Technology and the Growing Talent Crunch!

A debate of reasonable fury has been raging since the Bureau of Labor Statistics released their latest report on procurement sector job growth.  The primary point of contention is the BLS’ assertion that the “overall employment for purchasing and supply managers is expected to grow slower than the average for all occupations through the year 2014.”  Adding further fuel to the “sky is falling” fire that seems to be the theme of the majority of commentaries written on this issue, is BLS’ position that the “demand for purchasing workers will be eliminated by improving software.”

There are those (albeit in the minority) who are of the opinion that the forecasted decline in tactical positions as a result of improved software will be more than offset by the increase in demand for professionals with strategic expertise.  Hence the reason for the report’s somewhat stagnate findings.

Conversely, the vast majority believe that factors such as the growing complexity of global trade means that strategic sourcing positions are going to increase significantly and therefore the BLS report has grossly underestimated the pending talent crunch.  In fact some feel so strongly about the matter that they honestly believe that the BLS report has done a disservice to the industry.

While the above is certainly fodder for an interesting debate, one which of course does have merit, it represents just one of the three main factors of influence behind the dramatically changing landscape of procurement practice.

The Perfect Storm

In a chapter from a book that is nearing completion titled The Perfect Storm, I made reference to the convergence of three factors of influence that would forever alter the ways in which organizations will procure goods and services for the next 25 years and beyond.  The pending talent crunch was just one of the three critical factors.

And while our own studies have indicated that the effective introduction of a process-centric technology can lead to a significant reduction in head count (in one case study the number of purchasing personnel managing a large government contract went from 23 down to 3 within 18 months of the initiative launch), the broad application of these results as a means of predicting sector employment growth would not be sound.

This is due to the fact that the introduction of technology in and of itself will not automatically translate into fewer positions.  At least not in every situation!  And certainly not with existing implementation methodologies!

In her article titled eProcurement: The Technology of Smart Shopping, writer Linda Briggs attempted to identify the reasons behind the low rate of e-procurement adoption within the K-12 sector.  For many districts, high upfront costs and the need for “outside” technical expertise especially in the area of back-end financial system integration represented significant obstacles.

So even though the potential for savings are great (in an upcoming post I will discuss the important – and costly differences between potential and sustainable savings), according to the article 90% of all K-12 districts have yet to embrace e-procurement technology as a viable option.  This lack of adoption within the K-12 sector (which does extend to the general market as a whole), negates to a certain degree the purported tactical job losses associated with the BLS report.  When combined with a recent IDC study indicating that there is a growing dissatisfaction with the quality of outsourced services it is not difficult to understand why the majority of industry pundits believe that the pending talent crunch will be severe.

Commitment=Skill Development=Results

Regardless of the reasons or for that matter the degree, of the pending talent crunch or vacuum as I like to call it, a successful procurement practice is built upon the commitment (some would say passion) of its personnel.

Even though I often refer to the continuing high rate of e-procurement initiative failures, there are examples (however rare) of successful programs.  These bastions of success have very little to do with the technology (so you can ignore those “comparison” advertisements by the software vendors), and more to do with the individuals involved in the selection and implementation process.

In an excerpt from Linda Brigg’s article, Rick Grimm (who is CEO of the National Institute of Governmental Purchasing), made the following statement; “as is true of any technology, the push for an e-procurement solution typically comes from one or more tech-savvy leaders within a school district.”  What this tells me is that the success of any program starts with an organization’s leadership.  Regardless of the talent vacuum, all organizations should already have strong leadership firmly in place.  If not, the lack of talent at the operational level is the least of their problems.  Quite simply put, committed and passionate leaders tend to draw equally committed and passionate personnel.

Grimm went on to say, “there needs to be a partnership that includes at least the district’s CIO, purchasing agent, finance manager in charge of accounts payable, major user departments, and budgeting arm.  They all need to be thinking strategically about where the best value is.”  Putting aside the notable exclusion of external trading partners such as suppliers from the list (which I believe is an important oversight), Mr. Grimm has hit the nail on the head.  Skill development is not achieved in the classroom alone, but is instead acquired through real-life experience and understanding.  Being part of an environment which promotes the ability to understand and incorporate the objectives of different stakeholders is a critical element of a successful program and career.  As Grimm rightfully concludes, “when you don’t have that (re stakeholder participation and understanding), you find niche systems in which purchasing becomes an afterthought.”  And this brings us back to why 75 to 85% of all e-procurement initiatives fail.

In terms of success, the article sites both Detroit Public Schools and the Multnomah Education Service District.  What is interesting is that both districts were successful using two different technological approaches (re a traditional licensing agreement and a hosted service model respectively).  If you would like a copy of the article send me an e-mail with “School District” in the subject line.  I will forward the coordinates upon receipt.

You can’t stop the rain, but you don’t have to get wet!

At the end of the day, the debate regarding the pending talent vacuum while interesting should really take a back seat to the state of your current purchasing organization, including an assessment of the present leadership.

If your organization lacks passion and vision, all the talent in the world (or lack thereof) will mean very little.  This is especially important given a recent study in which the average length of time a “new” procurement professional spends in his or her first post is only 1 ½ years.  So if you are looking to bring in outside talent as a means of driving what has to this point been an underachieving organization – think again.  As Jim Collins (Good to Great) has discovered, hired guns rarely deliver to expectations.

This said the best way to address the coming talent crunch issue is to make certain that your organization is built on solid ground, with strong leadership already in place.  Then and only then can you be assured of drawing quality talent from even the leanest of talent pools.

Changing Face of Procurement Conference Series 

Jon Hansen is often retained by organizations such as the Purchasing Management Association of Canada (PMAC), the National Institute of Governmental Purchasing (NIGP) and the National Association of Educational Procurement (NAEP) to provide either a 1-Day orientation seminar or 2-Day accredited course based on his award winning Changing Face of Procurement Conference Series.  This 4-Part Series has successfully provided both public and private sector organizations with the insights they have needed to effectively evaluate the viability of their e-procurement strategy (including RFP creation) or alternatively, to drive greater value from an existing e-procurement program. Visit our web site at www.procureinsights.com for more information on this and our other services.