A recent survey of over 750 procurement professionals by Edbury Daley and 105 Consulting suggests that many organisations may not be generating the expected returns on their technology investments. Iain Stewart, Director at 105 Consulting, outlines why this may be.
When Edbury Daley and 105 Consulting decided to conduct a survey amongst procurement professionals, into the relationship between the use of systems and procurement skills, the expectation was that organisations introducing systems to their purchasing processes would be benefiting from increased value, better compliance, and higher-level procurement practice. This belief was based on the assumption that systems facilitate better-informed procurement decisions, and that the existence of systems enables procurement professionals to operate at a ‘higher level’ of value.
105 Consulting’s experience in working with a number of leading procurement organisations had led them to dig deeper into their assumptions. Based on the survey responses, the reality is quite a shock in a number of ways, and indicates that some procurement systems investment decisions may not be as well aligned to increased value delivery as had been assumed. In fact, the survey found some dissatisfaction, some belt and braces, and some stagnation amongst purchasers who have implemented the systems but actually have not moved far up the value curve.
One of the major concerns highlighted by the study was that 60% of respondents felt that use of procurement systems yielded no improvement in internal customers’ ability to obtain the goods and services they require.
“We think this survey has a high degree of resonance with one of our concerns, namely that we see some prospective clients where there is a lack of integration between the technical aspects of their finance and purchasing systems and the vision of what they need their systems to do for them.
These organisations often miss opportunities for reducing cost or increasing compliance because their systems simply do not provide the management information necessary to support effective decision making. Our experience, which aligns rather well with our colleagues at 105 Consulting and Edbury Daley, is that effective spend control and management is a vital first step towards creating the data and the headroom to increase the value that procurement can deliver to the organisation.”
What are your thoughts on the survey results – do they match your experience? Why do you think organisations may not be generating the expected returns on their technology investments? Feel free to post your comments below.
105 Consulting is a procurement and supplier management consultancy focused on helping its clients to manage cost, risk and performance through sustained improvement of their procurement capability. 105 Consulting works with businesses across a range of industries including pharmaceuticals, telecoms and financial services. To contact Iain please email iain (dot) stewart (at) 105consulting (dot) com or telephone +44 (0) 7935056435.