Built to Last:

Three Paths to a Successful

Procurement Transformation

Underwritten by:




Andrew Bartolini,
Chief Research Officer
Ardent Partners
July, 2013

Built to Last: Procurement Transformation Part 2



2013 Ardent Partners, Ltd. www.ardentpartners.com

1
REPORT SPONSORSHIP
The sponsor named below commissioned Ardent Partners to write this report. While the report
topic was agreed upon in advance, Ardent singularly determined the research approach taken and
the reports final content including its ideas, strategies, case studies, and recommendations. The
views and opinions in this report represent those of Ardent Partners at the time of publication. The
contents of this research report are the exclusive property of Ardent Partners. Please direct any
comments or questions regarding our research approach and sponsorship policy to Ardents Chief
Research Officer, Andrew Bartolini at abartolini@ardentpartners.com and/or 617.752.1620.
Sponsor:



At Zycus, we are 100% dedicated to positioning procurement at the heart of business
performance. For more than a decade we have been the world's most trusted leader in Spend
Analysis. With our spirit of innovation and a passion to help procurement create even greater
business advantages, we have evolved our portfolio to a full suite of Procurement Performance
Solutions including Spend Analysis, eSourcing, Contract Management, Supplier Management, and
Financial Savings Management. www.zycus.com
Contact:
For further information, please email information@zycus.com.









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There are many ways to begin a procurement transformation - an initiative may start with a focus in
either strategic sourcing or operational procurement, or it may pursue a Big Bang strategy that
pushes forward all components of the function at once. But, no matter the chosen plan, one unifying
characteristic of all successful procurement transformations is the holistic, long-term view of its
systems, people, and processes that was taken from the start. This report will help enterprises build a
strong foundation to transform their procurement departments into Best-in-Class operations by
analyzing three current state situations that these groups commonly face.
Over the past five years, the vast majority of procurement professionals have
strived to thrive in less-than-ideal global economic conditions, forced to do
more with less while pressured to constantly rationalize and evaluate their
existing sourcing, contracting, and procurement strategies and tools as a
means of delivering increased value across the full scope of their operations.
Within this business landscape, the importance of procurement
transformation and continual improvement to the larger enterprise is as
great as it has ever been. This Ardent Partners research report is the second
in a two-part series developed to help procurement organizations design, plan, build and execute
a proper procurement transformation program and utilize leading-edge strategies to broaden
their scope of influence and deliver greater value to the enterprise.
The Journey Begins: You Are Here
For most Chief Procurement Officers and their teams, transforming the procurement department
is more of a journey than a destination. And, while the timing of when a transformation begins and
what strategy will be pursued each fall within the control of the procurement team, the actual
starting point (or where) for a procurement transformation journey literally depends on where the
department is today - its "current state." The variety and complexity of the procurement function
and where it sits within the larger enterprise give rise to dozens if not hundreds of unique current
state situations. For the purposes of this report, Ardent Partners will review three common current
state scenarios and discuss and present a recommended path for each.
Paths of Glory
Within each scenario described below, there are a series of key considerations which must be
reviewed and several critical decisions that must be made to ensure that the full procurement
transformation not only starts on the right path, but also, maintains its course and speed.
The Greenfield Scenario
Current State: This is the very straightforward scenario where there has been little-to-no focus or
investment in the procurement function. In this situation, the procurement department may be
centralized or decentralized, but it operates primarily as a tactical back-office function devoid of

