Organizational agility has been written about for decades. It was revisited in boardrooms and white papers throughout the pandemic, as it became front and center again. Those organizations that had it were able to “pivot” (the word of the year for 2020) faster and perform better during those times.
The results at this point are proven; organizations with operational agility outperform on several different factors including financial performance, market share, and employee engagement.
How many organizations truly operate with agility? The numbers vary depending on the research but across all data we reviewed, there was no number over 50%. As an example, PMI’s Thought Leadership Series report indicated only 27% of C level execs in their survey considered themselves operationally agile.
When we were procurement leaders, we found that the function was often anything but agile. More rigid and at times bureaucratic. Our experience has been that agility is a term more often used than operationalized. And that properly deploying the right procurement technology is a large part of the answer.
There are numerous options for digital procurement tools today, and determining the right option can be daunting. But the benefits can truly impact business outcomes and enable procurement teams to contribute to operational agility. Depending on the tool, benefits include real time data visibility, automation across the purchase journey, enhanced supplier management capabilities, e-invoicing, contract management, category management, spend analysis, and risk mitigation.
These benefits change the way procurement, and cross functional teams, work. Real time data and spend analysis enable smarter business decisions to be made, faster. Automated tasks not only reduce the time to make a buy, but enable teams to focus on more strategic work and become a true partner to the business. Data based forecasting can be a game changer for supply chains, product launches and strategic planning. Teams can evaluate and engage suppliers more quickly, so that supplier relationships shift from tracking down lagging reporting data and quarterly business reviews around numbers to assessing leading, innovative solutions. Procurement becomes more nimble, proactive and able to anticipate change, and can react faster, as we know there are unknown, dynamic times ahead.
Last, but certainly not least, leveraging digital tools enables cost savings to be accurately tracked and reported, enterprise wide.
Agility in action.
But tech alone doesn’t = organizational agility
Tools, process, people and culture bring organizational agility to life. Deploying technology alone, without addressing the other components, will result in a digital transformation that doesn’t deliver all possible ROI and doesn’t operationalize agility.
Tools – There are over 430 procuretech platforms available today and the digital landscape continues to grow. Thankfully, integrations no longer mean needing to write large amounts of code and most contemporary systems can easily talk to each other. There is a growing trend towards selecting tools with “plug and play” integrations so implementations are less complex while bringing more valuable data. It is important to dig in on implementation methods and approaches to determine specifically what data will integrate, in what way. We see this daily as we work with our implementation partners such as Focal Point and Arkestro. Selecting the right tech for your specific strategy, goals, culture and tech stack is an important part of the process. And it’s the foundation for the change. But…
Processes – Simply deploying a platform over broken or inefficient processes will obstruct achieving the full value down the road, often results in workarounds, and misses the opportunity to capitalize on an enterprise-wide initiative. It’s important to use customer centric, design thinking to reengineer business processes both inside and outside of the technology.
People – Your people will transform your business, not the digital solution alone. Procurement teams have made big gains in building relationships with stakeholders, identifying change agents and informal influencers, and ensuring cross functional alignment in order to address the people component. But it’s not quite enough. Companies need to have a change management plan that puts people first, consider which skills and structure will best suit the organization post transformation, and be able to develop leaders who can sustain the change long term.
Culture – As this long standing and still true nugget states, “Culture eats strategy for lunch”. (Peter Drucker). We have seen powerful, problem solving, ROI based business cases sit unactioned because of organizational culture. And we have seen digital tools deployed but not fully adopted because the organizational culture was not addressed and accounted for in change readiness plans and implementation. Consider a Gallup report noting that most companies want to be more agile, but 59 percent don’t have the cultural attributes—ranging from cross functional collaboration to shared vision to quick decision-making—that are fundamental to agility.
Organizational culture does not mean a stop to a digital implementation. It just needs to be considered in the design, implementation, and steady state planning. Otherwise, the tool, and the resulting organizational agility, will be hard to sustain and scale.
But as we like to say at Wonder Services, quoting Door from Alice in Wonderland, “nothing’s impossible”. We see procurement embracing digital transformation and attracting the talent and the leaders that can get it done. With the right approach to these components, the selection of the right tech, and people focused change management, we’ll be seeing case studies anchored with results versus hypothetical wish lists. We are creating those case studies with customers and partners today. We are happy to share more – contact us.