Procurement Technology: 5 Most Overlooked Criteria for Futureproofing
In today’s rapidly evolving procurement technology landscape, businesses face the constant challenge of staying competitive. The key to long-term success is making informed decisions when adopting new procurement technology solutions. Futureproofing is a strategic approach to ensuring your technology investments remain relevant and practical. At Velocity, we help our clients assess 33 components of procurement technology. Here are 5 of the often-overlooked areas:
1. Assess the Scalability of Your Procurement Technology:
One of the fundamental aspects of futureproofing technology solutions is scalability. A system that can seamlessly grow with your business ensures that your investment remains viable in the face of expansion. Scalability pertains to handling increased workloads and adapting to new functionalities and integrations.
When evaluating technology solutions, consider their capacity to scale vertically and horizontally. Vertical scalability includes managing an organization’s growth through increased user counts, transaction volume, and global compliance. Horizontal scalable solutions have additional functionality that might not be needed today but provide the flexibility to accommodate new business requirements and practices in the future. For example, if your organization evaluates Contract Lifecycle Management Solutions (CLM), consider how that process might mature in the coming years. Are you currently using the CLM solely as a repository? In this case, the ability to author and redline contracts might be a viable example of horizontal scalability.
An industry best practice is periodically conducting a scalability audit on your existing technology. This review identifies areas to be aware of as the business grows and the procurement process matures. Knowing the scalability limits of your current procurement technology allows organizations to build a strategic plan to meet business needs.
2. Compatibility and Integration Expand System Capability:
As businesses adopt various procurement technologies, compatibility and Integration become critical for ensuring a seamless flow of information and operations. A futureproof solution should easily integrate with existing systems and be compatible with emerging technologies. Application Programming Interfaces (APIs) are crucial in facilitating Integration between different software solutions.
Typically, companies implement procurement technology in one of two ways. They might adopt an end-to-end solution (Suite) or purchase modules for each function of the source-to-pay process that has the best solution for their specific needs (best in breed).
In this case of a suite solution, all the functionality from spend analytics through accounts payable and payments are housed in a single solution. In this scenario, it is vital to understand how the suite solution can integrate with your core financial system (ERP). It is also important to understand the use case and capabilities of integrating to other solutions such as an HRIS (user data), MRO/Field Maintenance (additional orders), and data lakes (analytics/reporting).
For companies that use best-in-breed procurement technology, all of the integration considerations of a suite solution are still relevant. In addition, organizations need to understand what data needs to feed the module and where the output must be sent to automate the source-to-pay process further. Velocity has created an infographic explaining best-in-class data mapping for procurement technology,
3. Adaptability to Emerging Technologies Provides Longevity:
Technological advancement is relentless, and staying ahead requires a keen eye on emerging technologies. Futureproofing your procurement technology involves selecting solutions that can seamlessly adapt to and leverage new technologies. Whether it’s Artificial Intelligence (AI), the Internet of Things (IoT), or blockchain, your technology stack should have the flexibility to incorporate these innovations.
Of these topics, artificial intelligence is by far the hottest topic. There is a significant benefit to utilizing AI in the procurement process. One key component to remember is that AI tools require large training sets to become effective, and ineffective training can lead to limited efficiencies or incorrect processing. This is a key benefit of utilizing AI built into your procurement technology. Typically, these solutions have been trained on anonymized data, significantly reducing the training that your organization needs to perform.
Consider how the procurement technology solution aligns with the current technology trends and assess the provider’s culture around innovation and embracing emerging technology. We do not know what advances will be made in the future. Still, we can understand if our procurement technology provider has a history of being innovative or if they take a more conservative approach.
4. Flexibility of Your Procurement Technology:
Businesses are all different, and a one-size-fits-all approach to technology rarely suffices. Technology solutions should offer a degree of flexibility and customization to meet the unique needs of your business. This might involve adjustable configurations, modular components, or customizable user interfaces.
Consider how well the solution can be tailored to accommodate specific workflows and requirements. The ability to adapt the solution to changing business needs without extensive development efforts contributes significantly to its future viability. To what degree can process changes be implemented by your internal team, and what work must be done by the provider or system implementer?
It is also essential to understand if implementing the procurement technology to meet your process requires any system workarounds. While a solution might have a very flexible workflow process, specific workarounds often limit how future changes can be implemented. For example, suppose a particular requirement requires the provider to code specific variables into the workflow. In that case, any future modification of that workflow step will likely require a paid effort to change and require a more extensive project due to the previous modification.
5. Procurement Technology Support and Release Schedule:
The functional fit of procurement technology is critical but not the only consideration in a system evaluation. The vendor’s reliability and support are also vital components. Assess the vendor’s track record and reputation and support service level agreements.
One of the most overlooked components of reliability and support involves the process surrounding new releases. Some suppliers only provide a single release per year, limiting the flow of new features and capabilities that could satisfy key requirements in future process changes. On the other hand, other providers might do monthly feature releases, which puts a burden on the client to do system testing more frequently. In addition to the actual release schedule, it is important to understand the release process. Evaluating how much notice clients receive before a new release, what features are included, and how testing feedback is communicated to the provider are all essential.
These five areas are often overlooked in procurement technology evaluation. A thorough assessment looks at many more aspects of the potential solutions. An extensive review upfront will help ensure that your organization achieves the initial goals for the initiative in the business case and that the solution will be adaptable to future growth and requirements, continuing to enhance the overall project ROI and reduce the total cost of ownership.
If you will be evaluating procurement technology, Velocity Procurement supports organizations from business case creation through system selection and implementation.