Digital Transformation is much more than implementing software. Here are 5 signs to look for to see if your organization should consider undergoing a digital transformation:
Most organizations today utilize technology in some way to automate their sourcing, contracting, supplier management, procurement, and accounts payable departments. However, the presence of technology does not mean that your organization has truly been through a digital transformation.
Digital Transformation is much more than implementing technology. It is the journey of aligning your people, processes, and technologies. Processes are optimized and aligned to critical KPIs, as well as to your organizational culture. Technology is then used to enable people and processes at scale, eliminating bottlenecks while providing better, more actionable data.
All too often organizations focus on one or two of these areas but neglect the third. Here are 5 signs that signal a need to start a Digital Transformation journey.
User frustration often sparks the need for digital transformation. If the people who do the workday in and day out are unhappy, that’s a strong indicator that you have gaps in your technology and/or processes.
Manual tasks can take up too much time. Technology’s goal is to automate and speed up tasks so your team can focus on higher value-add work like analyzing spend, strengthening supplier relationships, and optimizing working capital strategy. But beware, automating a broken or incomplete process will create bottlenecks of manual touchpoints that erode the benefits of any technology implementation.
Things to Look For:
A successful Digital Transformation should empower your people, remove/reduce manual tasks and alleviate frustrations. Implementing technology without proper alignment of your people and process can create bottlenecks and frustrations that were not present before.
There’s a debate in the procurement industry around the use of best-in-breed solutions versus solution suites. While this debate is healthy, best in class status can be gained using either approach.
Regardless of what solution(s) you use, it is critical that master data is identified, the source of truth is cataloged, and that data set is available to all applications throughout the source to pay process.
It is equally important to ensure that transaction data flows step-to-step from sourcing, to contracting, to supplier onboarding, to procurement to AP and finally to payment.
When data is siloed, it requires manual intervention to gain meaningful visibility to critical Key Performance Indicators (KPIs). These can include process cycle times, areas of improvement, critical data for reporting, etc.
Things to Look For:
Data silos should be eliminated at the completion of a successful digital transformation and allow departments to easily access information and track KPIs.
Typically, a lack of data confidence stems from the knowledge that there are missing or inaccurate data points that affect the overall outcome. This results in hesitation to make important decisions, even when the data supports the decision. Oftentimes, data accuracy issues stem from one of two key causes:
Things to look for:
A successful digital transformation provides the visibility needed to build trust in your data.
All businesses have busy periods and lulls. These could be seasonal, or due to the capital expenditure initiative, acquisition, new product lines, etc.
Organizations who have effectively gone through a digital transformation are able to scale their capacity to meet increased demand much more efficiently than organizations who have merely implemented technology.
Things to look for:
After a successful digital transformation your team will be better able to ride the waves of changing workload.
There are organizations where procurement and accounts payable literally sit next to each other, but they do not communicate or collaborate. In most cases, the lack of collaboration between departments stems from misconceptions about what one another does, what their goals and motivations are, and in some cases a lack of willingness to share data.
In a digital transformation, your end-to-end source to pay process is mapped and aligned within each department. The goals of each source to pay stage are defined, and information is shared leading to better visibility at each step. Sourcing gains visibility to the results that come from their sourcing efforts and procurement can better track purchasing compliance against contracts and catalogs. Accounts payable gain all the critical information they need to simplify invoice matching, approval, and payments.
Things to look for:
A successful digital transformation can bridge the gap between departments and allow each to benefit from and support the other(s).
As you begin to look deeper into your organization, some of the points above may become abundantly clear to you. As you begin to understand the gaps in your people process and technology, you will begin to see ways to quantify the benefit of addressing more than technology through a true digital transformation.
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