Procurement Best Practices in Digital Implementation

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In a recent episode of the Negotiations Ninja podcast, I talked with Michael van Keulen (MVK)—the Chief Procurement Officer at Coupa Software. We talk about digital transformation in procurement and how many organizations are still resistant to change. MVK also talks about the importance of getting your stakeholders on board with any new implementation.

Part of the digital transformation process is making sure you choose the right software. You need to think about the founding principles of any technology partner that you choose. Where did they come from? What is the architecture? Platforms need to be built on best practices. One of those best practices includes ensuring good, useable data.

Benchmarking data at scale

Large P2P platforms can benchmark services and products. It presents a massive opportunity. But how do you effectively do that when the data is long-text? One option is to implement United Nations Standard Products and Services Codes (UNSPSC codes). They’re supposed to be universal in use and used to benchmark good data. If you don’t have standardized codes, your data becomes unmanageable at scale.

MVK points out that it’s the old adage, “garbage in, garbage out.” If you try to do that for $2 trillion worth of spend across 5 million suppliers and 2,000 customers across the globe—that’s a lot of data (that MVK points out IS anonymous). Coupa does have a UNSPSC type of taxonomy that they’re tweaking and forming into a Coupa taxonomy. Why? Because UNSPSC isn’t always helpful. Michael prefers meaningful taxonomies. What if I buy something from Microsoft? How do I ensure that it has the right classification?

A unified taxonomy across platforms is critical. Many companies miss the boat on this. You have to implement the taxonomy that makes the most sense for the business as well as benchmarking purposes. If you implement a homegrown taxonomy that only makes sense to your organization, it’s limiting yourself from future opportunities.

Don’t put lipstick on a pig

Some platforms guide you and encourage you to apply best practices. That allows you to benchmark data. It allows you to get better and better. Platforms that you can tweak to fit an outdated organization won’t allow you to extract the best value that you can. But if it’s built on feedback from the community, you will extract the most amount of value.

Only 30% of digitizations are successful. Why? Automating a flawed process won’t solve your problems—it’ll make it worse. It’s like putting lipstick on a pig. Best practices are so important. It can make change management more painful, but the outcome is bigger and better than having to tweak something to fit a poor system.

People think that implementing tech will solve all of their problems. It’s not true. If you have a bad process to begin with—and adapt the technology to the bad process—it makes the situation worse than where you started.

How else can you ensure a smooth implementation of new technologies? What should the digital transformation process look like? How can procurement step up in the boardroom and get their voices heard? MVK shares his thoughts in episode #177 of the Negotiations Ninja podcast. Make sure to give it a listen!