Find the Right Data Conversion Lead for Procurement

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oh good afternoon everyone thank you very much for coming along to our session this afternoon and I know it's just before lunch I think it's rather late lunch they goodness so hopefully not too many stomach rumbles on the way U my name is Jonathan Betts I'm co-founder and director for science warehouse and here today to talk to you about what we called intelligent procurement and how data and Technology uh combine to create strategic value in procurement so my background is actually as a a technologist I worked for 15 years specifically in procurement technology and during that time I've been really fortunate to work with lots of great organizations and procurement uh departments and their supply chains and really our Focus today and the uh content today is very much built from that experience um plus some specific work we've done around uh uh Market surveys of procurement professionals and and uh um the data feeding in from there so first of all I want to start talking about uh the choice that there is in procurement procurement has a choice between um being tactical and reactive or being strategic and creative we heard about it in the plenary this morning from Toby Mard a lot of the themes that he mentioned in there I think are really come through in my session today as well um so the question coming out of there and I guess my opinion and pro hopefully everyone in the rooms is that clearly curement can be and should be strategic and creating value for organizations but what does that actually mean I suspect it means different things for different organizations um but also once we Define that what are the enablers how do we actually get there um we'll talk about three specific enablers which is the content of the talk the data technology but probably the most important part which wasn't in the title is really the people so in terms of questions and answers it's probably best we keep those to the end we've got the stand downstairs so if anyone wants to um see or hear about science warehouse and the product you're very welcome to to go down there and and meet the the team on the stand they will welcome you there I'm not specifically going to talk about the the product science Warehouse solution today so so just a quick snapshot on science Warehouse itself so the business has been operating for the last 14 years uh we're based up in leads and the whole team in terms of our developers and analysts and data people are all hous under one roof so um customer Serv essentially all hous within that single operation and we support our activities globally from there um we provide really user focused and datadriven uh eprocurement solution I think it's those two pieces which are really important is the data and anyone who who knows me knows I talk about data a lot so I can be rather boring on that subject but it is key to driving e procurement success and the usability Our Heritage comes very much from work working with end users whether it's within uh the purchasing organization or uh within the supply base to you provide solutions that are really very easy to to adopt um the types of organizations we work with tend to be complex in the sense they have disparate operations lots of what we might call users in different locations uh similar they have a disparate Supply base and quite frequently they also have disaggregated systems and data sets which we're providing a solution to help them address and ultimately uh what we're driving to do is to enable organizations to buy the right product the first time and to uh deliver I saying their hindsight in real time so there's no need to actually make the wrong choice in terms of purchasing a product uh there's no need to look into the re rear viw mirror your data you should have it all in front of you um when you're making a purchasing decision so that's a bit about science Warehouse what about proc procurement generally and where the value is generated so um I think there I say there is a question mark over where procurement is heading in a sense because uh cost reduction is clearly the the key driver for procurement organization procurement departments um but there's only so much cost that can be taken out of a business so um with any cost Reduction Program there's an initial burst of savings and then you quickly get into the area of diminishing returns so you can look at new categories um keep taking uh uh new steps into new areas but ultimately it's about shaving uh more or fewer and fewer pennies really off off the savings are always always been there and undoubtedly uh there's a lot of pressure for procurement departments to deliver yet more savings but that gets harder and harder so it's is is that heading down to a cisac and I think it is um so as I say I believe there really is a a choice um for procurement organizations what we might call between cost and utility models um the first one is um clearly the the the overall aim of procurement is to deliver best value from the spend that an organization is making those so there two approaches of the cost model is what I call here the value preservation so it's all about being fairly reactive doing what the business asks you to do doing it well fantastically but it's not really getting outside of the the comfort zone as it were whereas the value creation model is much more about pushing out from those those boundaries and um taking procurement capabilities into different areas of the organization where they can add a lot of value uh a key part of that ultimately is aligning um procurement strategy and objectives with those of the organization so whether it's a public sector organization which is all about getting best value and therefore delivering better services or a manufacturing organization where it's all around the quality of the products and the output and ensuring that the uh elements within the supply chain of delivering value uh it really doesn't matter but the procurement strategy needs to be aligned with those with the organization so we did a survey and I talked about this at eworld previously but um we work uh every year we do an annual survey uh where we go out to organizations to proc professionals and ask them what are their key challenges what are the things that they're looking to achieve and deliver in the year ahead and uh one of the things that we found over the last couple of years is this uh fact that strategic becoming strategic is growing in importance so in the last survey it was 42% of procurement professionals said that becoming more strategic was a key driver for their organization and that we've seen that increase steadily over the years clear you see on the bottom line there that cutting cost is you know that that is the number one driver and it always will be but um it's picking up th those factors and those Trends and seeing that that growth in becoming more strategic is is there and as I say it is