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any strategic engagement or process automation. The catalyst for change in this situation is often
the hiring of the enterprise's first Chief Procurement Officer ("CPO").
Key People Considerations: Since the department has never had an experienced procurement
executive at its helm, it is highly likely that the sourcing and procurement competencies of the
staff are, in general, lacking and substandard to a Best-in-Class operation. A staff that has only ever
functioned in the background will not be brimming over with strong leaders.
Key Process Considerations: Lack of visibility across the operation and limited collaboration
within it will mean that most department processes will lack standardization and that "best
practices," where they exist, will not be current to the times. Slow adoption of any new processes
should be expected.
Key Technology Considerations: The procurement organization will be manually-driven and
largely lack the skills and experience needed to properly select, deploy, use, and optimize a suite
of supply management solutions. While resistance to new technology may be seen within the
business, the heaviest resistance to new technology may arise, surprisingly, from within the
department.
Key Stakeholder Considerations: Unless they have other external experiences, the entire
enterprise hierarchy from the executives on down have never seen a high-functioning
procurement operation at work. The concept of a procurement transformation may resonate, but
there will be greater need to "see" the proof in actual results like savings and quality gains.
Critical Decision Points: Since there are so many areas in need of major improvement, the critical
decision is not deciding what to do (everything!), but rather, in which order to do them. The
prioritization of focus, energy, and resources on the areas that will provide the greatest near-term
impact without undercutting the long-term vision will be critical in earning the trust of the
organization and building momentum over time. The marriage of new processes with a new
technology suite and a capable staff can take time. In the Greenfield scenario, procurement
leaders must be able to perform a quick diagnostic of the entire organization to determine the
best strategy to improve and/or rationalize the staff while maintaining current operating levels.
They must establish whether or not the current staff is equipped to drive the transformation or if a
third-party partner is needed. Understanding the required budget as well as the level of executive
and business support that exists for the initiative will help determine how aggressive the team can
be and how many phases should be planned.
Typical CPO Path: The new Chief Procurement Officer in this scenario will typically choose one of
two paths to start, either: (1) Start with an investment and focus on strategic sourcing solutions
and processes to drive savings that will fund the ongoing initiative and drive engagement with
the larger enterprise which will build credibility. After sourcing is in good shape, the enterprise is
ready to tackle operational procurement, or, (2) Start with a move to clean up operational
procurement and gain visibility into spend and processes and drive compliance with the launch of

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a procure-to-pay (P2P) system. Once visibility has been established, the team can focus on
smarter sourcing.
The "Stalled Initiative: Substandard Suite" Scenario
Current State: In this scenario, a procurement transformation was begun, but is now fully stalled.
Procurement was able to invest in and launch a suite of solutions, but, for a variety of reasons, the
suite was not well-utilized and the early momentum of the initiative has faded. Procurement is no
longer advancing; it may be treading water, but is, in all likelihood, eroding support and value.
Key People Considerations: Many in the department will be familiar with basic source-to-settle
solution functionality, but, they will have been burned by the investment of their time and energy
into learning and using sub-optimal technology. Once bitten by poor technology, they will be
twice as shy to support, deploy, use, and optimize a new suite of solutions.
Key Process Considerations: With a solution suite in place, the organization has been through a
process-mapping exercise that has not yielded positive results. Process owners will likely blame
the technology for the issues, however, this does not mean that the processes cannot be
improved.
Key Technology Considerations: A major investment in a supply management solution suite did
not yield the desired results. One likely culprit is that the solutions did not do what they were
expected do from a functionality, integration, and usability standpoint. The technology market
has seen dramatic innovation in all of these areas in just the last few years: a clean break is needed.
Key Stakeholder Considerations: Whether there is a new procurement leadership team or not,
the procurement department expended significant political capital to get executives and the
larger end-user base behind a solution suite roll-out, with poor results. The stakeholders will
wonder why this time will be any different.
Critical Decision Points: There can be any number of reasons why the launch of a source-to-settle
solution suite failed the first time. It will be critical for the Chief Procurement Officer to have a very
clear understanding of what went wrong and why and develop a plan that addresses each of the
issues head-on. The CPO and department must now prove to the key stakeholders that there were
significant lessons that were learned and that this time will be different. When identifying the root
cause of an unsuccessful transformation/technology launch, the CPO must be careful to avoid
casting full blame in any specific direction. All of the groups that "failed" last time should not be
alienated and must be fully-engaged with the new initiative. While it may be difficult to "walk
away" from a major (and possibly recent) technology investment, those costs are sunk, and there
is no benefit to throw good money after bad into a poor system and failing program.
Typical CPO Path: Once the decision has been made to move in a different direction and "rip and
replace" the current system, many CPOs will choose to replace the entire current system in one fell
swoop. The new and improved solution suite will have to match and improve upon all of what the

