14 October 2024
Excitement over procurement technology reached fever pitch in past weeks. The geek-alarm on my inboxes has not let up. It’s being activated by some recent nerdfest in Amsterdam which attracted normally sane procurement folks to pay to be pitched to by software salesmen. What’s it all about?
It quickly emerges that there are many technical solutions out there, all desperately seeking problems. And where are they finding these problems? What is generating all the excitement?
- Intransparency of data
- Risk identification
- Contract management
- Performance monitoring
- Spend analysis
- Process improvement
- Et cetera
- Et cetera
All very worthy, we know. They can fill hours of presentations on procurement operations; and they do, regularly. But haven’t they been worked on for decades? Aren’t the benefits of applying any new technology going to be marginal, at best? You know the bottom of the barrel of opportunities has been reached when you see ‘Customizable Dashboards’ in a list of targets.[i]
These so-called solutions are all about making existing resources and processes more efficient but, collectively, the sum of all everything procurement does accounts for 1% or less of corporate revenues.
If there were massive rewards out there, if there were business breakthroughs waiting for the right effort from Procurement, would the last decades have been spent cutting back on sourcing resources? No. Just the same old, same old. We’ll do what we’ve always done; but cheaper still, and more efficiently.
That would be laudable except that Procurement people sense that there are indeed massive problems to be solved, problems that Procurement is almost exclusively suited to cracking. But they involve looking outwards, not inwards.
[i] I was too embarrassed to include it in the above list but, I promise you, I read it in a list of purchasing problems and solutions!