How to Avoid the Pitfalls of Procurement SaaS Implementation
Procurement departments are under pressure to transform their processes digitally. Software as a Service (SaaS) makes it easier, because the underlying software is available over the cloud with transparent pricing models. Yet things can easily go wrong. We look at the main pitfalls and how you can circumvent them.
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Pitfall 1: Trying to do everything
Many SaaS implementation projects start to go wrong before they’ve barely started. The reason is simple: the project scope is too broad. This happens when procurement organizations attempt to digitally transform everything in one go. Yet many processes in procurement are rarely used or may even be outdated and in need of optimization.
A Minimum Viable Product (MVP) covers roughly 70% of the essential business requirements and processes first.
A Lighthouse Project demonstrates clear value and proof-of-concept but is limited in scope, rolled out to the organization when users are satisfied.
How to circumvent: Instead of sinking time, money and resources into developing a solution to cover all existing processes, procurement can get more out of new software solutions by first delivering a Minimum Viable Product (MVP) that covers roughly 70% of the essential business requirements and processes first. Once the team has started working with the new SaaS solution, you can strategically evaluate which of the remaining 30% of your processes you would like to cover. You may find that you don’t need some of them at all! Second, you should make your MVP a Lighthouse Project that demonstrates clear value and proof-of-concept but is limited (for example by geography) in scope, then roll it out to the rest of the organization when the users are satisfied.
Pitfall 2: Long or unclear implementation period
Implementation projects may take several months to complete. The longer it drags on, the longer you have to wait to reap the benefits; managers only see the costs and users only see delay and amounts of time spent. This reduces morale and may make important stakeholders suspicious of the implementation partner as well as the new solution. This can result in in lower acceptance rates.
How to circumvent: By focusing on achieving quick wins first, you and your team will be able to see the cost savings, a return on your investment, sooner. Once the Lighthouse Project is successfully managed and completed, it will also be easier to market internally, which will boost user acceptance.
Pitfall 3: Low user acceptance rate
Many implementation projects fail because users are reluctant to use the new tool. Return on investment, when measured (for example) in terms of volume of spend via the new system, is therefore low. If users do not like the new system, you may even increase levels of maverick spend increase.
How to circumvent: Project managers need to manage employee expectations with internal project marketing. Deliver an MVP and make it clear that this is not the final product; elicit input from stakeholders and users and build their suggestions into the next iteration of the project.
Pitfall 4: Requirements change after the project has started
Projects often start with a grand blueprint for how the final product should look, but then (for a variety of reasons) reality turns out to be different. This can take you down numerous dead ends, which leads to frustration. Or else the procurement team surfaces issues that weren’t foreseen at the planning stage.
How to circumvent: Digital transformation is about more than digitizing existing manual processes. It is about doing things better, with a changed business model. Implementing your current processes 1:1 may not be the best or most effective long-term option; for this reason, it’s important to spend time discussing user needs and starting with a best-practice MVP, then optimizing it through several short project iterations, or “sprints”. Every function and department that will be working with the final solution should be included in both the initial discussion and the subsequent sprint reviews.
Pitfall 5: Unexpected costs
According to the Gartner IT Key Metrics Report 2018, only 60% of software implementation projects finish on time and only 71% of SaaS implementation projects stay within budget. Longer implementation periods result in missed savings opportunities as employees continue to use less efficient manual processes.
How to circumvent: Choosing the right implementation method can help contain costs and reduce risks based on the “win fast or fail fast” principle.