Digital transformation in sales for purchasing

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Hélène: So welcome to   the procurement game changers, the podcast  for leaders that make a difference. Today,   we'll be talking about digital transformation and  to discuss that topic, I am very happy to receive   Tomas Wiemer. Tomas is the Global Indirect  Procurement and Digital Transformation   Director at Juniper Networks. Juniper Networks  is leading the revolution in networking,   making it one of the most exciting technology  companies in the Silicon Valley today. Tomas   has more than 25 years of experience and  expertise that spans the execution of business   transformation initiatives, negotiation, and  operations management. Welcome to the show, Tomas.  Tomas: Welcome. Thank you.  Hélène: Tomas, could you tell us   what led you to procurement? Tomas:  So I started in procurement after starting a  career in business development and strategic   planning. So when I started in procurement, it  was early 2000. And the idea, back in those years,   is we had a lot of mergers and acquisitions  happening in the chemical industry. So   in those years, I was in the chemical industry.  And really what the organizations were looking for   is to create a new dynamic when those companies  were created through the procurement organizations   and supplier management. And what they were really  looking for were business savvy talents, I guess,   who had leadership skills and moved procurement  out of the standard quality management execution   approach into a more business savvy supplier  management approach. So that was really how   it started. Hélène:  All right. So we talk a lot about digital  transformation and its impact on procurement.   And actually, when I talk to procurement  leaders, they often have a budget for   digital tools rather than support to transform  their processes and practices. So the thing is,   digital transformation is about changing the ways  of working first and digital tools second. So,   Thomas, can you give us your vision on what  is digital transformation for procurement?  Tomas: Yeah, so it's <laugh>, this is a very interesting   question, right? Because you're right, most  often it starts with a tool to be selected one   after the other, and then eventually build a user  experience that goes with it and then hopefully   get an ROI out of it. When you do this several  times, you discover that it's probably the wrong   approach, right? So the problem that we have  in the industry, when I say industry, it is   the procurement industry in general, is that  there's not too much experience yet happening.   That means that nobody's really taking the time to  really evaluate what is really that you're looking   for. What is the why? Why do you need that?  What is you're trying to accomplish? And then   let the budget constraints run free and not put  yourself immediately in the budget constraints.  Tomas: Of course, if you have a very,   very, very tiny budget, then I guess you  don't have a digital transformation anyhow,   but and we will come back, I guess, [on] that  later. There is a minimum of budget for that. But   you should really start with the thinking about  what is it that you try to accomplish? What is it   that the organization today is not really tackling  properly from the supplier end ? And what is the   talent that you want to have and where you're  going. And then from there on you build your   plan and your budgets. But very often we start  completely reverse, which is the biggest mistake.  Hélène: Yeah. So let's start with the wrong end. And I say   there's so many startups, you know, within the  digital space, the digital procurement space.   How can you explain all those options  to a CEO? So where do you start?  Tomas: So the comfort very often   comes with a logo, right? [it] means that you have  a consulting company who brings a logo and the   comfort comes also in, from technology companies  who have proven their level of satisfaction.   Most often they're big software houses and  it's really a multimillion-dollar ticket   at that point. The startups, [it] is a  completely different scenario. You can   try and test with relatively low budget. But  they're young companies, they're not mature   and you need to work with them. So there's  a requirement of having a project structure   that follows very closely that startup and  accept[ing] the fact that you're building   the business case, right? You, the account that  you're bringing, they will sell it and it's fine.   You will benefit from it and the startups can  give organizations a new way to do business.   But it requires a lot of flexibility  and a different mindset, for sure.  Hélène: Yeah. Yeah. And obviously,   as you were saying, a lot of startups  are building, as they go, the tool.   So it's the pros and cons of having something  that is maybe more customized with what you need,   but it means that you need to involve your teams  more at the beginning. So you get something that   is workable at the end. Tomas:  Yes, that's correct. So when you build that  budget you have the software cost, you have   the integration cost, and then you have the change  management cost, right. And very often those three   do not, not necessarily get analyzed from the  beginning and the startup management will always   on the sales set at the beginning, try to  get your business. And they will really try   to do all the extra steps. The problem is  that once you start and launch, they run   out of steam and then you need to move the next  account. And that's when the frustration starts.   