The response to a Procurement Insights poll asking the question; “What is the most significant risk that procurement faces in 2020?” was telling in that the number one risk was not cyber-attacks, job security or supplier performance. More than 40 percent of those who responded said that “digital strategy implementation” was the greatest risk procurement faces in 2020. In this Knowledge Note, I will provide a breakdown of what is known as the Progressive Implementation Methodology. Based on four key elements or building blocks, this methodology will overcome the slow digital adoption and unfavorable outcomes associated with traditional consulting methodologies.

1. AchievingDigitalSuccess
Why the Digital Transformation of Procurement Is More
About Implementation Methodology Than Technology
Author: Jon W. Hansen
JON HANSEN  PROCUREMENT INSIGHTS  819-230-2131  OTTAWA, CANADA  JON@PIMEDIA1.COM

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ABSTRACT
The response to a Procurement Insights poll asking the question; “What is the most significant
risk that procurement faces in 2020?” was telling in that the number one risk was not cyber-
attacks, job security or supplierperformance.
More than 40 percent of those who responded said that “digital strategy implementation” was
the greatest risk procurement faces in 2020.
A Deloitte Global CPO survey which reports that “most companies that have fully implemented
digital technologies are not satisfied with the results,” is further verification of the above poll
results.
So, what is happening?
Given that we are – according to Gartner, in the postmodern ERP era, it would be reasonable to
assume that the intuitive, user-friendly technology of the digital age would have removed the
past barriers to successful procurement automation. The barriers which included low user
adoption, long implementation timelines, and operational inefficiencies are no longer an issue.
Today’s digital technology, including RPA and AI, are amazing tools. However, the problem,
unlike the past, is not with the tech – it is an implementation strategy and people resource
problem.
No matter how “advanced” the technology may be, the methodology of developing and
implementing a digital procurement strategy is crucial to success. What this means is that you
must look beyond the technology to assess your organization’s digital readiness and align
yourself with the right partners to realize your objectives.
In this Knowledge Note, I will provide a breakdown of what is known as the Progressive
Implementation Methodology. Based on four key elements or building blocks, this methodology
will overcome the slow digital adoption and unfavorable outcomes associated with traditional
consulting methodologies.

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ANALYZING THE POLL RESULTS
When you think about “risk management” in procurement, a familiar list that includes cyber attacks,
economic instability and supplier consistency, to name a few, probably come to mind. These are,
without a doubt, all legitimate areas with which you must be mindful.
However, and based on the results of an ongoing Procurement
Insights poll asking readers the question; What is the greatest risk
procurement professionals will face in 2020? Forty-three percent
chose “digital strategy implementation.” Economic/political instability
(22 percent) and supplier reliability (16 percent) were a somewhat
distant and surprising second and third concern.
The results of the above poll – which went out to the more than
16,000 Procurement Insights followers, seem to reflect andverify the
findings from a recent Deloitte survey of Chief Procurement Officers.
According to Deloitte “a large percentage of companies” that have
“fully implemented modern technology” are not satisfied with the
results.
The areas of contention for CPOs include their new technology’s
inability to address supply chain risk and compliance in which 81
percent express dissatisfaction, supplier management (71 percent),
and contract management (64 percent).
Even in areas of functionality where it is a relative given that
technology will result in significant improvement such as sourcing,
invoice processing andpayments and requisitioning and ordering
more than 50 percent of CPOs are unhappy with the results they are
seeing.
“Interestingly, though, a large percentage of companies that have fully
implemented these modern technologies are not actually satisfied with the
results.” – Deloitte 2019 Global CPO Survey

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The above findings raise the question; is it the technology that is failing us, or is it the implementation
approach or methodology?
As stated earlier, today’s digital technology, including RPA and AI, are amazing tools. Intuitively user-
friendly, high end-user acceptance and adoption have significantly reduced the implementation
timeline from years to months and in some cases, even weeks.
Add into the equation the fact that today’s users are considerably more familiar and therefore more
comfortable with technology, thebarrier to success is not elongated implementation timelines or end-
user resistance. The problem is the continuing reliance on outdated consulting and implementation
models.

