Strategy Phase

Although many companies have established annual retreats and strategic planning days to help executive teams develop their marketing strategy (and therefore often mistakenly believe that they have already done the “strategic planning stuff”), it is important that before beginning any major enterprise-wide e-procurement initiative, the key organizational leaders convene to discuss and agree on the way forward. Usually completed in a workshop setting with 10 to 12 key organizational leaders attending—who should be all company officers, including the CEO—this forum provides an opportunity for the executive group to become educated on the many aspects of e-procurement; to debate and agree on the case for action; to consider the need for business process restructuring, supplier involvement, and risk and change management; and to reach consensus on the basic scope of the project, including cost, resources, and timescales.

The strategic alignment workshop (which is described in much more detail in Chapter 13) should begin by examining the key issues facing your company over the next one to three years, and should include discussion and agreement on

• The core competency and focus of the company over the next few years

• How your products and services may change during that time

• Key ways in which you will differentiate your products or services from those of your competitors

• Future markets and possible growth, scale, and geography considerations

• Critical changes occurring in terms of customer support, standards, or expectations of quality

• Issues concerning procurement of ORM, MRO, and direct goods, including inefficiencies, lack of leverage, maverick buying, and lack of compliance

• The changing nature of your relationship with vendors and partners, and how these relationships may be affected by e-procurement and strategic sourcing

• How e-procurement plans might affect the supply chain: purchasing, inventory management, supplier management, logistics, and product design

• Business systems support architecture requirements (AR, AP, GL, performance tracking, reporting)

• Coordinating your own, and competing with other ongoing, planned initiatives

• Prioritization, project risks, and change management issues

• Project planning, including timescales, resources, and budgeting

Ultimately, the output from the workshop becomes a foundationplanning document that serves as a “constitution” for your company’s e-procurement project. But the real value of this early strategic planning comes from providing a forum for discussing and clarifying the scope and goals of the project, gaining consensus at the executive level on all major project issues, and providing those involved—now and in the future—with a clear understanding of why the project is necessary, what you are trying to achieve, and how you believe it should be done.

Far too often, this type of strategic workshop approach is seen as unnecessary or simply too uncomfortable for the executive team, who often have long-running grievances that they fear may erupt into open conflict. Probably 8 out of 10 projects instead drop immediately to the tactical level, with responsibility for moving straight to software selection being given to a small team from IT and procurement. This invariably means that the e-procurement project is seen as little more than a technology implementation, without the strategic context, focus, or direction necessary to ensure a successful outcome.

It is important for project change management that this executive group continues to participate in the process as an active steering committee. This will help to keep them informed about—and engaged in—the project. It is also better for them and their employees if these same organizational leaders are responsible for communication and sponsorship of the project within their sphere of influence.