Top 5 Reasons Why Businesses Fail At Implementing Procurement Systems
Updated: Apr 14, 2019
There are many reasons why businesses fail at implementing procurement systems. Here are my 5 top reasons "Top 5 Reasons Why Businesses Fail at Implementing Procurement Systems". To get even more top tips, purchase my book from Amazon http://amzn.eu/2UuLS1G.
Reason 1: Procurement Software & Implementation Partner
One of the main determining factors when selecting software applications to run procurement processes is the cost of the procurement system. In an age where there is lots of procurement tools available in the market, the cheapest software application is not always the best tool for the organisation.
Tip: Look at a variety of tools that will suite the organisation. If your organisation has specific requirements that cannot be fulfilled by off the shelf procurement systems, look for a software application that can accommodate the requirements.
I have observed implementations where the software has not always been fit for purpose because of the complexity of the software application. Some organisations are not very technology oriented and underestimate the efforts required to make the procurement processes more simplified.
Tip: Understand the business culture / environment and implement a procurement system that compliments the organisation. Identify procurement tools that are easy to implement and require the least amount of training and development.
There are still organisations that look at implementation cost as a determining factor when choosing an Implementation Partner. The decision to look at cost being the major factor can sometimes be misled as the reality is that organisations end up spending more than they initially budgeted.
Tip: When selecting an Implementation Partner (IP), always check that the IP fits with the type of organisation / culture. Look for IP’s that have experience with implementing procurement systems. Client visits is always recommended.
Reason 2: Procurement Processes
When implementing procurement systems, I have observed organisations that do not understand their procurement systems. In some implementations, businesses are unsure what they want, as a result the procurement processes are not streamlined.
Tip: Ensure that the Head of Procurement or Business Process Owners (BPO’s) are fully engaged. The success of procurement processes relies on good management and understanding of processes.
Some of the projects that I have implemented, seem to lack a clear sense of direction as well as clear project goals. The two elements are important because if you do not have the right direction and project goals are not clearly established, it becomes difficult to implement a procurement system and measure the success of it.
Tip: The Implementation Partner or Implementation Team should walk through the solution design with business representatives and the project team members of what problem (s) the project is trying to resolve or fix. A high level project plan can help people understand the main milestones and goals. The BPO’s should help steer the process elements in the right direction.
Reason 3: Roles & Responsibilities
The role of each person on the project is very important. I have come across projects that have multiple streams that actually cover similar areas. For example, the functional teams and testing teams that end up testing the same functionality. Other projects that I have worked on, the testing was executed by the functional team to reduce costs and time.
Tip: The project management methodology should define the roles of each person within a project team. Ensure that everyone understands their role.
Business users sometimes do not understand their role on a project. There are many reasons for this. Some business users do not have implementation experience. Others are forced into the world of projects but would rather do their day to day jobs.
Tip: Identify and train business users as early as possible. Give them the assurance and motivation by giving them responsibility to implement procurement processes that will benefit the business in the long term.
Resource management is always a challenge when implementing procurement processes and systems. The projects that have worked well, generally have experienced resources who have implemented procurement systems across various industries.
Tip: Resource Management is key to any project implementation. Read my book on “How to Implement a Successful Procurement System” available from Amazon (http://amzn.eu/6HZ9SL5). You will find lots of helpful tips and process information.
Reason 4: Testing!
From experience, you can never do enough testing. I have often observed projects that have various test managers and testing cycles. The scope of the testing can sometimes ensure success or failure. Project scope and test scenarios should be identified and agreed with the business. End to end testing is very important to give the stakeholders assurance that the system and process is fit for purpose.
Typical test phases include:
Unit Testing: Testing of enhanced functionality
Functional Unit Testing: Testing of enhancements and customisation
System Integration Testing: Testing processes and enhancements
User Acceptance Testing: End to end testing with real data
Performance Testing: Running volume and transactions through the system to see how it behaves
Regression Testing: Testing solutions that were previously implemented to ensure there is no impact
Tip: As you can see, there are many test phases and test cycles. Hiring a test manager to manage the testing cycles is very important. The preparation of test data and scripts is vital to the success of the testing phases. I have worked on projects where system set up and data has not been accurately set up. This caused delays in the completion of the test phases and impacted the project.
Reason 5: Training & Development
Another reason why procurement projects fail is due to the lack of training and development given to the business. You could have a world class procurement system, but if the user community does not understand how to run the processes, then the procurement tool is a failure.
Tip: It is of great importance to engage with the business and identify key users to deliver the training as early as possible. Some organisations employ professional trainers to create the training material and deliver it. This can be advantageous, but always have a business representative to answer any business process related queries.
I find pilot training sessions with the user acceptance testing team beneficial to fine tune the training material. The training material should have realistic process and functionality related to the procurement system.
Another issue that causes procurement implementations to fail, is the scope of users that are trained. Procurement is generally used by the majority of the employees within an organisation, as a result the user community is typically larger than finance. Training 50 users when 500 users will have access to the procurement tool is not a good idea. Invite as many users as possible to attend the training courses. It is always helpful to deploy simulation tools / e-learning tools to help users self-train, that cannot attend classroom based courses.
I hope you found this article helpful. Have you experienced any implementation issues whilst deploying procurement or finance systems? What are your 5 main reasons why businesses fail at implementing procurement systems?
My book called “How to Implement a Successful Procurement System” explains 5 steps that can help reduce the failure of implementing procurement processes and systems. It looks in detail at People, Process, Technology along with 10 tips to help organisations understand achieve a successful implementation.
For helpful tips on how to successfully implement procurement processes and systems go to Amazon http://amzn.eu/6HZ9SL5
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What are your top 5 reasons why businesses fail to implement procurement and finance systems?