a growing um desire if you like for a more objective for procurement professionals and as I've said though the pressure is still there from a cost point of view um in our survey for the last Financial year 27% delivered 10% savings or more uh but nevertheless every Department every procurement organization is been asked to deliver even more savings so um for three quarters of the organization survey they have to deliver up to 10% savings and a quarter of them is actually more more than that 10% figure so going to come on to now talk about this move towards um strategic procurement what it is um and as I say the enablers for getting there so um there there are three parts there's the the technology which I will cover there's the data and there's the people as well and I think it's that that latter point which is uh you know a really important factor so there's a and we're in now what is the start of the second Machine Age so the the first Machine age was when um basically muscle power was replaced by machines and the uh uh High labor jobs the blue colar jobs were replaced uh manual Works replaced by machines um we're now saying with the second Machine age that it's actually um decision- making and cognitive uh abilities which are increasingly being replaced by um computers and software so there is actually a question of whether um managers if you like are becoming obsolete there's a lot of evidence in fact the decision making by software is better than um the old management gut feel and that'll be increasingly so so in terms of just to talk a little bit about what is this what do we mean by strategic procurement as I said at the beginning I think it will mean different things to different people it will depend on what your objectives as an organization are and your particular department and team um but there's been quite a bit of work over the last few years to look at this uh one piece of what I like particularly is from Samuel rashed and his this Beyond procurement concept and there are a number of elements which um been highlighted in that work which uh you know are are interesting in terms of how they as I say apply procurement skills capabilities knowhow um throughout the organization to deliver more than just pure cost-saving so there's elements such as Innovation sourcing so this is working with um suppliers to actually pick up on the innovations that they're delivering and incorporate them within your own product development within your own Organization for example there's elements such as total cost based management which is really applying um what procurement has been applying with its suppliers but across the whole of the organization so it could be a product development process for example um where there's a requirement for cost management as part of that and procurement clearly has the skills and capabilities to actually deliver that for the organization extended SRM uh I'm sure that people here will be able to talk a lot more than I can about Supply relationship management but clear it's another area where that interactivity with suppliers and encompassing them more within the framework of the overall business operation not just you know between the supplier and the procurement Department uh is an area for uh value creation and then Business Services is is quite a simple one but it's probably more around the the actual shared services model to degrees so there is um but maybe extending beyond the traditional um Po and transactional processing into into other areas as well because they clear there are skills in managing those elements within uh procurement operation and uh each of those areas is B to actually although they they're beneficial in their own right so it may be about helping the organization to um launch a product and grow revenues they they also um deliver um around 5% cost impact in each case as well and delivered in an organization so they have that uh benefit too but as I say the key key requirement is alignment between uh what we're doing in procurement and what the organization as a whole is delivering so there's there's very little point in doing the rest of this unless that alignment is really there and so we've actually looked at this in in our last survey and to understand where organizations have actually got to in terms of uh moving through the levels from a tactical operation um to a strategic one and uh the first one on the list is is around just a standard measure of procurement Effectiveness and there we found that 2third of organizations measure and manage compliance and procurement decisions well one would hope so so one wonders actually what the the other third are doing but um you know potentially there there are many organizations which don't actually have a professional procurement function so it may be that they're not actually doing that to any great degree but when we get onto the real kind of strategic uh kind of activities or the activities that support strategic procurement uh the the numbers that are actually engaged in these activities and managing them are are much lower so if you look at something like supplier performance where 28% systematically managed suppliers is a key source of value for the business so the key element there is systematically manage suppli as a key source of value so a minority of organ organizations are doing that and then the third point which is the key one around aligning with with uh organizational objectives again only a third of uh organizations are actually uh working with a well- defined procurement strategy aligned with their their business priorities so there's there's some way to go but there are clearly many reasons why these things these things don't just happen it's actually hard hard to do and uh um this is where I introduce our old friend the spend monster who uh basically eats eats all our pound notes uh there's there there are a number of different reasons why uh value can be drained from an organization rather than created and or may say there are other activities that will be happening with an organization and within the external environment which actually impact on the operation and don't allow the resource to be devoted to the Strategic activity so there's always the external factors and clearly in a procurement environment that's very much part of the day-to-day activi is dealing with the external um Supply base and um understanding and working with changes in the economy so these are massively outside of control we can only respond to them but we need to be able to uh respond to them in the best way we can there's elements such as the regulatory environment which uh clearly have an impact on purchasing uh that's something which can be can be managed and uh and driven through um but again it's it's something that ultimately is is outside our total control and organizationally there are often uh barriers to proceeding because they uh a lot of factors such as U Want to Say in terms of systems Legacy systems so a lot of