Procurement Technology: 7 Best Practices to Maximize ROI
Our Previous Insight focused on recognizing gaps in your organization’s utilization of procurement technology. Identifying gaps in your procurement technology is the first step in maximizing the return on your procurement technology investment. Here are seven best practices to ensure you realize maximum value from your existing solutions.
1. Develop a Maturity Plan
Once procurement technology has been implemented, it is common for the business to go back to focusing on day-to-day operations. In general, procurement technology implementations only utilize a portion of the overall solution functionality based on the current state process and an organization’s capacity for change. Failing to plan for future utilization of the tool is a wasted opportunity. Best-in-class organizations understand the benefits they will see at go-live and the prospects for additional efficiency gains through their existing technology.
A comprehensive maturity plan should include:
User Feedback: Regularly collect and analyze feedback from end-users, especially power users, to identify common challenges and areas for improvement. User feedback helps understand how the technology is used in real-world scenarios and where improvements are needed.
Monitor Key Performance Metrics: Establish and track key performance indicators (KPIs) based on the success criteria you defined during your initial implementation. Tracking this information will help you understand where you have seen efficiencies grow, as well as areas of your process that still need refinement.
Review Recent Release Notes: Examine the release notes from your Source-to-Pay solution’s latest updates (within the past two quarters). Your provider likely introduced new features that your team needs to be aware of, which may directly impact areas you’ve identified for improvement.
Balance your plan based on effort and expected results: Based on the feedback and data collected, prioritize enhancements that will have the most significant impact compared to the effort needed to achieve the results.
Implement Changes in Phases: Adopt a phased approach for implementing changes, dividing them into manageable ‘waves.’ Each wave should focus on specific areas of improvement, allowing for thorough testing and user adaptation before moving on to the next set of enhancements. This methodical approach ensures stability and minimizes disruption to ongoing operations.
2. Core Enhancements: The Foundation of Procurement Technology Efficiency
The efficiency and effectiveness of procurement technology are fundamentally tied to the proper utilization of core components. Core enhancements, therefore, are critical in ensuring that the system meets current needs and adapts to future demands. These enhancements involve areas such as:
Primary Datasets Optimization: The primary datasets, such as supplier information, procurement catalogs, classification taxonomy, and contract data are central to the system’s functionality. Regularly review and update these datasets to ensure accuracy and relevance. Implementing data validation rules and cleansing routines can significantly reduce errors and improve decision-making quality.
Integrations: A Source-to-Pay system does not operate in isolation. It must integrate smoothly with other enterprise systems such as ERP, CRM, and financial software. Identifying ancillary systems that may not have been part of the initial integration strategy is often a core theme during maturity planning. Solutions such as maintenance repair and overhaul, inventory management, and others all play a part in your organization’s procurement strategy. Building a plan to incorporate the transactions from all systems into a single process can dramatically improve spend visibility and control.
Permission Sets Refinement: User roles and permissions are pivotal in maintaining the integrity and security of the system. Review and refine these permission sets to regularly align with organizational changes and roles. Regular permission reviews ensure that users have access to the necessary tools and data while protecting sensitive information.
Optimizing Global Settings: Global settings, including default configurations, workflow rules, and system notifications, should be periodically reviewed and adjusted to ensure alignment with changing business processes and policies.
3. Quick Wins: Immediate Impact Strategies
Once you’ve conducted A thorough gap analysis, you will find that some action items are larger and more impactful than others. When building your maturity plan, consider prioritizing minor things with your more strategic initiatives. Showing quick success along your maturity journey will help build momentum for your overall maturity strategy. Areas that are identified as quick wins are often topics that frustrate end users. Addressing these small areas can improve the general perception of your procurement technology within the user community.
4. Refine the Success Criteria For Your Procurement Technology
New criteria should be documented once all initially identified success criteria have been met. This may involve refining your original criteria (such as setting a higher expectation for spend under management) or creating new success criteria focused on areas not considered initially.
5. Build Flexibility into Your Maturity Plan
Continuous improvement is an ongoing commitment. While your maturity plan should identify strategic opportunities to improve your technology, the plan must be built with a level of flexibility. This allows unidentified issues or unexpected business changes to be adopted into the program. This is especially important for organizations that grow through acquisition or global organizations that face changing compliance regulations from around the globe. If your plan is not adaptable to these critical business changes, then there is a high risk that it will be shelved for more pressing projects. Once a maturity plan is abandoned, it becomes difficult to revive the maturity effort.
6. Monitor Emerging Technologies in Your Procurement Technology (such as Artificial Intelligence)
Understanding the difference between potential and actual business opportunities is essential when evaluating emerging technologies. While Artificial Intelligence (AI) is not the only emerging technology to monitor, it has the most visibility and momentum. Understanding your procurement technology provider’s strategy around AI can impact your maturity plan. Planning to implement AI functionality within procurement requires a thorough data assessment and a deep understanding of how it will impact existing processes. Properly adopting emerging technologies helps keep organizations competitive and agile.
7. Plan for User Sustainment of Your Procurement Technology
The long-term viability of any procurement technology relies on program sustainment. Solid onboarding processes, continuous training programs, and support structures are key to long-term success. Employee turnover is inevitable as your most knowledgeable staff are promoted or pursue new opportunities; their roles are filled with new employees requiring comprehensive training on your procurement policies, processes, and technology.
Failure to plan for these continuous transitions leads to knowledge gaps and the risk of offline manual processes being created. This is not a one-time activity; user communities require strong ongoing support that supports their day-to-day activities and the overall maturity of your procurement technology. This is often one of the most overlooked areas of Procurement Technology maturity and why Velocity provides support through our Tech Desk services.
Incorporating these seven best practices into your maturity strategy will help maintain competitiveness and build procurement’s strategic value. At Velocity, digital transformation is a strategy, not a project. If you are interested in maximizing the value of your existing procurement technology, we would love to connect!