digital action plan part one: current state analysis · capabilities, collaboration or soft skills?...

Digital action planPart one: Current state analysis

Procurement Leaders | Accelerated transformation starts here Procurement Leaders | Accelerated transformation starts here

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Introduction 3

• The benefits of digitalisation• Blockers• Current state analysis• Process mapping• SWOT analysis• Automation matrix • RACI model

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111213

Procurement Leaders’ view 15

• Procurement technology solutions• The systems landscape• Barriers to leveraging data• The digital readiness assessment

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Contents


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IntroductionOverviewSenior executives are aware of the importance of digital transformation but often fail to adopt a structured approach to developing a meaningful digital strategy. Without a clear purpose and an aligned strategy, executives risk formulating plans that are either unachievable or will fail to meet the business’s objectives. An ambitious yet realistic action plan is integral to a successful digital transformation initiative.

STEPS TO SUCCESS1. Frame your purpose before deploying solutions. Focus on

outcomes that align with the corporate strategy.2. Build a vision of the future by focusing on short-term,

achievable outcomes. A six-, 12- or 24-month scope will force CPOs to set stretching yet realistic targets.

3. Invest in individuals that possess business acumen and soft skills. Make them champions of change.

THE PURPOSE OF THIS DOCUMENTThis document supports procurement teams that are digitalising their operations. In particular, it will:1. Help CPOs identify priority areas for digital strategies

using a current state analysis. 2. Provide the general steps, relevant templates and

Procurement Leaders’ perspective to clarify what teams should do.

3. Clarify how procurement chiefs should plot a rigorous future vision for their functions.


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The benefits of digitalisationWhat will a digital transformation deliver?

Procurement Leaders | Accelerated transformation starts here

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The most commonly cited roadblocks to jump starting a digital initiative are:

1. Disparate data sources, as well as poor system integration and adoption.

2. Incoherent strategy or unclear priorities.3. Talent and operating models are not aligned to the new

technology or not appropriately set up to deliver against the organisation's digital strategy.

Blockers


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This section provides templates and insights to help procurement executives assess internal skill sets, as well as their processes and technology provision.

1. Process mapping. Understand where processes should be simplified, where automation should be applied and the extent to which current processes are automated.

2. SWOT analysis. A strengths, weaknesses, opportunities, threats (SWOT) analysis can help build a better picture of the internal digital landscape.

3. Value automation matrix. Map tasks based on the degree to which they are automatable or strategic. This enables procurement executives to understand how resources are deployed and identify opportunities to derive value from automation.

4. RACI model. Use a responsible, accountable, consulted, informed (RACI) model to identify project owners and the tasks they have committed to completing.

Current state analysis


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Process mapping

01 02 03BUILD A PROCESS MAP DEVELOP A TEST TEAM FOCUS ON PAIN POINTS

Work with process owners to obtain a detailed overview


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Begin with three areas:

1. Where processes should be simplified: Does the organisation use standardised processes? Where do inefficiencies exist? Is it possible to circumvent or reduce process complexity?

2. Where automation should be applied: To which areas does the organisation devote the most resources? Where are activities suitably standardised, data-heavy and repetitive? Which processes require a high level of cognitive capabilities, collaboration or soft skills?

3. The extent to which processes have been automated. What solutions already support these areas? How effective is existing systems provision for these activities in achieving business outcomes?

1. Build a process map


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§ A digital strategy requires comprehensive oversight of existing workflows and resource allocation.

§ Focus on the time spent on a process by job level.§ Develop a test team with roles that represent the

procurement organisation, and have them record the time spent on daily activities.

§ Include all the key stakeholders from the start when mapping the process.

§ Consider this in the context of salaries by job level to calculate the estimated cost of each activity or process.

§ Explore how the function applies technology over these processes. Identify whether dedicated systems exist, how they are used and where staff circumvent the organisation’s current solutions.

2. Develop a test team


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§ Make process maps easy enough to read that anyone in the company can understand them.

§ Assess whether:§ The task is associated with human errors.§ The task is repetitive.§ The process is simple enough to overlay with a

technological solution.§ And identify:

§ the outputs;§ the customers;§ the process inputs; and § the suppliers of each input.

3. Focus on pain points


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§ A strengths, weaknesses, opportunities, threats (SWOT) analysis will help procurement executives gain a better understanding of the organisation’s situation.

§ This framework can be implemented quickly at little or no cost to the organisation and repeated at regular intervals to explore how the project has evolved.

SWOT analysis

StrengthsResource levels, skillsets, leadership, executive buy-in,

existing infrastructure, level of process standardisation, change management maturity, culture, key partnerships

WeaknessesResource levels, skillsets, leadership, executive buy-in,

existing infrastructure, level of process standardisation, change management maturity, culture, known vulnerabilities

OpportunitiesVendor capabilities, emerging technologies, new business

requirements, competitor vulnerabilities, prospective partners

ThreatsDevelopment hurdles, knowledge gaps, requirement

changes, poor internal alignment, poor change management


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USING A VALUE-AUTOMATION MATRIX§ Mapping the value of tasks and the degree to which

they can be automated provides insight into how the function deploys resources.

§ Supported by the activity tracking and process map, assess the automation potential and value of tasks.

§ Automation potential: How repetitive is the activity? How data heavy is it? How collaborative is the task? Does it require soft skills or creativity?

§ The value of the activity: What effect does it have on the wider business?

HOW TO READ THE MATRIXMap the amount of time staff spend in each quadrant. If they appear to spend too long on tasks that could be automated or fail to work on strategic activities, address this as a priority.

