Technology, digitalisation, digitisation, automation are all words that can be considered business words of 2020, alongside obvious other words like crisis, profitability, liquidity, restructuring. The importance of these words grew in pandemic as companies previously unready for technological change realised that they would either seize the opportunity to digitalise and survive or go out of business.
According to Gartner, „Digitalisation is rapidly changing the way organisations create value and how they compete with each other.”
The case of Rhenus, an international logistics operator, bears this out. In the difficult time of the pandemic, Rhenus demonstrated the courage that characterises innovative companies. It seized opportunities to improve its processes in order to achieve operational excellence and free up resources just before the operational peak, the Christmas period. Additional KPIs, significantly tightened by the competitiveness of the e-commerce market, including lead time delivery, forced logistics operators to think and act more efficiently than ever before. What has happened at Rhenus? Well, the company invested in 2020 Business Process Mining technology, which we have often written about in our articles, including Logistics in times of pestilence | Eveneum
I spoke about the courage to change and the tangible benefits in February with Rhenus and Crestt, who implemented Celonis BPM technology at Rhenus. I encourage you to watch an abbreviated version of this webinar titled: "The Courage to Change": Logistics in times of pestilence | Eveneum
IT purchasing strategy (NOT) for the drawer?
We are noticing an increased interest in the topic of new technologies and our training product at Eveneum Strategic IT/IS purchasing category management | Eveneum
The training course teaches a methodical approach to developing a procurement strategy based on the latest trends and including a good dose of knowledge about local and global IT solutions, risk and relationship building and contracting.
In this article, I will take a closer look at the most important aspects of technology purchasing that should not be overlooked when building a purchasing strategy. The following tips are inspired in part by an article featured on Forbs: Buying New Tech For Your Business? Here Are 12 Crucial Aspects To Consider (forbes.com). The article describes the most important aspects that organisations need to pay attention to when deciding on a technological change.
I have chosen 6 aspects for you which, from a purchasing strategy perspective, seem very important. I have described them according to my experience
What to look for when building a new technology procurement strategy?
1. NEED OR EXPECTATION?
A clear distinction needs to be made between real needs versus business expectations. There needs to be a thorough examination within the organisation of what benefits and what losses are associated with the planned technological change. Is this change necessary, is it timely, does it fit our organisation? etc. I have witnessed many situations where there has been confusion between need versus expectation when creating technical specifications for IT software. For example: expectation business was the purchase of a well-known high-end software, e.g. ERP from the high end of the price spectrum, simply because most of the significant companies in the market have this software implemented. Another indication could have been that the recommendation of a particular ERP system came from the IT department, as this department had the best experience from previous implementations.
Need was to provide the organisation with a transparent and uninterrupted, continuous flow of financial documents from request to invoice settlement (Source to Pay). In most cases, a need defined in this way does not require high-end, top-of-the-range software. However, companies often opt for the most expensive solutions. The result of such an approach is usually an endless process of implementing a product that is poorly calibrated to the size and scale of the organisation's needs. This drags on for months and countless changes are made to match the off-the-shelf system to the specifics of the organisation. I am writing about the so-called 'off-the-shelf' approach. change request converted into a high rate of developer days. This increases geometrically the cost of an implementation project that may never deliver a return on that investment, the so-called ROI for digitising the Source-to-Pay process. This is worth considering in the context of technological choices.
2. WHAT BUSINESS PROBLEMS WILL TECHNOLOGY SOLVE?
Absolutely critical to the success of an implementation project is the answer to a strategic question: what problems are to be solved by the technology we want to source from the market and implement. What challenges in the organisation will we have to face. If it influences the improvement of operational results (achieving so-called operational excellence) financial, sales, quality in relation to customer service, this is already half of the expected success. Analyse potential technology partnerships to ensure that their internal team, expertise and security are what you are looking for. Finally, consider whether the latest version of the product you want to implement is available on the market, how many system updates are planned by the manufacturer, and whether the system is scalable in a business expansion situation.