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current system supports. CPOs may choose a single "cut-over" from the old system to the new but
maintain both during a period of transition. Additionally, the "cut-over" process may be rolled out
by region or business unit.
The "Slow Initiative: Death by A Thousand Point (Solutions)"
Current State: In this scenario, a procurement transformation was begun, but has failed to
achieve its initial goals. The procurement department has generated some success via the
deployment of one or more point solutions but ultimately, the department lacks cohesion and
appears unable to get to the next level of value. All of the considerations are likely to be much
more complex since failure and success are likely interwoven across each area.
Key People Considerations: There will be top performers and laggards on the same team
working on the same things and managing the same processes and stakeholders. The power users
are being slowed by those resistant to change. One issue may be the lack of a clear and shared
vision for the department.
Key Process Considerations: The process problems may not be global in nature, but rather at the
sub-process and user level. While every process should be streamlined in the new program, the
emphasis should be on improvement and not simply change for change's sake.
Key Technology Considerations: The issue is not whether or not a point solution can drive value,
but rather, can it add value to entirety of the source-to-settle process. A lack of cohesion across the
current systems (something that often stems from a lack of transformation planning) is now or
soon will be a major hurdle to driving more value. It is an issue that should be addressed head-on.
Key Stakeholder Considerations: The stakeholders will likely have very mixed experiences. Some
will be very pleased with the current program and confused as to why a change is needed, while
others will be frustrated by the current program and disinclined to engage on a new initiative.
Critical Decision Points: In this scenario, the procurement department in all likelihood does not
need to conduct a major departmental overhaul. Rather, the leadership must surgically strike to
identify and eliminate the negative, invest in the worthwhile all while leveraging the positive (to
lessen the amount of perceived change) into the "revitalization" effort. A holistic view across
processes and systems will likely result in the move to a single solution suite. There may be a
short-term erosion of the strongest areas, but the overall long-term gain in value should more
than outweigh that.
Typical CPO Path: This is a challenging situation for any Chief Procurement Officer, particularly
those who have tenure and ownership of the original transformation effort. The CPO will
effectively choose to go "all-in" with a single solution provider, requiring proper diligence and
analysis. The procurement leadership with executive support will also develop and enact a
sophisticated communication plan that applauds the program's many successes, but challenges
the organization to do more.
GREEN FIELD
SCENARIO
STALLED
INITIATIVES
SLOW
INITIATIVE
Lack of visibility and
collaboration
Manually driven
Oblivious to what
procurement automation
can do
To decide in which order
to do things as against
what all to do
Skeptical towards new
technology
Lacks extensive process
mapping
Automated but lacks
integration, usability and
function
Skeptical towards new
technology
Understanding what went
wrong
Lacks cohesion and is not
streamlined
Automated, but no synergy
Resistant to change, either
because of comfort zone or
because of skepticism
How to revitalize the
existing set-up
Current
Situation
Whether to use internal
resources or external
ones for procurement
transformation
Whether to walk away
from or to improve the
existing set-up
Whether to switch to a
single suite or not
Downstream: Get house in
order
Upstream: Drive savings
that will fund the
initiative
Root cause analysis
What went wrong
Why
Who
What will be different
Sophisticated messaging
Surgical strike
Eliminate the negative
Revitalize the positive
Go All-in with a
provider
People
Technology
Critical
Decision
Points
Stake-
holders
CPO
Path
Processes
Lack sourcing or
procurement competency
Lack of vision to reach next
level of procurement
performance
The Journey: Procurement Transformation Scenarios
Some success
achieved but full
potential not realized
Little-to-No
investment in
procurement function
Existing suite does
not deliver on key
objectives

