Replace or reinvest? Three considerations when upgrading your procurement system


Nicklas Brändström

April 6, 2016

It’s easy to get lost in the excitement of moving to a new procurement solution, but make sure you first take stock of your actual needs and what you already have at hand.

 The Clash sing: Should I stay or should I go? Procurement leaders today should ask themselves – should I replace or should I reinvest? CXOs often tend to fall for the full suite approach when looking to upgrade their procurement system. However, before making the commitment, it is imperative to consider the major pitfalls of implementing a full suite when existing systems can meet most key function needs. Moving to an entirely new system with all the bells and whistles often creates as many issues as it solves. Organizations should first assess what they already have, how much of the procurement functionality can reside within existing solutions and then identify the gaps: like difficult user interface, limited buying channels, poor quality of content and lack of connected vendors. The answer to these questions will then help the organization to decide what it would like to take to fill these gaps. The organization then usually finds itself with two main options: leverage the existing procurement technology with additional 3rd part technology and services, also known as a hybrid solution, or replace the existing procurement technology in its entirety.  There are three main factors to consider: 


 It shouldn’t come as a surprise that full suite systems come at a premium. If leveraging existing systems and combining them with other tools and solutions proves to be just as effective, why waste the money, the resources and time that a major implementation entails? More often than not, you can meet your indirect procurement needs in full by layering an indirect procurement solution on top of your existing enterprise resource planning system with less cost and headache. 


 It is not uncommon to underestimate just how much of a drain on resources that implementing a new tool or system can bring. There are many factors involved such as migrating data, changing and enacting affected processes, training staff members, and general change management, to name a few. Leveraging existing systems reduces the time, effort and labor involved as well as overall risk.   


 Many organizations that choose a full suite procurement system do not successfully deploy the entire suite. The decision whether to go full suite or choose the hybrid approach should depend heavily on your organization’s actual rather than perceived requirements. Consult all the key stakeholders on their specific needs and focus on key problem areas or pain points.  Specifically, take user-friendliness into account. Within indirect procurement, complex user interfaces and features drive many users into circumnavigating processes such as purchasing directly over-the-phone or online, therefore savings on sourcing are never realized due to low contract compliance. This leakage is one of the most commonly identified pain points of indirect procurement but can be easily addressed with a hybrid approach. Most ERP systems feature power functionality but antiquated user interfaces. A hybrid approach allows an organization to retain the current functionality of its existing ERP while adding an improved user interface by layering a new user-friendly tool on top of the legacy system.  

Go with what works

 When you have truly analyzed and documented the required (not desired) needs of the key stakeholders within your organization, find and implement the solution that meets these needs and solves your organization’s procurement shortfalls. Do not waste time and money on solving issues that are not there. It is easy to fall under the spell of believing that all you need is a completely new system – a fresh start. Things are rarely that simple. New systems take up time, cost a lot of money and pose a number of risks. According to Gartner, “By 2017, 50% of S2S suite deployments will have failed to meet business expectations due to poor implementation processes.” Taking this into account, a hybrid approach involves lower risks and a faster return on investment, and more focus can be put on change management rather than technical questions. Take the time to make the right strategic decision. There are situations that require a full suite replacement for outdated systems, but many that don’t. I would recommend you make sure you aren’t over engineering something that could be solved quickly and simply with less effort and cost.

This article was written by Nicklas Brändström from CapGemini: BPO Thought Process and was legally licensed through the NewsCred publisher network.

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