Challenges CIOs face in architecting right procurement transformation strategy
Key challenges are,
a. To identify which area ( Sourcing, Procurement, Supplier relationships, External interfacing ) under procurement domain should be targeted first to have a quicker ROI especially in current turbulent environment when investment budgets are hard to come by.
b. To work out make / buy strategy considering the changing software industry and outsourcing approach of the organizations.
c. To identify right packages / system integrator that would achieve the basic objectives while undertaking such procurement transformation initiatives.
Lets discuss first challenge today..
Following generic 2*2 matrix may help in deciding the right candidate for investments in the current environment.
It is advisable to start with the self service procurement ( with or without pre negotiated contracts / catalogues ) wherein employees will be empowered to procure based on their individual authority levels and thereby reducing the procurement process expenditure giving immediate transactional benefits.
While it may not cost too much to have good spend analysis tools in place, the returns will only accrue over a period and would also depend on organisation’s decision making competence / capabilities which are often observed to be constrained owing to multiple factors like supply market, supplier dependencies, master data validation etc.
Strategic sourcing is another area where immediate benefits accrual will start and can provide an excellent bottom line cushion but it would require additional investments towards hardware and supplier licensing costs.
Supplier enablement and thereby fostering long term supplier relationships can provide huge strategic benefits but that can only occur over a stretched period of time.
It is therefore vital for a CIO to take the right path in chossing the target area which will eventually help the organisation achieve its intended objectives while keeping the investments low in current crisis situation.
I will touch upon the other challenges in my future posts on the same topic. Looking forward to your comments and I assure of quick responses.
Bye for now,