So the reality is that you need to stay engaged  and you cannot count on the supplier that they do   all the work for you. Right. They will simply  not. Or then you go into a consulting SOW,   which is in a different business model. And  probably it's a good thing to plan for an SOW   on the consulting side at the same time. Hélène:  Yeah, that's interesting. So what about the return  on investment and what can company really expect   from the digital transformation? Tomas:  Yeah. So those are two school of thoughts, right?  You have, the first school of thought is the hard   dollar payback, right. Which is probably true  for organizations who are not that mature yet.   And have a lot of unmanaged spend, unmanaged  suppliers and a level of complexity that   has never really been addressed either  because of the history of the company,   or because they went through multiple  mergers, like acquisitions and things have not   been aligned. So this is almost what I call the  low-hanging fruits. And then you have the other   type of companies who are much more mature over  the last 10, 15 years. They have already a P2P.   They went through multiple restructuring and  that ROI gets more based on the user experience.   Now, how do you measure user experience and  user satisfaction, simplicity, and speed of   execution gets much harder. At that point of  the year, the transformation agent, so to speak,   needs to spend time and educate the finance  organization in the upper management,   in order to rebalance both of them. You need the  money for sure. Otherwise, why invest? At the same   time, the benefits of the digital transformation  brings you on new avenues, which is kind of the   big thing nowadays, right? The diversity, the  sustainability, the Eco Green Initiative, the   values on how you want to do business, et cetera.  It brings you on that path. And there is a,   what I call, a dimension of belief that needs to  be part of it. You have to believe in what you do.  Hélène: Yes. So one thing that I've noticed in particular   in our very niche category, which is consulting,  is that what digital may bring to the table is   finally the ability to have an overview of what's  happening in the category because it's scattered   in the company. So it's not real hard dollar  value, as you say, but for procurement, this is   so valuable to finally know who is spending, what  [CUT on, on] on what type of project. And it goes   to your point that there might be some unexpected  value in the digital transformation that cannot be   measured in dollars per se. Tomas:  So you're touching on a very interesting  point, right? The interesting point is that   traditionally procurement systems have developed  it through the purchase order accounts payable.   So whatever the invoice says, that's what you  get as an information. The digitalization now   touches on pretty much on everything else than  what you see in an invoice. Like what is the   value of SOW, right? And the consulting. What  is the return of investment of the time spent?   So those are not always materialistic outputs  that you can see through the normal traditional   P2P. So I think the procurement organization is  now extremely challenged. And I think actually   the innovation will come through the startups in  the sense of, you see, we speak so much about AI   and artificial intelligence, but the AI  becomes only intelligence when you start   to bring in multiple sources of information. And then somehow you can cross them. But if you   have only the traditional supplier onboarding  P2P and contract management, frankly speaking,   you don't really create a digitalization.  It's the premise of a digitalization, but   it's a necessary step, but you haven't reached  the digitalization yet. So the challenge for   our industry, in short, is that, and we are not  completely there in reality, there's a lot of deep   writing on it, but we are not really there. The  data crossing each other in term of information   is a hard step to overcome, especially as we  are today in a cyber security information,   security, privacy, and many laws happening  in many countries is also a barrier for those   information transfer from one to the other. Yeah.  So that's the 20, 25 journey if you want. And, and   not to go too far, but that's when I'm a strong  believer that that's when the platforms will come.  So you will probably see if I, if I would take a  my crystal ball, I would say by [20]25, [20]28,   we will not speak anymore about individual  softwares for procurement. You join the   platform and it's just there. You don't need a  purchase order. You don't. It's like the Venmo   in the US for credit cards where you don't need  an invoice, you don't need this and that you just   get paid, right? Yes. And you don't need to  supply onboarding. The suppliers are already   on the platform. You don't need every time,  negotiate your terms and conditions. They're   standard for everybody. If you join the platform,  that's what you accept. And maybe certain things   you can address. That's where it's coming. We are  not there at all yet. So everything pretty much   what we do sounds bit depressing, but [it] is more  to prepare for the next wave to come. But if you   don't do it, you're really, really behind Hélène:  So let's talk about resistance. You know, what are  the main resistances? How do you have become them   in that preparation of the next wave? Tomas:  The change management in general is a budget  that gets early cut because nobody really   understands it. Where's the money coming back?  People should adapt. They should understand.   The reality is that everybody likes what they do.  People are comfortable. It's really a little bit   of psychology coaching in a certain way. But  the management has a big role to play, right.   