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Digital Transformation in Procurement 2018

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This discussion paper examines the cultural effect or influence on the development, introduction, and successful implementation of a digital strategy from four key areas; home culture, generational culture, gender culture, and senior management culture.

Through the examination of these four areas, the reader will be able to determine the alignment of their current cultural environments, and use said understanding as a predictive tool for determining their organization's digital readiness and as a result the likelihood of initiative success.

Published in: Technology
  • Very interesting. Applies not just to procurement. Anyone wishing to digitally transform their organisation shouold nread this first. I might prevent a disaster.
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Digital Transformation in Procurement 2018

  1. 1. DigitalTransformationin Procurement An Examination of Cultural Influences on The Successful Implementation of a Digital Strategy Author: Jon W. Hansen © 2018 JON HANSEN  PROCUREMENT INSIGHTS  819-230-2131  OTTAWA, CANADA  JHANSEN@PISOCIALMEDIA1.COM
  2. 2. D I G I T A L T R A N S F O R M A T I O N I N P R O C U R E M E N T A B S T R A C T » 1 ABSTRACT In what Gartner has called the Postmodern ERP Era eProcurement technology, and technology, in general, has become more accessible from both an availability and ease-of-use standpoint than it has been historically. However, does increased technological accessibility ensure success if cultural misalignment within an organization exists? This discussion paper examines the cultural effect or influence on the development, introduction, and successful implementation of a digital strategy from four key areas; home culture, generational culture, gender culture, and senior management culture. Through the examination of these four areas, the reader will be able to determine the alignment of their current cultural environments, and use said understanding as a predictive tool for determining their organization's digital readiness and as a result the likelihood of initiative success. The digital revolution has and will continue to permeate all areas of everyday life bringing with it the promise of greater efficiencies, conveniences, and savings. Everything from self-driving automobiles to at your fingertip (or voice) assistance for managing all facets of your world is now becoming a reality. The impact of technological breakthroughs in the emerging digital age is no different for the business world from the standpoint of streamlining important processes and reducing costs. However, the successful introduction of new and exciting technologies into the work environment comes down to recognizing and managing four distinct digital cultures. Digital Strategy Home Culture Generational Culture Gender Culture Senior Management Culture
  3. 3. D I G I T A L T R A N S F O R M A T I O N I N P R O C U R E M E N T T H E H O M E C U L T U R E » 2 THE HOME CULTURE Experience buying a product for personal use at home through a computer or other device has influenced procurement’s understanding and expectations for how technology can be better utilized to streamline the buying process at work. In fact, it would be reasonable to conclude that collective individual at-home buying experiences across all organizational hierarchies have contributed to the acceptance of today’s pay-by-the-drink SaaS or on-demand platforms. Based on the above, there is little doubt that home experience regarding technology utilization will to a certain extent continue to influence digital advancements in the workplace. This home experience including a sound bring-your-own-device to work policy is an essential starting point because it can remove the potential barriers to adoption of a digital transformation strategy at work as long as said workplace strategy mirrors the home experience from the standpoint of ease-of-use and anticipated outcomes. In other words, if an employee is digitally comfortable at home, then it would be logical to conclude that they would also be digitally comfortable at work even though the latter’s technology may be somewhat different and expansive. Therefore, it is important to understand the digital home culture of procurement professionals as it is a potential indicator of adaptability to technological change and advancement in the workplace.
  4. 4. D I G I T A L T R A N S F O R M A T I O N I N P R O C U R E M E N T G E N E R A T I O N A L C U L T U R E » 3 GENERATIONAL CULTURE Depending on the source and age breakdown, there are either four or five different generations that are simultaneously employed within the same organization today. Suffice to say, that a multi- generational workforce creates both complexities from a management standpoint, as well as opportunity relating to experience and diversity. The key to finding the right balance of engagement towards achieving maximum productivity and a collective organizational outcome is dependent on knowing the actual demographics of the organization’s workforce and the corresponding roles of each generational group including their core competencies. For example, the Millennial group (generally those born between 1981 and 1997) who are also known as The Net Generation, “have been surrounded by advances in digital technology” since a young age, that they are almost to the point where they cannot do their work without utilizing technology. In fact, and unlike the majority of Boomers and Generation X constituents (born between 1946 to 1964, and 1965 to 1980 respectively), whose first experience with technology likely occurred in the workplace, a “Netters” first touch was early in their school career with some starting as soon as Kindergarten. The advantages of this experience in the new age of digital transformation are obvious. However, what isn’t obvious is the impact this early exposure has had on their approach to learning and interaction across generational boundaries within the same organization. MILLENNIALS SURPASS GEN XERS AS THE LARGEST GENERATION IN U.S. LABOR FORCE U.S. Labor Force by Generation, 1995-2015