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To overcome the unfavorable outcomes previously highlighted, you must employ a Progressive
Implementation Methodology based on four key elements or building blocks:
1. Assessing your organization’s digital readiness;
2. Confirming the cultural fit between key strategy development and implementation stakeholders;
3. Facilitating the implementation & execution of the strategy;
4. Maintaining ongoing alignment with core organizational objectives.
I will examine each of these “building blocks” in the next section.

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BUILDING A SOLID FOUNDATION FOR
SUCCESS
With more than 35 years in the high-tech industry and almost has long in procurement I have
overseen successful implementations with clients such as the Department of National Defence and
the New York City Transit Authority to name just a few.
The proprietary technology in those early years was, by today’sstandards, complex and
cumbersome. While integration within existing IT infrastructureswas far from a plug-and-play
capability, requiring significant resources and expertise, the ultimate foundation for implementation
success had four elements or building blocks that are still applicable for today’s“digital” technology.
One - Organization Readiness
Good technology will not overcome bad practices and processes.
Whether we are talking about the lengthy andoverarching ERP technology implementations of the
past or the seamless introduction of the intuitive pay-by-the-drinkdigital platforms today, inefficient
processes and practices will derail any initiative.
Poor data governance, misaligned objectives between different stakeholders within and external to
the enterprise, outdatedviews of the procurement role andfunction by senior management are all
influencing factors. When combined with unrealistic expectations centering on digital technology
being a magic bullet, it is easy to see why many CPOs participating in the Deloitte survey are
disappointed with the results of their digital strategies.
Unfortunately, themethodologies of traditional consulting firms did not take the proper time – if any
time at all, to assess the digital readiness of the client choosing instead to focus on achieving the
“end result” by way of introducing new technology.
Through a series of Joint Application Development or JAD sessions, there was the adoption of a
“Can Do” mindset that did not seek the inevitable gaps in the client’s practice, processes andculture.
The emphasis was instead on the functionality of the technology and how to integrate into the
enterprise with the belief that once up andrunning the technology would redefine and fix the existing
process leading to successful outcomes.

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Part of the reason for leading with technology is that traditionalconsulting firms are general
practitioners who do not have procurement expertise. As a result, the appeal of the technology being
the one constant with each client made the “technology first” approach the most logical and viable
implementation strategy. The poor outcomes with most ERP-based e-procurement initiatives show
that this methodology does not work.
Unfortunately, this same approach or methodology is still being used by traditional consultancies
today, and as it was in the past, the results are less than optimal.
Given the continuing disappointing results despite the advancement of technology, requires a new
and more progressive implementation strategy starting with the assessment of the client’s digital
readiness.
Two - Cultural Fit and Collaboration
On August 1st, 2007, the I-35 bridge in Minneapolis collapsed. Tragically 13 people died with many
more sustaining injuries.
Besides wanting to honor those whohad lost their lives, there was a great deal of pressure to have
the bridge built quickly to restore a major artery between the Twin Cities. Despite the many
challenges with such a complex project involving so many different stakeholders, the bridge was
rebuilt 3-monthsearlier than expected and on budget.
The reason for the success is that the state of Minnesota abandonedits normal procedures for
managing a project of this magnitude. They instead chose to use an open-book framework where
costs were known, andrisks were “jointly identified” and shared equally among all stakeholders.
There was also ongoing andopen communication between all parties that allowed them to address
any issues that arose quickly andeffectively.
The I-35 story is an example of how successful collaboration with a shared vision andcultural fit
between all stakeholders delivers optimal results. In this kind of relationship, all partnersare equal
and active contributors with each bringing their “own” unique perspective, skills and needs to the
table in an open and transparent “partnership.”
This level of collaboration andcultural fit is often absent with traditional implementation
methodologies. Instead, the relationship is “reduced” to one in which the client mostly defers to the
provider’s or consultant’sexpertise resulting in a one-way dialogue. The dynamic exchange between
stakeholders that is necessary to progressively adjust andadapt the plan to real-world
circumstances while maintaining the alignment of all stakeholder interests is not possible under this
unilateral model. Therefore, there is a higher risk of initiative failure.