organizations have either grown by acquisition and therefore have lots of different systems uh that they're using or they may be a a an organiz ganization which is growing and then their previous system is not fit for purpose anymore so there's those kind of Demands on an organization to be able to um work within a often a fragmented environment which leads that in itself can lead to fragmentation of data that's something we see a lot uh with many different organizations that um and many many very successful organizations but they really struggle to really pull out their data and uh assemble it in a way that they can access and interrogate in a meaningful fashion um because it's held in so many either internally within their organization or within the supplier systems it's just not um that accessible to them and the old I say was going to say Old Chestnut but resources and capability I mean everyone we we'd all love more resources wherever we are that's not reality we always have to work um within the constraints that are are uh given to us within our businesses but uh um so it's all about making the best of those and developing them and uh we heard earlier about the I think it was the banks that are recruiting all all the top procurement Talent now so making it harder for organizations to um uh get the get the talent they need but I guess that's a good thing because everyone's wages are going up so um and then procurement culture so that's all around uh embedding getting a procurement culture embedded across an organization so it's not just something that happens Within you know within the procurement Department within the shared services center it's something that is actually everyone within the organization understands what procurant is about and what their responsibilities are and why procurant is doing what it's doing and how it's adding value to the organization so the three things I was going to talk about technology data and people starting with starting with technology this is not specifically about science Warehouse technology and you might say it's a bit generic but uh um I think these These are the sorts of things that every organization will have on their shopping list when they're looking at adopting a new technology be it procurement or otherwise so um user friendliness is is a is a key one um it's particularly powerful I think in a procurement context uh with with e procurement because you have casual users with an organization who have you know probably very little interest in procurement per se they just need to get the the products they want and uh we want them to buy in a in a compliant manner so clearly having something which they can walk up to and use um I know with our solutions they are generally put live across organizations with with zero training for end users because it is this consumerization this BTO C like um interface that enable um individuals at work to use systems in the same way as using eBay or um Amazon and Tesco at home integration clearly and connectivity are key so the two things there one is integration with your your systems but from a supply chain point of view it's that connectivity with suppliers so we see with a lot of programs that in fact the connectivity isn't really there it stops at the at the edge of the organization and the suppliers are often left to to pick up their um their end of things but that that connectivity is really um you a massive driver for ensuring that there's value throughout the supply chain and the solutions provide visibility and I think increasingly collaboration so um arguably any any tool um allows you to obviously collaborate with suppliers and with your users internally but as we as we move forward there will be more and more um elements of of software Solutions which allow and promote that that kind of collaboration again some of it drawing from the uh the consumer likee applications you see out there analytics uh goes without saying so here it's about drawing the data into um into if you like a centralized environment that's or certainly an accessible environment uh and that the last Point around being cloud-based is is part of that so clearly with Cloud solutions that enables you to to do that in a in a very um uh ready manner if you like and the the argument about I mean we offer a Cloud solution so you would say well you would say cloud is great but clearly it has pros and cons but I think the the argument around the economics is is definitely definitely being made now so I saw um uh uh Slide the other day a couple of weeks ago where it showed where the the cost of ownership for was bit like an iceberg theyd shown so the for traditional on- premise software the the software license costs were 9% and the bulk of the iceberg was all the support and implementation and consultancy which goes around implementing that solution whereas for the cloud Solutions it was the the iceburg was the other way up so not quite sure how it floated but that's uh that was the concept and ultimately the support is a is a key aspect so it's not just around um you know buying a technology platform a technology solution that needs to be expertise from providers to ensure that that is um delivered ultimately technology in itself is some of us get excited about it but really it is about freeing up resource um within your organization to focus on that creation of strategic value what about the data piece then um there's been a lot of talk still is I think around so-called Big Data um I I've spent a lot of time we work in the data field trying to find out what is the definition of big data but that is the definition as far as I can tell it's data that is big um I think it's it's not the actual the data itself so there are increasing amounts of clearly increasing amounts of data about been generated every time we do a Google Search and and all the rest of it there there are huge amounts of data being generated I think the thing about big data is that it's uh um it's not interrog on traditional software uh on traditional database approaches so it does require new techniques to actually uh generate um uh information from that data and that's that's what big data is all about um but it is something that has been somewhat somewhat hyped uh one of my colleagues back at uh back at science is even more cynical than I am which is shocking um said that the the sort of hype about big data will reach the peak of inflated expectations this year or so picture of a pi p p e but in terms of um what does big data mean for us in procurement um clearly I think data in itself and been able to interrogate analyze and generate meaningful data yes that that will be that's clearly very important and not sure big data per se in the sense that is talked about in the Press will have a massive impact on day-to-day procurement activity I think the changes that will happen will be incremental as well so over time we will see um outcomes from these but uh there's not going to be a huge surge of what