Are you planning a large-scale digital transformation? As per analyst research, there is a 70% chance that it will fail to achieve its intended objectives, possibly resulting in significant and far-reaching consequences.

You are not alone. Many companies dedicate vast financial resources and several years to deploying automation solutions. Despite the considerable investment to foster user-centricity and enhance productivity through digital capabilities, a perplexing question remains: why do numerous transformation projects encounter failure? These issues apply not only to mediocre software solutions but also to top performers, market leaders, and the favorites of industry analysts. Change management in e-procurement involves the structured approach to transitioning individuals, teams, and organizations from the current state to a desired future state in the context of e-procurement processes and systems.

According to research conducted by the BCG group, companies considered digital leaders experience earnings growth that surpasses that of digital laggards by 1.8 times and exhibit more than double the increase in total enterprise value. BCG particularly highlights the strategic importance of projects that enable the workplace of the future. Procurement automation transformations fall in this bucket, given their impact on productivity improvements and better employee & supplier user experiences while improving visibility and cost governance.

This presents a complex problem for management: digital transformations are crucial for the long-term success of your company, yet only 1 in 3 such projects succeed. And for a good reason, too, as the success of implementing such projects extends beyond the software technology itself.

Change management is pivotal in ensuring smooth adoption and effective utilization of the new system by end-users. In this blog post, we will explore the significance of change management in e-procurement software implementation and provide practical strategies for achieving successful change adoption.

What is change management in e-procurement?

Picture this. You have 10s of 1000s of employees working in dozens of offices, possibly across continents. As a progressive company, you value your employee diversity, their unique backgrounds, and the experiences they bring in both as professionals and as individuals. Many of your workforce is contingent – gig workers, temp staff, vendor staff, subsidiary companies, etc.

What are the odds that the adoption levels will be uniform throughout if a new, crucial software like a procurement solution is introduced? How do you minimize resistance to change, factoring in the cultural alignment while mitigating risk?

This is where change management plays a role. There are several globally accepted best practice frameworks for change management in the context of digital transformation like Prosci ADKAR Model (Awareness, Desire, Knowledge, Ability, and Reinforcement), Kotter’s 8-Step Change Model (creating a sense of urgency, building a guiding coalition, and anchoring changes), Lewin’s Three-Step Model (unfreeze, change, and refreeze), and Project Management Institute’s (PMI) Change Management Practice Guide.
Zycus has formulated its own proprietary iSwitch change management methodology, which encapsulates its experience from having empowered 100s of large and medium-sized companies through their source-to-pay deployments and change management processes.

Irrespective of the framework one adopts, change management fundamentally involves a structured approach to support individuals through change so they can embrace it and transition to new ways of working effectively.

Read our blog on: Change management in an AI-led procurement world

Change projects have two aspects:

Technical – did we build the right solution?
Human – did the solution get used?

Change Management focuses on the human side of change and looks to:

• Get people on board
• Remove barriers
• Increase commitment

The change management in e-procurement helps users transition from existing procurement processes and systems to the new system. It involves addressing people, processes, and technology to facilitate successful adoption.

Key benefits of effective change management:

Change management, when implemented effectively, delivers many benefits, including:

• Higher user acceptance and end-user delight
• Reducing resistance to change
• Eventually, better and faster ROI realization

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A study conducted by Prosci, the leader in change management solutions, indicates that effective change management is likely to deliver 6x better project outcomes.

Planning for Change: The Pre-Implementation Phase

1. Identifying key stakeholders and assigning specific roles:

For an e-Procurement implementation, the typical stakeholders involved up front should include:

• Key leaders/ executives from the CPOs office
• IT buyers
• IT team involved with implementation and integrations from:
  – your company
  – e-Proc vendor
  – implementation partner, if any.
• Key end users
• Some key/strategic suppliers

Each of these individuals needs to understand their specific roles & responsibilities. To accomplish this, Zycus adopts the RACI (Responsible, Accountable, Consulted, Informed) principle.

2. Conducting a Change Readiness Assessment:

As we covered earlier, every company is different, so off-the-shelf templates for change management will only fit some companies, if they’re fortunate. There’s multiple factors & variables that dictate how successful an organizational change is or isn’t.

For instance, your company may be amid other transformational projects or may have had a bad bout of talent attrition, or while some parts of your company may have more mature employees, a newer division may have Gen Zs or Gen Next.

The change management in e-procurement could get particularly interesting (and possibly challenging) in specific scenarios such as the following:

• Your company relies heavily on documents, spreadsheets, emails, and phone calls in the procurement process currently
• You had a previous botched-up tech implementation setting in a recency bias
• You are migrating from a legacy or on-prem setup to a cloud setup
• From a heavily centralized structure, you are attempting to bring in a culture of ‘self-service’
• You are introducing AI-powered interactive intelligence within the company.
• You are eliminating repetitive manual tasks with autonomous procurement, possibly eliminating jobs in the longer run.
• You are trying to build a culture of using cognitive analytics & prescriptive AI for ‘what next’ suggestions
• You are undergoing a merger/acquisition, necessitating the sunset of redundant technologies and process standardization

So, before taking up the e-procurement implementation and change management initiative, assessing your company’s readiness is crucial.

Zycus uses a 7-dimensioned change readiness index  called FACTORS which measures the level of Flexibility, Agility, Confidence, Tolerance, Optimism, Risk & Resilience, and Strength. A typical change readiness assessment would involve a response to an assessment tool and in-depth conversations with key stakeholders.

3. Developing a Change Management Strategy:

Based on how a company ranks on the FACTORS Index, a mutually agreed change management strategy is crafted with the customer to maximize the probability of success.

