Procurement and the Uber Effect

Posted on September 9, 2021


“Uber is a $3.5 billion lesson in building for how the world should work instead of optimizing for how the world does work” – Can Procurement Technology Benefit from the Uber Effect? – Procurement At A Crossroads  

I have been in high tech for more than 40 years now, and it is interesting to take a step back and realize how much innovation has advanced how we live and work.

Of course, the advancement to which I am referring is solely focused on the development of new and exciting technologies. However, our ability to utilize said technologies to their fullest potential has not always kept pace.

In some ways – perhaps more than we would care to admit, our advances in leveraging technology have lagged in the area of process optimization and outcomes.

The 2019 Deloitte global CPO survey finding that “a large percentage of companies that have fully implemented these modern technologies are not actually satisfied with the results” is proof of the previous statement.

So, what is the problem? I think that this is where the Uber tweet about building for “how the world should work” comes into play.

Process Before Technology

During the boom, I wrote extensively about how process before technology was the key to automation success.

Back then, I headed up a company that developed one of the procurement industry’s first algorithm-driven procurement platforms called RAM. For those who are acronym fans, RAM stood for Reverse Auction Module.

I designed the system for the Department of Defense’s procurement of MRO parts to support their IT infrastructure. What made it work so well was that the process behind the technology was sound. In other words, we didn’t look to technology to improve our processes; we looked for our processes to improve technology.

The end result was a user-intuitive system that effectively managed the delivery of high volume, low-dollar parts across the country on a timely and cost-efficient basis. The efficiency of RAM also reduced the number of DND buyers from a high of 18 people to 3.

Once again, this would not have been possible had we looked to the technology to “improve” or “fix” the process.

A Hard Lesson

As I stated earlier, there is no doubt that technological advancement has been nothing short of amazing over the past two decades. However, great technology will not fix poor processes and weak governance models. The results of the Deloitte survey are proof positive of this assertion. In short, having the right processes and governance to leverage technology fully seems to be a hard lesson many are still learning.

That said, what role do new, disruptive technologies associated with intelligent or cognitive procurement play in addressing the process before automation dilemma?

At this year’s Zycus Horizon 2021 conference, joining me in a Fireside Chat will be fellow procurement pundit and co-author Kelly Barner to discuss how cognitive procurement is a potential game-changer in the process before automation challenge.

Posted in: Conferences