There are several key parts to getting BI working well for you – working out what to measure, getting the right data together, presenting the information coherently, and finally, using the results to change behaviour.
There is no doubt that procurement needs BI to respond intelligently as it is driven to deliver greater savings, improve efficiency, manage risk and increasingly, to play a more strategic role in the business’ direction. But is it being used as effectively as it could?
For the purpose of this article, we’ll assume data is complete, accurate and optimised for procurement (a big assumption, but there’s a whole other article on this). We’ll also assume that you have the people to build user-friendly, good looking dashboards that can be easily understood and used (if anyone uses BI on an ipad then you’ll know that Apple’s already taken care of some of the hard work here anyway).
Our focus here is on the two areas of BI that get less attention than they deserve: what to measure and what to do with it.
What to measure?
Most companies have a defining vision which should act as a mantra for everything they do (including procurement). Think of Volvo, what springs to mind? Safety. Our mantra at Xoomworks is Engaging People – it’s our mission to truly engage with our colleagues and clients – after all, procurement is about people, not about systems.
So, your organisation’s vision statement should be the guiding principle for your BI requirements, which will help align procurement with the rest of the business. If it isn’t, then you’re not measuring the most important aspects of your business.
For example, the safety first approach may translate to a tight control of risks in the supply chain with thorough business continuity planning. A company with innovation at the heart of their culture may be driven in other ways – working collaboratively with suppliers in the design of products or services could be more important.
It’s then vital that you balance your BI requirements across procurement. This can be done by segmenting what you want to measure into four categories – all aligned to your overall vision for procurement:
A project’s progression towards milestones and consumption of budgets should be tracked at a high level, to ensure targets will be met and deliverables made. Whilst more detailed reporting will come from the respective project teams, the CPO should understand how their progression fits within the context of the other BAU activities and ultimately whether they are on track to deliver benefit.
What to do with it?
In our experience, this is where most companies fall short as we’re straying beyond the boundaries of systems and processes – the mechanics – and delving in to the behaviours instilled in your organisation. Changing behaviours is a far greater challenge than implementing new technology but delivers significantly greater benefits, if done well.
We have worked with a number of clients using BI to make positive changes and found that the key theme is engagement. If your stakeholders in the business are not engaged with your vision, then nothing will change. It sounds fairly obvious but it is interesting how many companies don’t publish the results of their BI.
So, the key question is how do you effectively engage people? The most effective projects we’ve implemented have used a number of different methods to get the right people involved:
It also helps you prioritise – which is hugely important as the resources at your fingertips are squeezed more and more. Understanding what “good” looks like means you don’t waste time and money on unachievable goals that ultimately don’t pay back. But remember to keep this in the context of your business and what it is trying to achieve overall.
We worked with a UK company recently that took this approach and the results speak for themselves. The CFO was engaged from day one and the mission to become best in class was communicated throughout the organisation with regular updates on progress of the key KPIs. When benchmarked in year two – they had achieved their goal.
This was recently highlighted by a company working to make their P2P processes more efficient. By using their BI to drill in to the business areas that are constantly causing invoice exceptions – we could then use our user group in that area to determine what the issue was, which lead to a new process being used to cover their specific needs and reduce invoice exceptions.
Ultimately, BI will show you where you are underperforming but your BI process and strategy needs to include the steps of determining the root cause and an appropriate remedy. This is how you achieve a return on your investment in BI.
Procurement functions need to deliver greater savings with a limited budget, and to do this, they need to be innovative. Having a good handle on what you’re doing well and what you could improve on is a good place to start and good BI will help you do this.
Our approach is simple; align your BI with an overall strategy for procurement – or even better – the business as a whole. Once you have this information at your fingertips, make sure you use it effectively by engaging the people that can make a difference.