One of the most common reasons change management fails is the psychological aspect of change. Change often evokes drastically contrasting emotions. Employees may show anxiety, fear, threat, and hostility at one end, and at the other, there may be happiness, relief, and pride.

The nature of emotion depends on how the change is expected to impact different people.

As change management is essentially about people, it is crucial to assess and understand the extent of the impact that procurement transformation will have on various roles and people. This is particularly important if your company implements Cognitive procurement / AI-powered solutions.

Current role	How AI will change the role in medium to long term	Talent strategy
Spend analyst	– Allows auto classification and analysis of huge volumes of data, at higher refresh frequency – Helps identify patterns, give insights and make recommendations eliminating need for manual analysis	Reskill / morph the role into data scientist
Vendor / supplier manager	– Autonomous supplier onboarding eliminates the need for manual data collection and data entry – Allows monitoring vendor performance, track compliance, and predict potential risks – Alerts about renewals, suggest negotiation strategy	Plan for a gradual reduction in team size Refocus the team on strategic vendor management
Strategic sourcing	– Will identify potential suppliers, conduct auto-RFP evaluations, and supplier risk assessments, making the sourcing process more efficient and data-driven	Will impact the lower end of the job (sourcing analysts) Increasingly focus on category management strategies
Tactical buyers	– Automated quick source will make spot buying touchless	Prepare to repurpose / redeploy the spot buyers to other roles
Business users	– Will allow self-service, guided buying, faster turn around	Work on mindset change towards self-service

High Negative impact Moderate impact New roles/ skills No Impact
Proactively addressing each of the above groups with a well-articulated and meaningful talent roadmap will help reduce the negative fallouts and resistance to change.

Read our blog on: Handle Change Management in Procurement

4. Communicating Change Effectively

Transparent, honest & meaningful change narrative: To overcome resistance and build employee buy-in, organizations must articulate a compelling change narrative that is transparent, honest, and meaningful. It should communicate the reasons and benefits of the transformation – show how the new system aligns with the organization’s strategic goals. At the same time, it should also acknowledge and talk about how it would impact the current way of doing business, specific roles & job functions. Finally, the communication plan should include remedial actions for any adverse fallout.

According to a study by Towers Watson, companies with effective communication programs are three and a half times more likely to outperform their industry peers with regards to employee engagement.

Reinforce & Reiterate: Employees want to see that the management is consistent and walking the talk. Hence the change communication requires reinforcement and reiteration across townhall meetings, newsletters, group meetings, helplines etc., such that each group truly understands the benefits and impact of transformation.

5. Leveraging Change Champions:

Change champions are influential individuals within the organization who can advocate for the benefits of the transformation. For an eProcurement transformation process, it makes a strong statement if the CEOs and various divisional vice presidents champion the cause of self-service by undertaking spot buys on their own instead of relying on their administrative support teams or the centralized procurement teams. A survey by McKinsey found that organizations with effective change management programs were 1.5 times more likely to have visible and active sponsorship from senior leaders.

While ‘top-down’ executive sponsorship is essential for symbolism, the success of eProcurement transformation depends on the entire workforce adopting the solution for 100% of their purchases. Identifying champions within each business unit, office premises, and team is shown to help. These champions play a crucial role in offering peer-to-peer assistance, exchanging success stories, and addressing their colleagues’ concerns.

Contests, rewards & recognition, and leaderboards have been shown to help keep the change management program on top of the mind while creating a sense of friendly competition to meet all the intended KPIs.

6. Training and teach-in sessions

The 2nd most common reason technology-led transformation projects fail, is unfamiliarity with the new software. People are often very comfortable using a particular software or working through a specific process or way of doing things. They have built muscle memory, and any deviation from this can create cognitive dissonance.

Picture someone who has only used an Android phone all their life and is now trying to navigate through an Apple/iOS device, and vice-versa.

Similarly, a thorough assessment of training needs in a corporate environment ensures that employees have the necessary knowledge and skills to work with e-procurement software or any process or policy change, effectively.

This assessment could involve identifying skill gaps, conducting user surveys, and analyzing existing procurement processes to determine specific training requirements.

According to a study by the Aberdeen Group, best-in-class organizations are 57% more likely to provide role-based training during e-procurement implementation.

7. Track key metrics: understand progress, identify bottlenecks

Go-live with any new solution is only the 1st moment of truth. Go-value is the real moment of truth. Go-value would be achieved when the initial ‘measures of success’ are achieved.

Measures of success could include hard numbers like – adoption rate, reduction in maverick spends, reduction in non-PO invoices etc., and soft agenda like user satisfaction which can be monitored by user feedback and surveys.

Regularly analyzing the data will show if the change management process is on track and, if not, where the actual bottlenecks are.

Conclusion:

Successful implementation of e-procurement software requires effective change management practices that address the transformation’s people, process, and technology aspects. By understanding the significance of change management in e-procurement, planning for change, communicating effectively, providing comprehensive training, focusing on user experience, and monitoring progress, organizations can navigate the challenges associated with change and unlock the full potential of their e-procurement investment. Embracing change management as an integral part of the implementation process is vital to achieving long-term procurement automation success.

Related Read:

1. Blog – Automation Deployment And Change Management Best Practices
2. Blog – Handle Change Management in Procurement
3. Mastering Change Management in E-Procurement Software Implementation: Best Practices 
4. Supplier Management Software
5. White Paper – e-Invoicing Playbook : How to Plan for AP Transformation Success
6. Building Resilient Supply Chains through AI Led Digital Transformation