“Interestingly though, a large percentage of companies that have fully implemented these modern technologies are not actually satisfied with the results.” – Deloitte 2019 Global CPO Survey
Uh oh. What is the old saying about those who fail to learn from history? Are the dismal results of eProcurement initiatives in the ERP-era going to be repeated in the digital age?
According to the recently published Deloitte Global CPO survey “most companies that have fully implemented digital technologies are not satisfied with the results” (see Figure 3 below).
Besides understanding why there is such a high level of dissatisfaction with the results, let’s first understand what it means.
Early Adopters
In the July 2019 article Who are Early Adopters and Why Do They Matter? Martin Luenendonk writes that “Early adopters give you the first impression of the market,” and as a result “are effectively the metric for how strong your start has been.” He then goes on to say that “A slow start for a startup has almost always been a strong indicator of a business that might not reach the growth stage in the product life cycle.”
On many occasions, I have referred to the results of a McKinsey survey of 1,650 incumbent global companies in which only 20 per cent have a digital strategy in place. Of those, a meagre 2 per cent involve the organization’s supply chain. In short, when it comes to digital transformation, most executives are in a “wait and see” holding pattern.
Given the feedback from these early adopters, one has to wonder if and when digital will go mainstream. It is a fair question, especially given the historical influence early adopters of new technology have on mainstream buy-in.
The Real Problem
From my standpoint, I do not see it as being a technology issue – which was one of the main shortfalls with ERP-centric platforms. In other words, the digital tech is sound.
So, what is the problem?
It comes down to poor data governance, an unwillingness to move away from the familiar, i.e., the continuing reliance on spreadsheets, and a reactive versus proactive approach to formulating and implementing a digital strategy based on the failed consultancy models and methodologies of the past. These are not the only reasons, but they are among the main reasons why the level of CPO satisfaction with digital results may be so low.
Let’s do a quick unpack of the above points:
Data Governance: As Robert Handfield states, digital transformation will not happen without clean data. The paucity of clean data and determining who is responsible for cleansing has to be dealt with upfront. Unfortunately, most CPOs indicate that they do not have the resources and therefore cycles to go through the data cleansing process. As a result, they abdicate that responsibility to a service provider who, according to Handfield, is not equipped to do the job.
Spreadsheets: Next to discussions about gaining a seat at the coveted table – whatever that is, the subject of spreadsheet use is probably the next most frequent topic of discussion. In countless surveys, there is the recognition that the continuing reliance on columns and cells is perhaps not the best idea. However, until we clearly answer the “what’s the alternative” question, spreadsheets will continue to be a significant obstacle to digital transformation.
Failed Methodologies: Traditional consulting firms are general practitioners who usually win business first, and look for ways to make it work after the fact. In short, most do not have a deep bench when it comes to procurement expertise, meaning that they are not usually able to walk the talk. With the emergence of new procurement-centric consultancies and related implementation models, this obstacle will likely be the first to fall. Providing, of course, that “client” organizations have moved beyond the no one ever got fired for buying IBM belt with suspenders mindset.
Where to go from here?
I am sure that some are reading this post who will argue – and justifiably so, that one survey doesn’t prove that the digital transformation of the supply chain is not possible or is a worthy pursuit. I agree.
However, we cannot ignore the result or summarily dismiss it as being out of order. We need to learn from the survey’s feedback, starting with recognizing that new and exciting digital technology requires a fresh perspective and approaches, beginning with addressing the three significant obstacles referenced above.
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Procurement Insights 
Fabio Herle
December 12, 2019
Hi Jon,
Great article!
I don’t think that technology is not being an issue. Regarding usability, my expectation is that my users can log in and find their way around like we have the expectation to be able to do this with most top apps we use privately. There, no specific training is required, but instead the good applications (the ones I actually continue to use) have a very high usability, enabling an implementation without requiring a long training or reading a deep user manual. If this is not the case, I usually deinstall the app again immediately. Thinking in years, I’d say that only very recently there were a few moments where I was like “wow, this is really cool to use proc. tech.!”
I guess this probably has a lot to do with most “older” service providers originally starting from a “let’s setup a good process” background instead of aiming at providing an app which you want to scale as fast as possible to as many users as possible and therefore excellent UX is key from the start.
“Ease of connectivity setup between supplier-customer” can also still be a real challenge and requiring training of suppliers, follow ups etc..
One hurdle not mentioned above can be IT departments unwillingness to go out there and try something new outside of their “ERP centered world”.
Consequently, while I fully agree with your points above, I’d argue we cannot “only” blame the users. Lot’s of proc. / supply chain tech. still has quite a bit of a way to go, but slowly more and more new apps are being created and some of them have really good usability. Things are changing and I am convinced that digitalisation will happen sooner or later.
Best Regards,
Fab
piblogger
December 12, 2019
Excellent points, Fab – especially the parts about the continuing reliance on “old” ERP technology and the lack of great procurement “apps.”
Regarding the first point, a Gartner study reports that CMOs will spend more on IT than CIOs over the next couple of years. This trend, I believe, reflects the fact that IT is no longer the gatekeeper regarding the introduction of new tech into an enterprise.
As for the shortage of quality proc apps, Figure 6 in the Deloitte doc speaks directly to your point. Specifically, the level of satisfaction (or dissatisfaction) with the availability of viable procurement solutions on the market.