When COVID 19 hit us, we were unprepared for the challenges it brought about. Be it something as easy as getting contracts signed, to something as complicated as inventory management, they all brought one thing with them, the question of “How do we do this now?”. The solution was to create a virtual workspace where everything could be within the reach of a few buttons.
With an intuitive panel of speakers at “Re-imagining Procure-to-Pay Process for the next decade”, we discovered some major changes that were or rather are still needed across industries to make the procurement function digital-first and get it to add more value to the organization as a whole.
It was pointed out that 40% Large-scale, 60% mid-sized and 80% SMEs are still continuing operations with semi-automated or manual processes. This lag in adopting technology was one of the major contributing factors for the losses companies suffered in the initial period of the global pandemic.
So, what did we learn at this round-table? What was missing and what can prepare us better for any other contingencies that come to be?
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Just because of the perceived, daunting cost of implementation of new technology, a lot of SMEs refuse to invest in technology which may not only give them monetary benefits but also an edge over their competitors all the while reducing risk! If there is a strong push from the management to digitize the processes, organizations need not worry. However, that is not the case for most organizations as they still consider their existing techniques and work to be efficient enough and hence, investing in new technology does not seem worth the cost of implementation.
When implementations do happen, the speed at which the changes happen are very irregular and this causes the companies to lose out on opportunities that could have helped them reduce costs and risks. The momentum of change helps organizations to stay on top of their game and ahead of the competition. With the digital revolution that this pandemic brought about, if an organization cannot maintain its pace of progress they will soon fall behind and lose out on precious opportunities.
A company is pushed towards change when they suffer losses because of their existing processes. This motivation only comes about when the company faces the negative impacts of using older technology. If only organizations are “Pulled” towards change will it be rewarding in the long run. This pull happens when a customer demands new technology to collaborate especially when they have already moved to newer technology for the processes. A Pull also happens when a company strives to be at par or one step ahead of their competitors, they tend to invest in top-of-the-line technology to have an edge in terms of a cost advantage.
Across the globe, digitalization is still looked at with great scrutiny as it is still believed that any form of digitalization will lead to loss of jobs of people working within the process manually. This is not true for most cases as even if technology is introduced in the procurement process it will only help enhance the performance of the employees by reducing errors and saving time. This fear needs to take the backseat for the organization to be able to drive smoothly and swiftly towards its goals.
An organization can clearly understand whether they need to invest in a new technology to digitalize their process only when they perform a Cost benefit Analysis. They need to factor in the cost of implementation, the cost of human error, the costs for reworking the processes due to errors, the cost of the actual software, lifetime value of the software, the cost of services being provided by the software company, opportunity costs etc. All this can help determine if your current software is efficient or if you need to switch to a newer technology to upgrade your organization and, by extension, your workforce.
ROI was the biggest determining factor when it came to upgrading process which seemed to be more or less efficient in the current times. A return on Investment only determined the need for implementation of new technology only if it happened to provide a higher monetary return instead of also considering the increase in efficiency in the long run. However, this ideology has gradually changed to organizations wanting to adopt change management. Change management is a much more complicated process to implement and analyse digitalization, however, it is a much better way to scale-up the performance of the organization with every new digital innovations implemented.
So when we talk about digital transformation, it does not only imply to the organizations who have already started their journey. We need to educate every organization about the downside of not moving ahead with their fellow industry peers, as this will only expose their organization to the biggest risk of all; the risk of falling behind. In a fast-paced world as it is today, being left behind would be the worst thing to happen to an organization; the opportunities that would be lost, the revenue that would be lost and even the loss of market-share, just because they were not ready to bring in transformation at the right time.
If your organization is one of those that is still on the fence about whether or not to upgrade their procurement process, it’s time to seriously pick a side because the world will not wait for you to be future-ready when the future is already here.