The Future of Agile Procurement
Predicting the future in procurement right now is nearly impossible. Technology is evolving rapidly, supplies are constrained as the world starts to emerge from the COVID-19 pandemic, and many teams are still fighting to move procurement from an operational function to a strategic one. Amid all the changes, how can we be sure of anything?
One thing we can say with confidence is that agility is essential. In fact, it’s one of the few things we can predict. All the uncertainty only makes it more important as you look to build a one-year, three-year, or five-year roadmap.
Two Types of Agile
Before we examine what the future of agile procurement actually looks like, we should be clear about what exactly it means. There are two common areas in procurement where the term agile gets used. On the one hand, some use agile to describe an implementation methodology. Borrowed from software development, the term refers to starting with a small implementation (a minimum viable product) and then building on it in short bursts (called sprints) while reevaluating your plan as you go. On the other hand, some use the term agile procurement to mean a source-to-pay function that can adapt quickly to changing circumstances. To JAGGAER, these two areas are heavily related, so let’s take a look at both.
Lean Agile Procurement Implementation
Agile implementation is built on the idea that you can introduce a more basic tool to your users, then use their feedback to shape the solution as you add more features or functionality. One primary competitive advantage of this approach is that it helps users feel engaged and heard, increasing the likelihood that they’ll adopt the solution and follow protocol.
We’ve written previously about how you can achieve agile procurement, but we continue to receive questions about how an agile approach can help, and whether it might even be harmful to newly digitized procurement organizations. On a recent webinar, JAGGAER SVP of Customer Engagement Michael Roesch was asked whether providing a minimum viable product might decrease user involvement. His response was very clear:
“We’re doing projects every day, and we see only in very rare cases that companies start with an MVP – a minimum viable product – and then let this product grow. They do it completely the opposite. They ask for a budget, they get a huge amount of budget, and they want to do it “right.” And then they do an implementation project taking 6-12 months or longer… and then they find out, “Hey, we’ve designed a monster.” People don’t like it so change management is quite difficult, and the project is not going in the right direction.”
Instead, Roesch urges customers to consider an agile approach, saying, “We want them to start a little bit smaller, with something a little bit more than an MVP, roll it out to some suppliers, learn from that, measure the success, think about the optimizations and then go to the next step.” Learning and measuring are the key points here – without taking the time to reevaluate your progress and reorient at each phase, you risk getting too far down the wrong path.
Why Agile Implementation Now?
So why is agile implementation the right choice now? You might be asking yourself, “if things are changing so quickly and we need digital tools to navigate things, shouldn’t we get a complete platform up and running as quickly as possible?” While digital tools can certainly help you navigate the chaos more effectively (as we’ll discuss later), that same unpredictability makes agile implementation all the more important.
As you start shaping your vision for a source-to-pay suite, it’s easy to let your ideas run wild. But the platform you dream up today might not fit your needs a year from now. With things shifting as often as they are, it might not even fit your needs three months from now. So in order to adjust to changing demands, you need to be constantly revisiting your implementation blueprint.
Agility within your Procurement Organization
The second area of agile procurement is a bit more self-explanatory. It’s mainly just about building a procurement team that can react with agility, adjusting to changing circumstances and market fluctuations. It’s pretty clear why that’s still necessary in 2021. It’s still the wild west in a lot of procurement areas, with some suppliers unable to meet demand as companies scale back up to full operations.
At the end of 2019, Chief Research Officer and Founder at Ardent Partners Andrew Bartolini made the case that 2020 would be the year of the agile CPO. He didn’t know at the time just how right he would be. He emphasized that positioning your organizing team to make quick decisions and act on the fly was one of the most valuable traits in a CPO, and as Coronavirus played out we saw this very prediction in action. That’s the core of an agile procurement team – having the confidence and knowledge to make quick business decisions when needed.
How Technology Can Help
Importantly, agile CPOs and their teams rely heavily on technology to help them achieve such flexibility. Having a solid foundation of supplier and risk data allows you to quickly examine potential weak points in your supply chain and address them before they become a problem. Moreover, the newest developments in autonomous procurement provide specific recommendations to strengthen supply chains and respond to threats, all faster than humans can. The platform itself makes your team far more agile than you would be without it.
The effects of the Coronavirus pandemic will of course be felt for years to come. Within procurement, many organizations are still in the thick of it. Reopenings have created supply uncertainties as demand skyrockets and suppliers struggle to keep up. Markets continue to be unpredictable, and some infectious disease experts still aren’t sure whether COVID will become an annual occurrence.
As a result, both forms of agile procurement – implementation and response – are having their moment in the spotlight. You want to get a digital solution up and running quickly, so an MVP is a smart choice. Then you can continue to modify your platform as needed. If you’ve already implemented a solution, moving your team to a more flexible approach will build the agility you need to navigate a shifting landscape.
JAGGAER offers a comprehensive solution with cutting-edge technology, as well as an experienced and proven implementation methodology.