And then you can have a different type  of situations. Either you do all that for   headcount reductions. If that's the case, then  just say it, you're better off to just say it   and say what you're trying to achieve. Everybody  makes their own decisions. Those who stay,   those who leave, that's it. Or you're saying, no,  we are not doing this for headcount reduction. We   are doing this for an enhancement of capabilities.  If you're on enhancement of capabilities,   there will be a dead time in a certain way  where you build out those capabilities.  The team members don't see the output yet, and  that can take 6 to 9 months to 12 months. So   it's a lot of hand holding and explanations and  spending time that it will be fine at the end.   But yes, your world will be rocked that's  for sure. Right. And it's not for everybody   at the end game. Right. there's a lot to  learn. I think that's the biggest thing.   When you belong to an organization that is going  through this, you need to be willing to learn   on your own, right. Make yourself available  to learn. And that's probably at least 10,   15 hours a month. Right. And what do you do  for yourself? Right. And most people, yeah,   they just don't do it. Right. Hélène:  True. And I think that goes back to what  you were saying. You need to be a believer   at some point that it's bringing value and maybe  the toughest challenge for the project leaders in   a digital transformation is to get other leaders  to believe because it's kind of spreading through   that. You can only get on board and really embrace  digital transformation if you believe in the   benefits for yourself and for your organization. Tomas:  Which brings to an interesting point is that it's  becoming a profession almost, right. In the sense   that if you do it once, you don't do so well. It's  like anything in life. If you do it three or five   times, now [you start to develop a second sense  of what can work and what cannot work. It's not   a recognized profession yet in reality, actually,  it's the opposite. It's the fuse of the system.   Very often the statistics unfortunately show that  its little bit improving, but over the last year   still is that the transformation agent is the  one that loses very often first his or her job,   simply because it's an easy fuse, right? He  or she is not able to explain. They didn't   understand our culture, went too fast, went too  slow and all that things have improved lately, but   it becomes a profession. It's important to keep the   fundamental of the profession. If you're in  sales, it's in sales, it's customer service,   customer service, procurement, procurement where  you apply what you know in a new direction.   And for those who want to go into that career  ladder, I really recommend to take some classes,   school certifications because the academia  behind it puts things back in perspective   versus just go by feelings, right? Certain things  are normal and other things you just don't know.   I think it's a new career ladder that will develop  quite quickly and companies will pay for that.   That's for sure. Right. Hélène:  You know, let's talk about a bit about, you know,  how to hire and keep young professionals. So   I've heard that that was very difficult these days  to get the right people, but to keep them as well   in procurement careers. So do you think that going  digital could help attract and retain talents?  Tomas: The simple answer is yes. And I think   that's one of the main reasons [I] personally  spent a lot of time on that of course, is to   bring the value to the company, but the value to  the company comes also through the talent. Right.   I believe that for those who have, well, let's say  10, 15, even 20 years of experience, and when they   look for new opportunities, you need to give in  a work environment that is not too complicated,   not, too hard. And so the old days when somebody  sends you a flat file that you need to go on,   spend hours and building the tableaus and or the  excels and the pivots, when you're done with it,   you're exhausted. You don't even have the energy  anymore into looking at what you have even built.  Right. And I think the talent is looking  for organizations that are dynamic.   Yeah. Many people apply to companies where they  can continue to grow, but grow from the knowledge   perspective. I mean, you have, it is not so much  in the procurement world, but it's coming also in   the IT world, people join certain companies  because they work on this type of software   so they can get certified, they can build a  brand for themselves, and then they move on.   The digitalization has a benefit for both ends.  The first and it's for the company, because for   those who want to rotate, companies stay stable.  But it's a great way to attract the right people   also ensuring that you are dynamic, you are modern  and [in] the job career that people are joining,   the organization at least is trying to create a  comfort level that goes with all type of setups   nowadays, right? Post COVID, is it a hybrid mode?  Is it a remote based, is it office based? And   we don't really know yet how organizations  companies will set themselves up. Right. So   there's a lot of choices and yeah, it's important  to be cost competitive, but also create this work   environment, in this case, the digital work  environment where it's not so hard to start and   perform right. That's the key thing, I think. Hélène:  Yeah. So now let's talk about risks. You  know, how do you manage risks during a digital   transformation? Tomas:  The risk is to collapse, right? The biggest  risk is to collapse that when you start to   dismantle and the organization is not ready yet,  and then you start to rebuild and in the middle,   everybody gives up. I have seen probably 10 years  ago situations where the top management suddenly   got scared and just wrote it off, stop everything.  