Procurement Technology: Managing the Change Process Michael Kirk The CIPSA Special Interest Forum on Technology in Procurement
Agenda About The Faculty The importance of change management in technology projects Lessons learned from a global contract management system deployment Understanding the current state Being clear on your objectives Engaging with stakeholders Understanding how the technology will work in practice Key success factors for deployment Questions The Faculty Management 2 Consultants Pty Ltd 2010
About The Faculty The Faculty is dedicated to helping our clients achieve Procurement and Supply Excellence Consulting Diagnostic, benchmarking and reviews on procurement / supply Procurement and supply strategy Procurement policy, processes and systems Change management and project management Procure to Pay, Source to Contract Process Discipline and Six Sigma Roundtables and networking Training and People Development The Faculty Roundtable Category Councils The CPO Forum Leading and Learning breakfasts The Faculty Management Consultants Pty Ltd 2010 3 Skills assessment and team development gap analysis Tailored training and mentoring Public training Pathways, SRM, Anklesaria Procurement Executive Program Talent and succession planning
The importance of change management 4November 2010 The Faculty Management Consultants Pty Ltd 2010
Commercial levers for Procurement which lever is your technology project addressing? Efficiency and effectiveness Acceleration of processes and information one version of the truth Managing risk Managing governance, risk and quality, protecting the brand Commercial innovation New operating models, JVs, Mergers and Acquisitions Growing top line revenue Orchestrating a trusted network of suppliers to deliver growth Cost savings Lean thinking, driving cost efficiencies and operational effectiveness The Faculty Management 5 Consultants Pty Ltd 2010
Case Study Global Contract Management System Deployment
Objectives and Challenges for the Project Objectives: Apply standardised global processes on a local basis to drive accountability at the operational level Measure and drive improvement in organisation alignment to global systems Improve governance and visibility of key contract information Provide support to individual procurement resources in a decentralised manner Leverage the organisation s investment in their ERP system Challenges: History of acquisitions and a decentralised business model Difficulty in implementing standard systems and process Limited visibility of critical management information Individual priorities and perspectives across diverse business units The Faculty Management 7 Consultants Pty Ltd 2010
The Faculty s Approach Define Measure Analyse Improve Control Define the Opportunity for Improvement Measure for success Analyse and determine specific issues Improvement Solutions for Success Control the Future Process ongoing As- Is Current State To- Be Future State Implement and Sustain Review the current state Understand strengths and weaknesses Engage team with understanding of current operations and business priorities Identify opportunities for improvement and quantify Develop a plan for the future Gap analysis against current state Quantify the business case for improvement Present and secure commitment for investment Develop implementation plan and execute Conduct training and change management Setup processes, procedures to support ongoing activities Diagnostic & Gap Analysis Business Case Build & Embed Capability 8 The Faculty Management Consultants Pty Ltd 2010
Typical Business Unit Implementation Plan 1. Understand As- Is process Map current state process 2. Design To- Be process Map current state process into the system for future state 3. Data conversion Load contracts and documentation into system 4. System configuration Configure for BU specific processes and context 5. User training Customised approach focusing on different team needs 6. Change management Communication within BU to end users, contract owners, approvers etc 7. Go- live Implement go- live plan The Faculty Management 9 Consultants Pty Ltd 2010
The Results Successful pilot leading to global rollout 5,000+ contracts loaded Over 10 business units implemented 200+ contracts officers trained including e- sourcing capability Increased visibility and knowledge sharing High degree of process standardisation with continuous improvement The Faculty Management 10 Consultants Pty Ltd 2010
Benefits of a Global Contract Management System Benefits to the procurement team included: Standardisation and Automation of contract management process Standardisation of process among different teams Systemising key tasks Increased Control and Governance Capturing documents and approvals along with contract documentation Clear visibility of approvals and delegation of authority Roles and responsibilities clearly defined and visible Improved Knowledge Sharing Share documentation across the organisation Provide global contract benchmarking and visibility New system functionality also supported: Electronic RFP using online sourcing tools Sharing of key documents with contract owners and site representatives Reporting and automatic alerts for contract management and status reminders The Faculty Management 11 Consultants Pty Ltd 2010
Key Success Factors
Be clear which part of the procurement process your technology is addressing The Faculty Management 13 Consultants Pty Ltd 2010
Be clear which part of the procurement process your technology is addressing Analyse Source Transact Pay Manage Analysis & Plan Spend analysis Specifications Stakeholder requirements Market analysis Sourcing RFQs / RFPs Tender Evaluation Tools Contract Management Systems Contract approval Transaction Requisitioning and Electronic POs Catalogues and Master Data PO Approval Order distribution Inventory Payment Invoice receipt Authorisation Payment systems and methods Manage Contract and Supplier Management Supplier KPIs Supplier Development and Collaboration The Faculty Management 13 Consultants Pty Ltd 2010
Be clear on your objectives for the technology which lever are you attempting to pull? Transaction Costs Increasing the ordering efficiency of buyers and Accounts Payable Transparency Improving transparency of spend volumes and categories to standardise purchases and inform future negotiations Compliance Improving compliance on leveraged negotiated contracts to reduce maverick spend Governance Control to ensure compliance with business rules such as authority limits Modernisation Adopting modern procurement processes and systems to keep the organisation on the leading edge of procurement technology 14 The Faculty Management Consultants Pty Ltd 2010
Key Success Factors Ensure the procurement technology strategy complements broader business needs and strategies, and identifies and manages key operational risks Identify and manage key stakeholders both internal and external their needs, issues and concerns; secure support and maintain communication Understand the business requirements and use them to drive the implementation and priorities, while focusing on top line revenue generation and operational efficiency Understand and manage the impact of change on the organisation Keep it simple and focus on the key benefits The Faculty Management 15 Consultants Pty Ltd 2010
Procurement Technology: Managing the Change Process Michael Kirk Email: Michael.Kirk@thefaculty.com.au Phone: +61 3 9654 4900