Automation matrix

High potential,tactical value

Purchase order automation, invoice processing, supplier

auctions, contract management

High potential, strategic value

Forecasting, traceability initiatives, sourcing supplier innovation,

complex analytics tasks

Low potential,tactical value

Unpredictable tasks, personal admin, work assignment, communications cycles.

Strategic value

Auto

mat

ion

pote

ntia

l

Low potential,strategic value

Leadership, strategic planning, stakeholder/supplier relationship

management


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RACI modelA RACI model helps leaders identify project owners and the tasks they have committed to completing

Develop a list of important stakeholders and project participants beyond the scope of the project team. A significant proportion of this responsibility model may be allocated to employees outside of procurement – either from IT or a data team.


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RACI modelProject team Key

suppliersApplication

ownersInformation architects

Data governance

Metadata analysts

System developers

Operations staff

Strategy R C C C A I C C

Data harmonisation processes A C R R R C

Data requirements analysis A C A R R

Metadata analysisA C R R A C C

Master Data Models A I A C R C I

§ The table shows how a responsible, accountable, consulted, informed (RACI) model can be applied to data stewardship – in this case, a master data management programme.

Responsible for deliverables related to completing the task.Accountable for delivering the task's deliverables or achieving the milestones.Consulted on how the task should be completed.Informed about the team’s progress.


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This section provides insights into the activities procurement functions are automating and barriers to effectively leveraging data.

1. Technology solutions for procurement activities. Many procurement functions focus heavily on improvised solutions and are overly reliant on programs such as Microsoft Excel

2. What does the systems landscape look like for the average function? Procurement teams with dedicated systems for a particular activity use more than one application to support that task

3. Barriers to leveraging data. Poor data integration is the most frequent barrier to using the information effectively4. The digital readiness assessment (DRA). The DRA can be used during each stage of a transformation to help

identify gaps, establish areas on which to focus on and determine where to start

Procurement Leaders’ view


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§ Across all activity areas surveyed, on average, 42% of respondents to Procurement Leaders' Data and technologyreport rely on an improvised spreadsheet solution (see chart, right).

§ In fact, many respondents who use a dedicated system say they regularly use spreadsheets alongside their primary systems.

§ This multi-interface approach, whereby processes are divided between systems and supporting spreadsheets, can be time-intensive. As a result, a number of procurement functions are looking to tools such as robotic process automation to carry out tasks more efficiently, freeing up staff to focus on higher-value activities.

Procurement technology solutionsLEVEL OF TECHNOLOGICAL SUPPORT BY ACTIVITY (% OF RESPONDENTS)

64

52

60

25

29

19

52

7

37

29

84

26

44

22

58

51

67

42

58

47

52

13

10

4

18

17

20

14

6

35

16

19

3

0 20 40 60 80 100

Procure-to-pay

Spend analysis and reporting

E-sourc ing

Category management

SRM/collaboration

Knowledge management/information sharing

Contract management

Stakeholder management

Workflow and work assignment

Risk management

Invoice processing

Dedicated system for this activity Improvised system No systems support required


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§ Functional effectiveness is linked to system quality and the number of systems used.

§ The best-performing procurement teams have fewer overlapping systems, enabling them to make greater use of available technology.

§ Procurement teams with dedicated systems for a particular activity currently use more than one application to support that task. Notably, the average function uses 2.7 P2P systems (see chart, right).

§ Consolidate overlapping systems to simplify the function's operations and make future technology deployments easier.

§ The number of systems per activity has significant implications for digital project selection. It may be that existing functionalities in one system P2P tool, for example, are underused and its use could be extended, rather than the function investing in a new system.

The systems landscape

2.7

2.5

2.3

2.2

2

2

1.8

1.8

1.7

1.5

1.5

0 1 2 3 4

Procure-to-pay

Workflow and work assignment

Invoice processing

Knowledge management/…

Spend analysis and reporting

Category management

Stakeholder management

Risk management

SRM/collaboration

E-sourc ing

Contract management

AVERAGE NUMBER OF SYSTEMS PER ACTIVITY

Source: Data and technology, Procurement Leaders


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§ Some 63% of respondents to Procurement Leaders' Data and technology survey say poor data integration is the biggest barrier to using this information effectively.

§ Disparate data sources, a closely linked issue, is a barrier for 61% of respondents, illustrating the severity of the issue. Procurement teams have inherited a wide range of platforms and these are often poorly integrated.

§ Although the use of spend analytics tools may merely demonstrate how poorly many organisations use data, deploying a spend analytics solution might not be effective if the function does not first address other barriers to making full use of the data at its disposal.

Barriers to leveraging data

19.1

19.5

35.2

37.7

42.4

42.8

49.6

58.5

60.6

63.1

0 20 40 60 80

Data security concerns

Limited executive buy-in

Inadequate data skill sets

Limited technology coverage

Lack of dedicated resource

Lack a suitable analytics platform

No master data strategy

Labour intensive data cleansing

Disparate data sources

Poor data integration

DATA CHALLENGES

The importance of data to teams generally outstrips the function’s ability to leverage it effectively

BARRIERS TO USING DATA (% OF RESPONDENTS)

Source: Data and technology, Procurement Leaders


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The digital readiness assessmentTake the assessment to map your readiness across these four pillars

PEOPLE AND CULTURE

INFRASTRUCURE AND CAPABILITIES

GOVERNANCE AND PROCESSES

STRATEGY AND VISION

DIGITAL READINESS REPORTBenchmark your readiness across 12 subcategories

Identify potentialbottlenecks

Recommended actions through insights, applications and connections

• Data skills• Leadership• Culture

• Accessibility and reporting• Tools• Make or buy

• Change management• Process management• Process engineering

• Roadmap development• Partnership• Data strategy

digital action plan part one: current state analysis · capabilities, collaboration or soft skills?...

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