficient business wide support which will be discussed in a future installment and it relates to the barrier of silos that we discussed in our first installment. The simple fact of the matter is that, as more and more departments were created, the piece of the pie each department received shank. Similarly, as system and process needs increased, the costs to operate increased. This double edge sword slashes budgets to the bone.

The Problem

As a result of the explosion in departments, and departmental needs, you have more departments fighting for more pie than actually exists. That’s the problem in a nutshell!

The Necessary Realization

Sadly there is no real solution here. Because, while theoretically, the solution is to:

• build realistic ROI models and
• prove the value incrementally with a staged implementation of the plan the ROI models were built on

every other department can do that as well, and why should you get more pie than they do?

Your only chance of getting your fair share of the pie, and getting it first, is to:

• Prove the value before the request goes in.

You will need to find a very low cost tool, pseudo-hack your own solution for RFX, Analytics, SXM, Invoice Automation, etc., and demonstrate a significant value over a significant period time, at least a quarter, and preferably two or three quarters or find a low cost mid-market sourcing execution provider that has a barebones offering you can put on the P-Card for your core team. Then, build a realistic ROI model that demonstrates the full value you could extract from your process if you could upgrade your solution to handle all activities of the type (which might require buying a mature for-purpose solution from a real Sourcing and/or Procurement vendor that has been in business for half a decade to a decade and has all the workflows and capabilities you need to replace the low-cost startup minimal tools you are using now or, if you just licensed the core module from a mini-suite provider for a small number of users, license the rest of the suite, equip the rest of the Procurement organization, and contract some services to customize the workflows and capabilities as needed). The reality is that most low cost solutions or start-ups are 60% solutions at best and moving up and scaling out to 80% or 90% solution will have a huge increase on ROI (as a result of a huge increase in efficiency).

The Technological Requirements

The technological requirements are considerable and require supply chain aware sourcing and sourcing aware supply chain and expertise from source to sink and back again on both sides.

A reminder that if you want to address the problem once and for all, you need the right technology with the right capabilities that support the right processes. If you want some guidance into what this is, hope that your favourite provider reaches out to Bob Ferrari of Supply Chain Matters or the doctor and enables us to focus on writing the not yet written series (or in-depth e-book) explaining what modern Procurement and Supply Chain Tech needs to look like (and how it needs to be implemented) to address the challenges, reduce the risks, and address the priorities. Since most of it has not yet been written, it’s a big effort that, for now, we will only be able to drip out as free time permits in the future.