So just was too much, too much, too fast at that   time. Today it's less, right. But I think that's  the biggest risk. The other big risk is that   it's a big distraction to the organization, right?  So you spend a lot of meetings, lot of things,   and at the same time, you have to execute and  deliver. So how to execute and deliver while   a big portion of that organization  is focusing on the transformation.  You need to find the right balance. Now, the next  risk is that people get a little bit jealous,   right? For example, he or she gets moved  into the transformation. And I am stuck   in the execution because I'm good in  execution. I'm good in negotiation,   but I'm not really part of the new wave. So you  have to manage this type of sentiments where   both groups are needed. And if you can, depending  on the size of the organization, the best is to do   some kind of rotation among people. So everybody  stays engaged, but yeah, depends on how big the   organization is. Nowadays it's rare that you do  that in one country. So you do it in different   countries, different time zones, how large the  organization is. So all those aspects need to be   taken into account when that movement starts  to happen. And it's a journey that will last   from the risk perspective, I think, it takes,  easy, 15 to 18 months. And then it goes down,   but you need to survive those 18 months Hélène:  And you have to be consistent during... Tomas:  You have consistent and deliver, because at the  end of the day, the CFO wants a money, right?  Hélène: So, direct or indirect, do you think that   digital transformation for procurement  applies more to direct, indirect, same.   What's your opinion on that? Tomas:  I think it's different. The common factor is learn  how to integrate data from the outside into the   inside. Many companies have started to work in  data links where you can bring information in   and you bring them out. The direct side is moving  more and more into geopolitical risks, commodity   risk management, planning, lead time. So the gap  between direct sourcing, especially if you're in   manufacturing, I guess. I guess the direct means  mostly manufacturing to make really simple.   The gap between planning, inventory, lead time,  it's getting closer and closer. So if I would   redesign something tomorrow, I will do an end to  end from that end, right. And probably walk away   from the traditional procurement KPIs. On the  indirect side, you're really joined by the hip   with compliance and legal. It's finance,  legal, compliance that gives the drive.  And the most difficult that most companies  still suffer is not just to have access to the   information and get ready to go decision proposal,  so to speak by the computer, to the strategic   source data. But [it] is a user experience,  right. How can it make easy to point that   almost the normal requester of the company doesn't  even know that the procurement exists, right? That   would be the ideal dream situation. You just need  it. And somehow you get it right. In the morning,   you switch on the electricity, you have light, you  go to a seat, there is a chair waiting for you.   You need a screen, you click, you have it, right.  And it's not so easy because those who are not   part of the procurement world, don't always  realize all the standards that procurement is   executing on behalf of legal and compliance and  audit and finance while procurement is not really   making any rule. Right. I mean, they can influence  the rules, but they don't own the rules. So   that's the downside, and again, back to platforms.  That's my big hope in the years to come, that the   platform will just wash all that out. Right. Hélène:  So now it's time our takeaway. What is the one  thing that our listeners should remember from   this conversation? Tomas:  Yeah. I think everybody can do a piece in the  transformation management. Everybody should   reflect either you are a small company, medium  or large. I think that the world is changing   and the best way to capture all the  sustainability, the Eco Green initiative,   the diversity, the building and remote employees  and motivation hiring is to engage on that path.   So don't be afraid. And the takeaway that I  would like to say is probably one point is that:   failing is part of the journey. Allow yourself  to fail, allow yourself to miss an investment,   but in a controlled environment and  lessons-learned environment, and the growth   will come naturally. That's the biggest takeaway. Hélène:  No, no, it's, it's a little bit like, you know,  I think there's a quote from Nelson Mandela   saying that I never fail. I just learned that's  the idea if you're in control environment,   and even when you fail, you take it early  enough. So you can just, you know, adjust   the course of the journey and you don't  take too much of a loss in the process.   Well, thank you, Tomas. Thank  you. That was very interesting.  Tomas: Yeah. Sure. Thank you for having me.  Hélène: So now it's your   turn to tell us about your experience and your  challenges in the comment section on the digital   transformation front. Don't forget to subscribe if  you want to be notified when a new episode is out.   Thank you for listening. Thank you again,  Tomas for your time. And I hope you enjoyed   this episode is that's the case. Don't forget to  give us a thumb up happy sourcing to you all, bye.