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Conclusion
As a procurement transformation initiative advances and matures, the benefits gained from an
expansion of the initial program including investments in additional resources and technology
can deliver accelerated returns and help enterprises ultimately achieve procurement excellence.
Enterprises that craft the right procurement transformation blueprint and build the right
foundation increase the speed and likelihood of their success. The realization of a Best-in-Class
procurement department that is "built to last" requires sponsorship, effort, collaboration, vision,
expertise, and a holistic view of processes and systems with a technology infrastructure that can
support that view. And, as Ardent's research has shown, time and again, a successful procurement
transformation can have a lasting, positive impact on business operations and results. If you build
it, build it to last.

This is the second and final installment of the "Built to Last" series focused on helping enterprises build a
strong foundation to transform their procurement departments into Best-in-Class operations.

Built to Last: Procurement Transformation Part 2



2013 Ardent Partners, Ltd. www.ardentpartners.com

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APPENDIX
ABOUT ARDENT PARTNERS
Ardent Partners is a Boston-based research and advisory firm focused on defining and advancing
the supply management strategies, processes, and technologies that drive business value and
accelerate organizational transformation within the enterprise. Ardent also publishes the CPO
Rising and Payables Place websites. Register for exclusive access (and discounts) to Ardent
Partners research at ardentpartners.com/newsletter-registration/.
ABOUT THE AUTHOR
Andrew Bartolini, Chief Research Officer, Ardent Partners
Andrew Bartolini is a globally-recognized expert in sourcing, procurement,
accounts payable, and supply management. Andrew focuses his research and
efforts on helping enterprises develop and execute strategies to achieve
operational excellence within their procurement and finance departments.
Andrew is also the publisher of CPO Rising, the first independent media site
written for and about Chief Procurement Officers and other supply
management executives (www.cporising.com).
Advisor to CPOs and leading solution providers alike, Andrew is a sought-after presenter, having
lectured and presented more than 140 times in seven different countries. Over the past seven
years, Andrew has benchmarked thousands of enterprises across all facets of their sourcing,
procurement, accounts payable, and supply management operations and his research is currently
part of the Supply Chain/Management curriculum at several US universities. He actively covers the
technology marketplace as well as trends in sourcing, procurement, supply management, and
accounts payable and has been published or quoted in leading business publications including
The Wall Street Journal, Business Week, Investors Business Daily, Forbes, and Fortune, as well as
the major trade publications focused on supply management.
Prior to becoming an industry analyst in 2006, Andrew developed, packaged, deployed, and used
supply management solutions on behalf of enterprises in the Global 2000 while working for Ariba
and Commerce One. Additionally, his experience in strategic sourcing (where he managed
sourcing projects totaling more than $500 million in aggregate client spend), business process
transformation, and software implementation provides a real-world context for his research and
writing.
Andrew has been named a Pro to Know by Supply and Demand Chain Executive three times and
holds a B.A. in Economics from The College of the Holy Cross and an M.B.A in Finance from Indiana
University. He welcomes your comments at abartolini@ardentpartners.com or 617.752.1620.

Built to Last: Procurement Transformation Part 2



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REPORT METHODOLOGY
Ardent follows a rigorous research process developed from years of experience conducting
research on the supply management market. While the report topic was agreed upon in advance
with the sponsor, Ardent singularly determined the research approach taken and the reports final
content including its ideas, strategies, case studies, quotes, and recommendations. The views and
opinions in this report represent those of Ardent Partners at the time of publication. The contents
of this research report are the exclusive property of Ardent Partners. Please direct any comments
or questions regarding our research approach and sponsorship policy to Ardents Chief Research
Officer, Andrew Bartolini at abartolini@ardentpartners.com and/or 617.752.1620. For more
information on this and similar topics, please visit www.cporising.com and the research library at
www.ardentpartners.com.
















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