“When COVID 19 hit us, we were unprepared for the challenges it brought about,” said Zycus. From contracts signed to inventory management, procurement functions were presented with one of the biggest challenges - learning how to operate in the ‘new normal’.
During Zycus’s roundtable (‘Re-imagining Procure-to-Pay Process for the next decade’) discover some major changes that were and are still needed across industries in order to make procurement a digital-first function that adds more value to an organisation as a whole.
“It was pointed out that 40% Large-scale, 60% mid-sized and 80% SMEs are still continuing operations with semi-automated or manual processes. This lag in adopting technology was one of the major contributing factors for the losses companies suffered in the initial period of the global pandemic,” said Zycus.
Key takeaways from Zycus’s roundtable
SMEs lack digital thought leadership: Despite the monetary benefits, having a competitive edge over other organisations, and reduced risk, the perceived, daunting cost of implementation of new technology, has resulted in many SMEs refusing to invest in technology.
“If there is a strong push from the management to digitise the processes, organisations need not worry. However, that is not the case for most organisations as they still consider their existing techniques and work to be efficient enough and hence, investing in new technology does not seem worth the cost of implementation,” said Zycus.
Irregular implementations: when implementation happen, Zycus identified that many are irregular meaning companies lose out on opportunities to reduce costs and risks.
“The momentum of change helps organisations to stay on top of their game and ahead of the competition. With the digital revolution that this pandemic brought about if an organisation cannot maintain its pace of progress [it] will soon fall behind and lose out on precious opportunities.”
Feeling the pull of change: Organisations that are ‘pushed’ towards change due to suffering a loss as a result of existing processes and older technology will experience less rewarding changes in the long-run compared to those ‘pulled’ towards change.
“This pull happens when a customer demands new technology to collaborate especially when they have already moved to newer technology for the processes. A Pull also happens when a company strives to be at par or one step ahead of their competitors,” said Zycus.
Digitalisation isn’t a bad thing: “Digitalisation is still looked at with great scrutiny as it is still believed that any form of digitalisation will lead to loss of jobs of people working within the process manually,” said Zycus.
However, Zycus highlights that in most cases, this isn’t true. Technology introduced into the procurement process stands to only help enhance employee performance by reducing errors and saving time.
“This fear needs to take the backseat for the organisation to be able to drive smoothly and swiftly towards its goals,” added Zycus.
Cost-benefit analysis: Ultimately, an organisation can only clearly understand whether they need to invest in new technology by performing a cost-benefit analysis.
“They need to factor in the cost of implementation, the cost of human error, the costs for reworking the processes due to errors, the cost of the actual software, lifetime value of the software, the cost of services being provided by the software company, opportunity costs etc.,” said Zycus.
In doing so, organisations can determine whether current software and technology is efficient or whether processes need to be upgraded.
Change management: In the years prior to COVID-19, ROI was the biggest determining factor when it came to upgrading technology and processes, however, Zycus highlights that this appears to be less efficient in current times.
“A return on Investment only determined the need for implementation of new technology only if it happened to provide a higher monetary return instead of also considering the increase in efficiency in the long run. However, this ideology has gradually changed to organisations wanting to adopt change management,” said Zycus.
While a more complicated process to implement and analyse, change management is a better way to scale up an organisation’s digital innovation implementation.