The Power of Procurement - The Key Role of Technology 

Samir Khushalani, Principal, KPMG in the USA: What we do see companies do is make investments, a lot of investments, in technology today. Companies are spending billions in some cases on technology applications and tools. What we are not seeing necessarily is the return on that investment.

Oliver Klein, Senior Manager, KPMG in Germany: Procurement technology is not solving any problems, it’s just supporting what the procurement function wants to do. So first of all, you need to be very clear what your targets are, align your targets with the business goals and then start thinking about your organisation, your processes and the tools support you require.

Samir Khushalani, Principal, KPMG in the USA: Five, maybe, ten years ago, the technology could have been considered to be broken or really immature. Today, that is not the case. The problem is not with the technology; it is with the people. Tools do what they are supposed to do; it is people who don’t. And, therefore when one does embark on this initiative around technology enablement, it is really important to focus that project on changing behaviours; on people what they need to do, how they do it and drive compliance not just to contracts but also to the tools and the processes. Also, sometimes companies tend to adopt a one size fits all model and they assume that the same set of tools will be used to procure all the different goods and services in the same way. And, the reality is the way you buy something ought to be determined by what you buy. The tools today have the ability to delineate and differentiate between, say, goods and products on the one hand and services on the other. They have the ability to differentiate office supplies from more complex materials and more expensive materials. The ability to differentiate simple services from complex services and the ability to have the definition of the different buying channels at the beginning, and the enablement thereof using the different tools or the tool that you have selected is possible today and must be exploited and leveraged.

The Opportunity Cost of Not Maximising Management Information

Ray Slayford, Partner, KPMG in Australia: I think our advice certainly to procurement functions and organisations would be to invest in the right technology for procurement, both from a procure-to-pay automation and efficiency perspective, but even more so from an analytics and spend management perspective. To really understand where the organisation spends its money, who they spend that money with and the best opportunities to optimise that expenditure across the whole organisation. Technology just does that quicker, faster and cheaper than you can do that manually.

Frank Mikkelsen, Senior Manager, KPMG in Norway: The opportunity cost is, I think I would divide it in two. One is the operational opportunity costs that you have lack of transparency that can be a risk for you as an organisation, and the other is that you have the lack of operational efficiency that you use more manpower than you need to use on this operation that can be automated with using technology.

Oliver Klein, Senior Manager, KPMG in Germany: You will not be able to maximise the value contribution procurement can bring to the company because not utilising that means you don’t have the transparency, you don’t have the compliance which can be driven by procurement, you don’t have the efficiency because typically tools free up capacity from all strategic roles, so you have a lot to lose if you do not do this properly.