Big Data value generated um let me know if you disagree but that's that's my view I forgot so's going to do a little quiz so people like quizzes hope so look like you're ready for one um so can you can anyone tell me what the the commonality is between these so we've got a traffic sign doesn't really matter what it is but it's a traffic sign we have got uh the game show Jeopardy so this is an American game show and if one's familiar with it where um the answer is given and then the contestants have to reply with the the question and and the final one is the Google driverless car no anticipating the need sorry anticipating the need yeah yes yeah um they're actually they're actually all about um computers replacing people so in uh the road sign one in 2011 there was a machine learning conference in Germany and uh they uh basically the participants wrote wrote software to recognize street signs and um they found that um 99.5% of signs and they were in different conditions like Blurry and disfigured and things like that so they were hard to recognize even by humans uh 99.5% um uh were recognized by computers and only 98.4 by humans so the the software was better at recognizing street signs than and the human beings which is probably a good thing when you look at the Google car um Jeopardy similar sort of story so early this year IBM's Watson computer uh beat the uh best two um contestants on The Planet at Jeopardy so you can play a sophisticated game like that and and win and then the Google car it's got you no steering wheel no pedals goes around at 25 M hour it's got no no driver uh so there are you increasingly aspects of Our Lives which only a few years ago would have thought well a driess car that's absolutely impossible they are being actually done now by computers so it raises this question of whether we as managers will become obsolete because um software is becoming so much more sophisticated and better at making decisions and um difficult ones at that well I I don't think we will become obsolete um hopefully not in in my time anyway and uh but ultimately that's all about staying relevant so U we talked about software will help in decision- making and it may be that uh we can use software to to help us with that and take away some of the I said the gut feel in that decision making that that often comes into play um but the future for for for managers and procurement uh professionals is uh about um providing that leadership and motivation and all those kinds of um people skills um and strategic thinking uh which will take um as individuals really and our organizations to the next level so the this this listenting actually came from an article I found on LinkedIn a couple of weeks ago so there's nothing particularly surprising in there but all all the kinds of things that we need to do is individuals to stay relevant and stay ahead of the game so clearly learning coming to something like eworld is great for finding out what's happening doing lots of reading and generally been aware of what's going on around us um teaching is a fantastic way so those of us that Mentor our teams and uh provide input uh certainly I find personally you learn a lot more about uh your subject matter from going through that process and effectively being put on the spot around it um seeking out new opportuni so the seek bit developmental opportunities so it may be going outside of the procurement Department getting involved in projects which are uh not necessarily within the um normal remit of of your activity but again it's about taking on new things that um wouldn't necessarily been exposed to previously um the thinking piece is really about that taking a step back and looking at the big picture U so it's it's thinking about that classic interview question uh what will procurement look like in three years time uh we should constantly ask us that ask ourselves that and have an answer to it um I'll think about mine and then um change changing jobs so that's maybe a bit bit of a um contentious one but uh it doesn't have to could be changing job within your organization doing a different role picking up skills um when we throw ourselves into those new environments that's when we really learn about um uh what is required of us and and the activities that we need to or the skills that we need to bring on board so um it's not what you know but how fast you learn is that adaptability it's uh um I'm actually a geneticist by training so I'll say darwinian this darwinian thing is all about Evolution staying ahead of the game so to finish up my uh my summarize on on intelligent procurement it's all about addressing ing new and changing demands with new skills um and that will also cover a number of of different areas and we talked about embedding procurement culture within the organization and uh um I know that's something that a lot of lot of organizations we we work with are doing very effectively and uh you know reaps Rich rewards uh in terms of delivering uh the the procurement across the across the organization the analytical skills those will increasingly be required um we've seen even with even with software to help us calculators whatever um the the analysis it's not it is about having number skills but it's been able to look at data and interpret it and and use it in the right way and make the right decision excellent market knowledge goes without saying again Toby was saying earlier about actually procurement is in a really powerful position because we're talking to suppliers and they can tell us a lot of what is going on in the market and provide a lot of information which is um possibly the CEO may not even know but would definitely want to know about or the CMO whoever it is negotiation ability and goes without saying that's another area where in fact procurement can add value elsewhere within the organization so um procurement professionals are highly trained in negotiation ability but how about transferring those skills to your sales team so they're on the other side of the um side of the bench and I said seeing the big picture and ultimately about providing you know creating a vision for new outcomes and with the ability and sophistication to actually bring those to fruition ultimately every organization is actually um in danger if it doesn't leverage its procurement capability of um missing out so leveraging procurement is a a fundamental source for or all organ organizations of competitive advantage that that was my presentation as I say we are downstairs you want to come and uh grab one of us to talk a bit more either the content of the talk or about our um technology and solutions uh we've actually got uh I've got a couple of floating men there they're not supposed to be there um we' got a car caricaturist I can't say the word down there so anyone want to say caricature take home and give to the kids please come along get one for free and thank you very much so those my contact details I say grab us later if you if you want to thank you