8 Steps To Avoid Change Orders In Your Procurement Digital Transformation
Summary: 8 Steps To Avoid Change Orders In Your Procurement Digital Transformation
Businesses are constantly assessing the need for new solutions and implementation tools to help them stay agile in an ever-increasingly competitive economic landscape. Unfortunately, it is not uncommon for a procurement digital transformation to include one or more change orders that impact the overall return on investment of the initiative. We will cover 8 Steps To Avoid Change Orders In Your Procurement Digital Transformation, including:
- Compare the proposed technology to the business case
- Compare the Statement of Work (SOW) to the Business Case
- Staff the project correctly
- Be realistic about the schedule
- Build agility into the SOW
- Make change management a priority
- Focus on the functionality that is key to the business case
- Select the right partner for the implementation
Proper planning and scoping of your procurement digital transformation will help reduce the chance that you get change orders in your project.
Compare the proposed technology to your procurement digital transformation business case
Technology selection processes can range from a few months to a year or more. As a result, sometimes the needs and requirements that were defined in the business case get overlooked by new features and functionality that providers highlight in their Request for Proposal (RFP) response or product demonstrations.
If the technology that is selected cannot fulfill the core business requirements, your organization will need to find ways to work around the shortcomings. This may include additional process redesign, internal IT development, or accepting that certain processes will stay manual.
To avoid this, compare the business case against the preferred solution in a final demonstration. Ensure that every requirement is discussed and shown to the key stakeholders, that the proposed solution will completely address the requirement, and that it is included in the license agreement as well as the SOW.
Compare the statement of work (SOW) to the business case
Most technologies in the source-to-pay market have a wide range of functionality. Within a specific module, there will be certain functionality that is critical to your business case. Other available functionality might be nice to have, while other capabilities may not be relevant to your business.
It is crucial that your critical business requirements are addressed in detail in the SOW. Assess the nice-to-have functionality and prioritize it against the business requirements. There needs to be internal alignment on what nice-to-have features should be included in the scope, and that these are documented in the SOW as well.
Staff your procurement digital transformation correctly
Proper staffing of your procurement digital transformation initiative is important. Internal resources need to be aware of the project, have the capacity to participate, and have clearly defined responsibilities.. This may require backfilling some of the day-to-day responsibilities of a resource and/or getting commitments from any 3rd party support of their availability during the project timeline.
Key roles in a digital transformation include:
Technical Integration Lead
Change Management Lead
3rd party resources*
*for roles such as business process re-design, ERP expertise, etc.
Based on your organization and the scope of your procurement digital transformation, you might have multiple people in one role (I.E. multiple process owners), and you might have one resource assume multiple roles (I.E. a process owner also owns training).
It is important to identify the key responsibilities for each role and assign the roles to the correct resources. If you uncover any gaps during this process, address these with your consulting partner on the transformation, and see if they can help cover these areas. For example, if you do not have an internal change management resource, discuss this with the provider and see if they can add a resource to the SOW before the project begins.
Resource constraints will lead to significant delays in the project timeline. This is one of the most common reasons organizations get change orders on procurement digital transformation projects. Proper planning can mitigate the chances that resources are not available and help keep your initiative on schedule and on budget.
Be realistic about the schedule
Your SOW should include a project schedule, with dates for key milestones. It is important to review this timeline against your internal capabilities and resource availability.
A procurement digital transformation schedule should consider the following:
Key deliverables are not scheduled for periods when the company is not working
Especially if your project will run over the summer months or year-end holiday season, verify that the resources that will be needed at that time are not planned to be out of the office.
Financial close periods
During a financial close (typically quarter or yearend), some organizations freeze work on data that might impact the close. This can affect your go-live if it is planned to occur during the close.
Many IT organizations have freeze periods, where they do not allow solutions to be changed or migrated to production
Organizations tend to work on multiple strategic initiatives in parallel. Identify any projects that will involve your identified resources, and compare the project schedules. Make sure that the resources are not scheduled to be on two projects at the same time.
Often times an implementation will affect a large number of end users. If training is not planned out well in advance, it may be difficult to schedule, and allow users time to process and retain the new tool before go-live. This can result in go-live dates being extended, or significantly reduced adoption of the new solution.
