Procurement’s technological insanity — The time loop…

March 14, 2017

Over on Sourcing Innovation, the Sourcing Doctor has an excellent series of posts on driving adoption of Procurement technology. As someone who has spent most of the last 15 years in the field of Procurement technology:

in a Procurement organization, as a user first and, then, as a project manager driving implementation projects
working for a provider and helping customers in their projects..

..the topic covered by the Sourcing Doctor is close to my heart.

Also, I have been working, at the end of last year, on a white paper (still to be published) that focuses on change management and… adoption of Procurement technology. So, based on the research for the white paper, I had planned to post here, a series on that topic.

The series of posts by the Sourcing Doctor and a recent post by Jon Hansen on Procurement Insight on a typical story of an adoption fail served as triggers to add my own thoughts and observations.

By doing so, I hope also to contribute to increasing awareness on the Procurement and the provider side because:

I strongly believe in the beneficial impact of Procurement technology,
There is a certain low maturity on the Procurement organization side (maybe because they do not do such projects very often),
There is also, sometimes, blissful ignorance on the buy-side regarding the effort such projects represent (esp. regarding change management and business transformation),
Providers are also at times guilty of feeding that ignorance as they are under pressure of getting deals and, therefore, also minimize the budget needed for change and adoption.

And, whenever a project fails, the profession suffers (time, cost, credibility, …). So, it is in the interest of all involved to maximize the chance that implementation are successful and that those technological solutions are fully adopted.

An old story…

As the Sourcing Doctor states several times in his posts, Procurement technology is now quite “old.” Despite this, adoption is still relatively low. Projects after projects, the same issues. Like in a time loop, the same story repeats itself.

John Kotter, in his bestseller from 1996, Leading Change reports that 70% of change initiatives in organizations and businesses fail. More recent sources reflect the same situation about failures or issues (over time, over budget…).

“The average large IT project runs 45% over budget, 7% over time, and delivers 56% less value than expected.” Source:Pulse of the Profession 2015, Project Management Institute, February 2015

And, year after year, the same findings:

Source: Pulse of the Profession 2016, Project Management institute, May 2016

The same applies to Procurement technology. Consider, as an illustration, the following quotes on the adoption of eSourcing from 2007 to 2016:

”Here are my Top Three Issues facing the [e-]sourcing world today — Adoption, Adoption, Adoption!”
Source: Issues in eSourcing: adoption and penetration, eSourcing Forum, 2007

“Failure to fully leverage an eSourcing tool in 2014 is unacceptable”
Source: CPO Rising, 2014

“If an eSourcing solution is not in place, change that. If one is in place, start driving and/or mandating its usage. They may be the single most effective value-driver for CPOs and procurement teams today.”
Source: CPO Rising 2016: How the Best-in-Class Leverage eSourcing for Superior Performance

It’s not just bloggers and writers who say that. Analysts and research firms, like the Aberdeen Group and the Hackett Group, come to the same conclusions. Here are statistics from some of their reports on the adoption of eSourcing by companies they define as “best-in-class”:

2015 ==> 68% (The best-in-class lead the way on eSourcing, Aberdeen, July 2015)
2014 ==> 70% (Why is eSourcing Adoption and Utilization Still So Low?, Spend Matters, Sept. 2014
2011 ==> 63% (The State of Strategic Sourcing 2011, Aberdeen Group, April 2011)
2010 ==> 57% (Strategic sourcing, the 2010 guide to driving savings and Procurement performance, Aberdeen Group, March 2010)
2007 ==> 61% (The CPO’s Strategic Agenda 2007, Aberdeen Group, February 2007)

So, between 2007 and 2016 nothing much has changed. On one side, there is a widespread consensus on the value that organizations can get from using eSourcing:

”Best-in-Class sourcing and procurement teams also report average savings on their eSourcing projects that are 7% higher than the results of their competitors (9.8% average savings on eSourcing projects vs. 9.1%). They identified 14% greater savings than all other teams, and realized 10% greater savings than all other teams (7.7% vs. 6.9%)”
Source: CPO Rising 2016: How the Best-in-Class Leverage eSourcing for Superior Performance

On the other side, usage stagnates and is far from being widespread.

So, as the example on eSourcing demonstrates it, the central question is:
Why people who would tremendously benefit from using “something” actually do not use that “something”?

To answer that question, one has to look at The Psychology of Change…