Digital procurement and legacy systems: finding the right balance

Digital procurement and legacy systems: finding the right balance

July 2, 2020 Off By Aval Sethi

Analysing the challenges and impact of digital procurement on legacy systems is an essential aspect of digital transformation for a business looking for growth. By implementing various types of procurement automation strategies in tandem with the current regulations and business climate, companies can become much more capable of responding to fluid changes in the business environment.

With the application of disruptive technologies, transactional procurement is becoming more automated, while strategic sourcing is becoming predictive with the supplier chain-management relationship gaining momentum and becoming more pro-active. The scope of a business is, in fact, enhanced through digital procurement solutions that enable order to be brought into massive unstructured data sets and give access to unavailable data. Consequently, the value of legacy systems is enhanced by employing emerging technologies.

However, since many digital procurement solutions are available online, companies often struggle to find the right strategy in keeping with the investments made in the legacy systems and keeping pace with the new technologies. What is important to note is that regardless of the current situation, it is important for the core, emerging and maturing technological frameworks to come together and enable effective strategising. While many of the emerging and maturing solutions can be used readily, the emphasis should be on the current level of core technological maturity that will help in a revolutionised digital transformation. This is important because sans digital transformation, established businesses will not be able to move up the ladder.

Procurement leaders can start with procurement automation covering aspects such as e-sourcing, e-invoicing and spend analytics and contract management. These are some of the essential areas that require high amounts of capital spending as well as work on integrated systems. Using the leapfrog approach, businesses with minimalist core technology investments can find favour in maturing solutions that won’t need core technology investments to be made.

Targeted investments can be planned to plug gaps and drive more value from legacy investments in the context of the moderate level of existing investment. Using the combination of emerging and maturing technologies by businesses that have substantial core technologies can help differentiate their resources and teams as well as accelerate value capture.

Since many of the emerging and maturing technologies are not intensive in terms of resources employed or utilisation of time, the payback is more likely to be measured in months rather than years. Therefore, businesses should gather their act together really fast, seek a larger vision and start small from the ground.

  • Seeking a larger vision or thinking big: This involves being able to continuously innovate, gauge the value of investments and take advantage of insights that can help the business in the procurement journey.
  • Starting small: It is necessary to focus on one or more projects so that there is more accountability in the whole digital procurement process. This will also enable the business to prioritise in terms of speed, cost and impact.
  • Gathering their act together really fast: This involves adding value to the procurement journey through capitalising on a quick favourable result that can help the business considerably at certain periods of time.

While certain businesses interested in cost leadership can begin their journey of digital procurement through strategic sourcing with the available data, transactional procurement can enable businesses to automate certain processes and redeploy resources in regards to major pain areas. The supplier risk management can be taken care of if businesses automate risk sensing in order to get early warnings about issues concerning suppliers, ecosystems or regulations concerning the stakeholders.