Account for the workload the identified resources currently have. Participating in a procurement digital transformation is often done in addition to the daily workload. If the resource is already overloaded, getting them to participate in a meaningful way could be difficult.
Thoroughly planning your project schedule will reduce the likelihood that resources need to be changed mid-project. Identifying new resources and bringing them up to speed takes time, which can derail your project schedule and result in a change order.
Build agility into the SOW
Before signing the SOW, identify the areas of the project that you are uncertain about, and account for additional time to review these areas in the SOW. For example: If you plan to redesign your accounts payable process as a part of your procurement digital transformation, the SOW should include time for this process to occur.
Additionally, consider how the initiative will be rolled out within the organization. Will the new processes and solutions be implemented globally, all at once? Will you deploy the initiative in phases by geography? Will the solutions be implemented by function (supplier management, then contracts, etc)? The rollout plan needs to be included in the SOW and aligned with your internal plan and capabilities.
Not accounting for the unknowns in a project or not aligning on the rollout plan can halt a digital transformation in its tracks. If explored improperly, these factors can impact the scope of the project, resulting in modifications to the project timeline, resource reallocation, and more, resulting in a change order.
Make change management a priority in your procurement digital transformation
Digital transformation initiatives affect people, processes, and technology. This can be a lot of change for the end user to absorb. Users need to be made aware of the initiative, what changes are coming, and how it will positively impact their work.
If the first time they hear about the project is when they are invited to a training session, there will be a great amount of fear, hesitation, and resistance to the change. These feelings can cause users to dig in their heels and resist, leading to more training sessions, process redesign work, or other friction to completing the initiative.
Identify the users that will embrace change, as well as those that are likely to resist. Make sure that there is a comprehensive change management plan in place that addresses each user persona, and guides them toward acceptance of the new processes and technology.
Focus on the functionality that is key to the business case
During your project, key stakeholders will begin to see all of the ways that they can leverage the new processes and technology to improve their role. This often results in requests to add to the range of the initiative. For example, as a contract manager understands all the capabilities of a contract management tool, they may want to increase the project scope to include more contracts and contract types.
These additional asks from the business should be critically reviewed. If they do not contribute to meeting the business case in a substantial way, they should be documented and revisited after the project is completed. This will help keep the project’s extent defined, and the project on track. The additional asks should be prioritized, and utilized in your continuous improvement process.
During a procurement digital transformation, there are likely to be some shifts in the end-state solution. This often occurs as processes are redesigned to eliminate manual tasks and utilize the data that a new technology will provide. However, these changes should be carefully considered and focused on the areas that you identified. This is the most common issue that results in a change order.
Select the right partner for your procurement digital transformation
In some cases, you can do everything right, and still, end up in a situation where you are being issued a change order request. This is most common when due diligence was paid to the technology solution scope and the SOW, but not to the implementation partner themselves.
A procurement digital transformation may be done by the solution provider themselves, or by an implementation firm that is partnered with the technology. In either case, research into who will be doing the implementation is equally important. Get references from the partner and ask questions such as:
- Was the project completed on time?
- Was the project on budget?
- Would you work with the implementation provider again?
- What was the highlight of working with the implementation team?
- What could have been done better in your procurement digital transformation?
Following these 8 steps will help you avoid change order requests in your procurement digital transformation.
Remember that implementing technology is just one piece of the overall initiative. Optimizing processes and change management are key components to a successful initiative!
A rigid procurement digital transformation plan inevitably leads to either a lot of change requests or an unsatisfactory outcome – often both. It is important to recognize that these factors will affect the course of a project and that these are not always apparent at the outset. Rather than excluding them from the scope in minute detail to avoid them, it’s beneficial to work with a partner that will bake them into what we call controlled scope enhancement. This allows the program to be “flexible enough” which affords us the luxury to assist our clients wherever necessary, within reason, in the spirit of making the client journey a successful one.
At Velocity Procurement, we strive to provide the tools to make your procurement digital transformation successful and help you avoid these common pitfalls. Our team works closely with you to understand your organization’s procurement maturity and what your optimal future state looks like. Then, we help you determine the logical steps in between. This not only ensures that your digital transformation runs smoothly but that it sticks.