3. DOES EVERYONE IN THE BUSINESS ACCEPT THE NEED FOR TECHNOLOGICAL CHANGE?
Another very important aspect is to make sure that the business understands why we are pursuing a process digitisation project and accepts it. Implementing technology just for the sake of having new technology can cause more harm than good. Procurement should be involved in the process of defining the business requirements from the very beginning and under the proof of concept / proof of value of a particular solution. Why? For two reasons. The first a very mundane one - to understand exactly the business objective of the technology change. In addition, remember that if procurement skips the stage of selecting a partner for the implementation of the POC/POV and leaves this in the hands of the IT department, the entire subsequent tender including other bidders is really of formal and symbolic importance. The second reason is related to risk and security.
4. WHAT ARE THE RISKS?
Risk - an aspect that has grown in importance especially in the pandemic and remote working forced by it. In an increasingly data-driven and cloud-based world, businesses face the dual challenge of scalability and data security and control. Scalability is a challenge due to „always-on” global consumers who generate demand for applications around the clock, wherever they are. Data security and privacy are becoming urgent as European RODO regulations come into force. Enterprises now face the dual challenge of being able to scale application services up and down, with data on demand, with flexible support for data security and privacy. These are the customer needs that drive our evaluation of new technology. In technology assessment, this criterion should be one of the key ones.
5. WHAT DO THE CRITICS SAY?
Let's listen carefully to what IT companies are saying about the products they are deploying. Let's not just listen to the manufacturers of high or mid-range systems and their sales forces. The truth lies ONLY in the „sweat and tears” of the one who has realistically had to deal with the implementation of a particular system and not just one company, not just one industry. Besides, he has comparisons from implementations of various products not only of the same class, but also of another category, which will answer our business need just as efficiently. He writes here about having a frank conversation with the IT company that implements the implementations about whether we definitely need an ERP system for our process, or whether a Business Process Management Systems class platform would prove to be sufficient and more flexible to our needs.
6. HOW DO WE UNDERSTAND PARTNERSHIP?
... and are you analysing your organisation's attractiveness to the new technology supplier market? No. Attention: change is coming!
Collaboration with technology providers should go beyond the functionality of IT products and SLA terms in the contract. They should be true business partners, engaged at an early stage of the change concept so that they can effectively help the organisation transform and adapt in a changing environment. The latest projections from the IT market point to the need for a complete change in the mindset of buyers towards technology companies than has previously been the case. Those who understand this first will win. What does this mean? Well, it is very likely that the inevitable increase in demand for innovation, accelerated by the pandemic, will create inverted market mechanisms. What I have in mind is a situation in which technology providers will be the ones to select customers for strategic and innovative projects. The effect commonly referred to as a „crop failure” will result in technology companies being very cautious and selective in entering into business relationships.
They will analyse the profitability and risk of project failure more frequently than before. All this is done in order to continually build competitive advantages through a strong portfolio of innovative projects and clients. In our strategy-building training courses, we show how to analyse the attractiveness of the buyer vs. supplier market. We use reasoning through the prism of the superimposed Krajlica and BCG* or Krajlica and Kaplan - Cooper -Gordon** matrices, in order to make buyers aware of the importance of being aware of how their organisations are perceived by suppliers. This knowledge is to be used by buyers when making negotiation and relationship-building adjustments in relation to key business partners.
In order to meet the expectations of our customers in relation to, among other things, the building of knowledge in the area of purchasing and implementing new technologies, we have launched the initiative Digital Procurement Centre (Procurement Centre of Digital Excellence). DPC forms a team of consultants, architects of solutions that increase process efficiency and reduce costs in companies. We aim to get our clients to the level of Digital Masters in the shortest possible time. Find out more about what we do at DPC Digital Procurement Centre (eveneum.com) . We also invite you to participate in our training Strategic IT/IS purchasing category management | Eveneum
Polish 
English