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Corporate Immune Systems are Stifling Innovation in Procurement  

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“The Three Markiteers” went to London - our Italian and French Country Managers Giorgio Luciani and Steve Barraud plus Head of Sales, Margus Vahemäe - where Markit participated as a showcase partner at Procurement Leaders’, Data Intelligence & Technology Forum on 6-7 November.  

Events like this provide excellent insight to the current topics and trends in procurement and there are some important take-aways that could relate to your company’s experiences of digitally transforming your procurement function. 

Corporate immune systems have a lot to answer for. 

This form of conformity tendency manifests itself in a significant number of large companies, and demands that organisations (including the procurement function) within the company, accomplish activities in certain ways.  Multinational corporations are particularly at risk, where the effects of varying regional and divisional priorities can be compounded by distinct corporate structures, languages and even time zones.

We’ve witnessed this first hand where some companies really want the time and money savings Markit can offer with real time price comparisons from a huge IT marketplace but the corporate steering wheel just won’t turn in that direction – sad but true.

The fact is that after years of talk, and hype, about digital transformation, AI and other exciting technologies to aid procurement...projects are frequently unsuccessful. 

In fact, Bo Dungal (Disruptional Evangelist - Group Procurement at Danske Bank) stated that, according to McKinseys, 70% FAIL. A shocking number when you think about the time, energy and money involved in some of the projects. Things just take too much time, and it seems as though decision avoidance is a key factor in the failure to leverage the benefits of procurement innovation in the marketplace. Bo also commented that even when a solution exists to avoid time consuming RFPs and heavy sourcing, the corporate machine (in some companies) often says “NO”. Only 11% of the organisations surveyed at the event said they were “digitally ready” - the main causes cited as lack of agreed KPIs and insufficient stakeholder engagement.

According to Neil Cocker, Vodafone’s approach has progressed thanks to creating an accelerator program (Tomorrow Street, a joint venture with Technoport, which he directs within Vodafone) to stimulate progress & digital transformation. 

Sam de Frates, Senior Director, Commercial Digitalisation at Mars  acknowledged that when they started work on digitalisation, “Things became very complicated very fast. Many different countries / many different businesses,” and that procurement has “the weight of the supply chain on their shoulders”. Better data would bring brand new value for them and he expressed favour for the transparency brought by blockchain. 

Andrea Greco of CBRE (the world’s largest commercial real estate services and investment firm) suggested that in order to “push” corporate immune system to change and move towards solutions which enable them to have clean data, CPOs should use the language of business and “Make it easy for their users (buyers) to do the right thing” & make it harder for them to buy outside newly implemented solutions.  

We have written about this issue of maverick IT spending before and Andrea’s comments are validated by our research too. Worth noting that Google, despite their well-known general policy to trust employees to “spend company money as it was their own”, they are now looking deeper into digitalised forms of purchasing channels and corporate guided buying, largely because of the growing headcount, according to Google’s Procurement Lead EMEA and LatAm, Vaishali Salmond.  

Perhaps even the phrase digital transformation is part of the problem?  

To digitise a whole company, or even just the procurement function, requires a complex web of interwoven “digitalisation projects” for example, our clients can be said to be digitally transforming their indirect IT device procurement, solving their pains and saving time and money, but, at the end of the day from their point of view, it’s only one category where the problems are solved. So, given the complexity and slow-moving nature of company-transformation, wouldn’t digital evolution express the nature of the journey better?

We could also share our take-outs on “The Importance of Clean Data” but we’ll save that for another day.

All in all, another excellent Procurement Leaders event, a lot learned and a lot shared.