Step three in your journey to catalyse change in back-office transformation
Why does it appear that procurement for Software as Service (SaaS) and related implementation partners, is stuck in an on-premises mindset? Cloud-based solutions can be a step change for the organisation, aligning business processes to leading practice standards. Transforming to the cloud is more about adopting new ways of working, than configuring a technology solution. Your approach to procuring such systems may therefore need to change.
Point of view:
What are you setting out to procure as part of an ERP / HCM replacement project?
- A technology product to replace one that has become obsolete.
- A technical migration from your current platform to something new and shiny, because others in your industry are doing the same.
Wouldn’t it be more effective to buy services that enabled improved business outcomes? Outcomes that were aligned with your organisational strategy. Outcomes that will support revenue and cost improvement whilst enabling better citizen, customer, and user service.
The procurement of software is commonly seen as a checklist exercise:
- Does the system allow you to enter “x” data?
- Will the system provide a report on “y” in format “z”?
- Can the system integrate with my existing ecosystem?
With the ‘top quadrant’ suppliers all being able to meet the core requirements, checklists alone are unlikely to provide much differentiation in the procurement process.
The relevant questions in the selection process are therefore much less likely to be “can the product deliver x “, to which the answer will most probably be “yes”. Of more relevance should be, “Are we as an organisation aligned with the way that HR and Finance as a function are moving, and can we engage an implementation partner who will help us adopt and evolve?”
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Large numbers of ERP / HCM cloud projects come to market with a combined procurement for Software and Implementation Partner. As migrations to cloud platforms are solution led programmes by design, the heavy focus on current system requirements seems to be a backward approach to selection. Selection processes that are mainly based on the technology capability do not address:
- How key outcomes will be achieved.
- How success will be measured.
- How the organisation will be made ready to adopt the change.
- How the operating model will be revised to embrace continual innovation.
Business Outcomes vs Functional Requirements
Creating a list of functional requirements generally leads to a binary answer, the degrees by which any specific requirement is relevant to another is often obscured by the quantity of requirements being assessed. Requirements do not define the business need in terms that are readily articulated and measured, they also represent the buyers view of what the solution needs to look like. A requirement-based view trying to align to a solution-led system.
By taking an outcome approach you start to look at the processes that need to be in place to operate efficiently. Identifying today’s key processes and the key processes that will future-proof the services, provides the foundation for a richer solution that does more than replicate the status quo.
If we take an outcome view it also becomes feasible to measure these outcomes with industry-standard KPIs. Thus, allowing benchmarking of the current state against industry maturity models and peers. A financial business case can then be modelled against the targeted process improvements.
We’ve now turned requirements into something that is specific and measurable.
But how should you express outcomes? In a language that can be easily understood in business terms.
Outcomes such as below help us simplify that we need to deliver:
- Recruitment – Reduce the time to acceptance of a job offer by 5 days.
- Invoicing – increase speed and accuracy of invoice processing by 20 per cent.
- Procurement – increase the automation in order to reduce the operational FTEs by 25 per cent.
These will be easily understood by the project team as they lean in to focus on what’s important to get the project delivered.
Transform and Adopt
‘Sparkling’ new technology doesn’t deliver better business outcomes. Implementing the same old processes delivers little organisational benefit, it may address legacy platform obsolesce issues, but won’t deliver true business case return on investment.
Moving to recognised best practice processes aligned to the SaaS applications will deliver benefit out of the box, leveraging the assets and enabling better adoption in the organisation will deliver much more. Easily said, but difficult in practice.
Given that any change is complex and difficult to achieve if not managed well, it makes sense to measure through better procurement the ability for suppliers to enable transformation. But what characteristics should you look for?
Maybe characteristics such as:
- Operating Model design review and implementation
- Establishing Programme Principles that are measurable and frame the delivery
- Stakeholder readiness tools and methods.
- Understanding of Inclusion, Diversity and how this relates to adoption
All great programmes are defined by the ability of the individuals involved to come together and work collaboratively for a common goal. This maybe the hardest of all the implementation suppliers’ characteristics to measure.
You will only know if you can work together when you work together. So, in the procurement stage, it’s advisable to do just that.
If your procurement cycle is set up to down-select early to a couple of suppliers, you will then have the time to engage in some meaningful dialogue. Perhaps visit the supplier’s office, ask them to demonstrate their methods and tools to you, and engage in some stakeholder mapping sessions. Visiting the suppliers’ offices helps you understand them as an organisation, how do the people you meet feel about who ‘they’ work for. They need to feel good about their employer before they feel good about working for you.
Easily communicated outcomes that are quantifiable, measurable and can support a business case. Suppliers that have demonstrable experience in transformation will be able to assist you in adopting the change more quickly and with better longer-term benefit.
Assessing cultural fit to your own organisation can be subjective, especially when only observed in the final presentation round. Spending time together is the only way to assess if you have each other’s back to make things work, riding the good and not-so-good times together.
What are the next steps?
To talk further about your journey, contact us to understand how KPMG can assist you in defining a meaningful set of business outcomes, linked to KPI’s that support a business case. Utilising the 6 layers of the KPMG Powered Operating Model we can help you define the challenges ahead, stakeholders impacted and support needs of the organisation in the programme. These can then be articulated in the procurement, defining better outcomes by which to measure implementation partners against.
About the ‘Transform to the Cloud’ article series
A series of blogs that look at the common steps in a Journey to the Cloud. Making the right choices at the beginning to preparing for a continuing innovation culture that harnesses the benefits of the back-office transformation for the long term.