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In this regard it is noteworthy when the State of Minnesota reverted to the unilateral model with the
next bridge project, it took twoyears longer than expected to build the bridge, and the project went
over budget.
In short, and as I had pointed out in a recent Forbes article in which I talked about the I-35 story,
those who consistently look beyond a transactionalmindset and adopt a relational approach
achieve a cultural fit that is critical to success.
Three - Strategy Execution and the New Consultancy
It is one thing to come up with a plan; it is entirely another thing to make it work.
According to a McKinsey survey of 1,650 incumbent company executives, while there is a universal
acknowledgement that digital transformation is inevitable, 20 percent of the executives who gave
responses indicate that they have a digital strategy. Of those, 2 percent indicate that said strategy
involves their supply chain.
The chasm between acknowledging digital necessity and digital action and realization ultimately
comes down to the fact that there is a great deal of uncertainty regarding the steps that an
organization needs to take to make digital real.
Despite the strategic importance of an organization’ssupply chain – or perhaps because of it, there
appears to be even greater uncertainty regarding what to do next.
When I talk about the emergence of a new consultancy, it is in direct response to the “what’sthe next
step” question. These new consultancies about which I am talking are built arounda by
procurement, for procurement model in which the consultantshave in-depth and practitioner-based
expertise. Think of it in the context of procurement professional first, consultant second.
When you work with consultants whohave real-world, practical procurement experience, there is an
inherent understanding of the inner workings of the procurement process – including the unique
challenges andintricacies of a complex, global supply chain.
With this level of understanding, the likelihood for cooperatively establishing and successfully
executing a digital strategy improve dramatically.

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Four – ProcurementFirst and Ongoing Alignment
Along the lines of the Brian Tracy quote regarding perfection, an ongoing alignment with
organizationalobjectives is “not a destination but a continuousjourney that never ends.”
While technology is a great enabler, success begins and ends with a strong procurement practice
that can leverage technology efficiently and effectively to drive desired outcomes. More to the point,
good technology will not make a weak procurement practice better, but a solid procurement practice
will make a good technology effective.
Traditionally, general practitioner consultancies lack the bench strength regarding procurement
knowledge and expertise. Their implementation methodology is usually heavily weighted on a
technology-first approach in which they structurethe procurement practice aroundthe tech rather
than the tech aroundthe practice.
With the new by procurement, for procurement consultancies, ongoing alignment is “built into” the
strategy from the beginning because the emphasis is on building a better practice first and then
adding the technology. As a result, your organization will have the ability to properly leverage
technology to achieve objectives on a consistent and continuous basis.
In this context, the Deloitte survey in which CPOs are expressing their dissatisfaction with digital
technology is, in reality, an expression of dissatisfaction with their procurement practice. The
graphic below indicating that 62 percent of CPOs do not believe that “their teams have the skills and
capabilities to deliver their procurement strategy” speaks to this truth.

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CONCLUSION
There is an increasing demand for Procurement organizations across the globe to perform a larger,
more strategic role in overall corporate growth while delivering sustainable business value. In their
effort to meet these new conditions, procurement organizations must transform their legacy
processes, structure and culture, and align them with the ever-changing needs of the company.
Traditional methodologies that predominantly lead “with” technology will not be successful in
facilitating this transformation.
An updated and more timely strategy development and implementation methodology “delivered”
through a new consultancy model are needed to achieve significant benefits resulting in long-term
sustainable procurement value.
The Progressive Implementation Model presented in this Knowledge Note provides the proper
framework for transforming your procurement practice – including how to identify and engage the
right consulting partner.

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VELOCITY PROCUREMENT
In commissioning Jon Hansen to write this Knowledge Note, Velocity Procurement’s objective was to
obtain an unbiased third-party assessment of both the need for a new, more dynamic implementation
model to maximize industry success with digitally transforming procurement, as well as the
methodology by which said objective could be achieved. As one of themost senior andwell-respected
thought leaders in both the procurement and high-tech industries, Jon Hansen is known for his
thorough research, independence, andexpertise. We hope that you have foundhis insights beneficial.
Velocity Procurement’s vision is to deliver best in class procurement consulting services, process
improvement, technology and managed services to help our customers manage their ongoing
procurement operations. We quickly acclimate and become highly vested in our customer’s success
through long term partnerships. We are obsessed with delivering impactful solutions with fast
implementation.
Visit our Website to learn more: http://www.velocityprocurement.com