Successful companies embrace digital transformation programs not by indiscriminately replacing the old with the new but by leveraging and aligning their strategic competencies with new digital capabilities. However, the accelerated emergence of new technologies creates increased uncertainty and confusion about which digital investments are the right strategic fit for the business. This is especially true in the realm of supplier management technologies, which are essential to making sure that companies that are dependent on a multi-supplier managed services model are meeting the needs of its internal stakeholders – and essential to realizing the maximum benefits, efficiencies and cost reductions possible.
Here are some important steps to help an organization select the right digital technology to enable more effective governance of managed services relationships:
- Establish criteria. To adequately evaluate any given solution, an organization needs to understand the deficiencies or issues of its current processes and the desired business outcomes. Before launching into a technology search, create a requirements list. Seek input from all relevant stakeholders, especially process experts, and pinpoint the specific inadequacies that, if addressed, would favorably impact the process areas. Once documented, prioritize the requirements using criteria such as ease of implementation and support, potential business risk, cost considerations and alignment with business objectives and technical strategy. Conduct a cost analysis to determine if executing a process using new technology is more cost effective than executing the process manually.
- Conduct research. Educate yourself about solution options available in the market. In addition to online searches and suggestions from your business community, analyst reports and trade associations are great resources for solutions research. Involve key stakeholders in this process. Build a coalition of senior leaders that can play a vital role in digital transformation. Many digital initiatives fail because the vision guiding them is not shared at the top. How long you spend on research for potential solution options will depend on the maturity of the organization.
- Select technology that fits the business environment. In addition to matching solution options against established process improvement criteria, evaluate the ability of each solution to adapt and scale against potential business growth and market dynamic needs. For example, can the solution scale to rapidly address volume demands associated with an acquisition? Can it handle an additional 5,000 vendors or 10,000 agreements if required? Also compare the business value of each solution and align total solution costs – including initial one-time costs, ongoing licensing, maintenance and support costs – against the organization’s budget.
- Choose technology that is easy for your suppliers and internal users to use. If they find it difficult to use, they will not use it – and they will work around the tool. First, gain a firm understanding of the suppliers’ and users’ requirements and environment. Prepare careful training and communications to facilitate successful adoption of the selected technology. Investing in initiatives that ensure user satisfaction with the new technology will pay off in the long run.
- Adopt one technology at a time. To keep from overwhelming employees with multiple technology choices and the associated change, prioritize your needs and introduce technology at a pace that is manageable for the organization. A strategic approach, a little patience and a lot of perseverance will help an organization reap the benefits of new technology for its business, its internal users and its customers.
ISG Governance Services leverages deeply experienced global resources, a fast-track maturity and automation assessment tool and ISG GovernX™, an advanced technology platform built on advanced analytics, cognitive technology and workflow automation to help enterprises optimize the value and benefits of their managed service agreements. Contact me to discuss how ISG GovernX™ and ISG Digital Supplier Management services can help you get the most out of your supplier relationships.
About the author
Divya Menon brings more than 15 years of experience in contract management, process implementation, process improvement, and project management. She has significant experience in outsourcing governance process implementation, contract review, and conducting process training internationally.