  5. 5. D I G I T A L T R A N S F O R M A T I O N I N P R O C U R E M E N T G E N E R A T I O N A L C U L T U R E » 4 When I interviewed Geoffrey Tumlin on my radio show about his book Stop Talking Start Communicating, out of the many points that stood out, was his assertion that even though we are through the Internet “more connected than ever before, we communicate less.” While Tumlin did not specifically refer to The Net Generation regarding diminishing communication abilities, Ben McNeely’s article Using Technology as a Learning Tool, Not Just the Cool New Thing, would suggest that this group surprisingly does better working with peers in person as opposed to in isolation surrounded by computers. According to McNeely, who is the managing editor of Technician, the student newspaper at North Carolina State University, The Net Generation, at least from a learning standpoint, does much better through the “social interaction that comes with being in class with their peers.” He then suggests that even though “they may use technology in their daily lives, relationships are a driving force in the learning process.” It is, therefore, reasonable to conclude that this same social tendency would also carry over into the workplace. For organization leadership, many of whom may believe the countless articles and reports that Millennials are “insecure and needy,” recognizing this social proclivity can serve as a critical bridge to introducing technology across their internal generational divides. Returning to the McNeely article, in it, he suggests that when it comes to learning, it is “usually older (people), in their 30s or 40s,” who are the ones “learning to use technology, like the Internet and computers,” to train for a new career. Mcneely further disputes older generation technophobia by referring to how his grandfather “a man who never had much formal technical education, built not one, but two, computers from parts” with the help of his (McNeely’s) cousin. It is within the context of this last statement that organizations can seek ways to capitalize on the Millennial relationship need to facilitate greater interaction with the older generations, in which the latter demonstrates both the willingness and practical knowledge to learn new technologies.
  6. 6. D I G I T A L T R A N S F O R M A T I O N I N P R O C U R E M E N T G E N D E R C U L T U R E » 5 GENDER CULTURE During a recent interview, Microsoft Canada’s new President Kevin Peesker talked about a just-released ICTC Study which reported that there are 216,000 open roles in technology, but that less than 10 percent is the “actual population of females in the tech space.” He then went on to say that “digital transformation will not happen without women.” It was a bold statement about the important role that women play in business that echoed similar sentiments to those of Warren Buffett. In a 2013 Fortune article Buffett said the following; “In the flood of words written recently about women and work, one related and hugely significant point seems to me to have been neglected. It has to do with America’s future, about which — here’s a familiar opinion from me — I’m an unqualified optimist. Now entertain another opinion of mine: Women are a major reason we will do so well.” The words of the President of a global technology powerhouse and an American icon who is considered to be one of the most successful investors in the world with a net worth of $87.5 billion is sufficient in demonstrating the increasingly important role that women play in the workplace. That said, the following insight from "the founder of modern management" will further illustrate why business in general – and not digital transformation alone requires greater participation and engagement with women. 216,000 Open Roles in Technology
  7. 7. D I G I T A L T R A N S F O R M A T I O N I N P R O C U R E M E N T G E N D E R C U L T U R E » 6 Regarding organization performance, Peter Drucker said that “companies with at least one female director were 20% less likely to file bankruptcy,” than those with none. He then went on to say that those with “higher representations of females on their boards,” overall had better financial performance.” Microsoft’s Peesker indicated that 75% of the executives in his company are women, but then added that this is the exception to the general rule in the high technology world. The only way to address this disparity and critical need according to Peesker is to bring more women into the Science, Technology, Engineering, and Mathematics or STEM fields. The above statements raise important questions regarding present organizational culture, and whether or not it is conducive to both attracting and retaining top female talent? Elizabeth Ames, Vice President, Strategic Marketing, and Alliances at the Anita Borg Institute believe that the answer starts with a commitment. Specifically, a commitment that is born out of a requirement as opposed to being the “fair thing to do.” In the case of digital transformation, companies need technical talent. According to Ames, “women represent half of the intellectual capital. If they want to attract the best and the brightest, there has to be a commitment from the top to increase the percent of women at their companies.” From the standpoint of the gender culture, the real question is not so much one of simply finding ways to bring more women into the fold, but one of leadership willingness to create the environment that draws more women to the digital field. 10 Percent Is the Actual Population of Females in The Tech Space
  8. 8. D I G I T A L T R A N S F O R M A T I O N I N P R O C U R E M E N T S E N I O R M A N A G E M E N T C U L T U R E » 7 SENIOR MANAGEMENT CULTURE A high level of senior management commitment to creating a culture that brings more women into the digital world is not the only area on which leadership should focus if they want their organizations to implement a digital strategy successfully. There needs to be a greater commitment to what a December 2017 Harvard Business Review article called “digital reinvention.” In their article What Successful Digital Transformations Have in Common McKinsey’s Jacques Bughin and Tanguy Catlin talked about their research on how digitization can hurt companies that “neglect to embrace digital innovations.” According to McKinsey’s research involving 1,650 incumbent or industry-leading firms from around the world, less than 20% of these companies take the path of “digital reinvention.” Based on these results, the management consulting firm concludes that “despite warnings from ourselves and others, most incumbent firms are failing to adjust to the digital era.” When it comes to an organization’s supply chain, and despite what McKinsey cited as the recognition on the part of participating firms regarding the potential impact that digital reinvention will have on the growth of revenues and profits, only 2 percent report that the supply chain is part of their “forward-looking digital strategies.” Despite the clear returns on digital reinvention, a transformation in senior management culture must occur before digital transformation, and the associated benefits can become a reality. 20% 2%
  9. 9. D I G I T A L T R A N S F O R M A T I O N I N P R O C U R E M E N T C O N C L U S I O N » 8 CONCLUSION In his article Transform Or Be Transformed: The New Digital Reality Microsoft’s Peesker talked about how digital transformation is “one of the hottest topics globally,” and that the World Economic Forum “predicts that the digital economy will be worth over $100 trillion by 2025.” He then goes on to say that with this great promise, there is an even greater responsibility for business leaders to be champions for digital reinvention. However, to become their organization's digital champions, senior leadership must first oversee a cultural transformation along the lines of a Lenovo and look beyond the technology to ensure that the right people are in place to transform objectives into the initiatives that will lead to tangible outcomes. The need for cultural alignment in the four key areas within an organization discussed in this paper is the first and most important step to not only procurement’s digital transformation but business in general. $- $20 $40 $60 $80 $100 2018 2019 2020 2021 2022 2023 2024 2025 Trillions

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