The Business Value of Process Orchestration in Procurement
September 18, 2023
September 18, 2023
This is a republished version of a deep-dive essay from Joël Collin-Demers, author of the Pure Procurement newsletter. Joël has been writing about the value of Intake Management and Process Orchestration technology in Procurement for some time now, and as he put it on his site, he was impressed with the capabilities of the Tonkean platform. We read and enjoyed his take on the ProcureTech space. We agreed to sponsor this article to make it free for his subscribers.
In the following article, Joël offers his take on the potential of Process Orchestration technology and offers advice for building a business case for it.
Navigate to the original post here. And to learn more about what process orchestration can do for your procurement team, download our updated Procurement Handbook.
In an environment where just ensuring continuity of supply is a challenge, organizations keep asking more of their Procurement teams. Procurement should aim to reduce costs, reduce risk, increase organizational resiliency, stimulate and facilitate innovation, find more sustainable and diverse suppliers, etc. However, Procurement department budgets are not growing in line with these new asks…
In the past decade, Procurement has turned to software to tackle this productivity challenge with mixed results. Solution functionalities have exploded to cover all the scenarios under the sun. However, organizations continue to struggle to meet digital transformation project objectives. Project failure rates consistently hover around 80% in survey after survey of Procurement executives. Why?
Well, the end user, your colleagues in the business, still needs extensive training to adhere to your company processes. They have to bend to the applications instead of the applications catering to their needs. Procurement applications still don’t provide an adequate user experience to produce results.
But what if we are looking at the problem from the wrong angle? Procurement should provide a great user experience across all procurement processes end-to-end. Would this deliver the results we are looking for? This is the promise of Process Orchestration.
2. The Current State of the Procurement Application Market
As it stands today, there aren’t very many gaps left in the Procurement software application market. There are currently 400+ solution providers offering solutions that span all the verticals in the end-to-end Procurement process (e.g., Spend analysis, sourcing, contract management, procure-to-pay, accounts payable, supplier relationship management, etc.). If you go out to market today, it’s likely you can find the tools you need to develop the capabilities required to reach your objectives.
These solutions fall into 3 main categories: ERP, Source-to-Pay Suites and Best-of-Breed applications:
ERP systems are the backbone of your company’s technology stack as they provide the integration needed with the other functions of your business (production, sales, inventory management, accounting, etc.). These solutions typically only support Procure-to-Pay processes.
Source-to-Pay Suites are fit-for-purpose Procurement software suites that fill the gaps left behind by ERP as it relates to supporting the other important processes executed by Procurement functions, as mentioned above.
Best of Breed Applications are also fit-for-purpose Procurement software but they will only focus on 1-2 verticals (processes) in the Procurement value chain, trying to fill gaps left behind by both ERP and S2P suites (think: specialized sourcing or contract lifecycle management application).
Over the past 20 years, organizations have been “stacking” ERP, S2P and Best-of-Breed applications to get the functionality needed to achieve their objectives.
This poses a challenge as each new application in your stack introduces added complexity. For example, all of these applications need to be technically integrated so that each one has the data required to work optimally (e.g., all these applications typically need a copy of the vendor master record).
Quite simply, technical integration is the process of enabling independently designed and developed applications to work together seamlessly (think: setting up an interface to get a purchase requisition from one system to another).
For successful technical integration, you need to define the ETL process for each interface (Extract, Transform and Load). This process will extract the data from the first application and convert it into a format the second application can consume. Best practices for this process are known and tools are readily available (e.g., middleware).
The need to integrate applications isn’t new nor is it unique to Procurement. However, technical integration remains one of the most complex parts of application deployment projects. The saving grace is that the solution (middleware) and process (Extract, Transform and Load) is known and proven. Success comes down to execution.
So, if we have the solution required to technically integrate our Procurement applications, why do Procurement organizations still struggle to meet their digital transformation project objectives? Well, because the above only caters to one of the three pillars of the classic People, Process & Technology triad: Technology. To ensure our processes and guided buying experiences cater to the other two dimensions (people and process)—and, in turn, to ensure our procurement processes serve to create business value—there’s a missing piece… Process Orchestration.
3. The Challenge: Operationalizing Procurement Policies and Strategies
When your tech stack is fully integrated, you will still experience benefits leakage from the People and Process dimensions. Why? In short, getting hundreds or even thousands of people to follow an application-supported process in the same way is incredibly difficult. Turnover, role changes and knowledge erosion all negatively affect your organization’s ability to use your various Procurement applications optimally. Furthermore, generic processes that aren’t differentiated based on the functional context and needs of a user simply cause frustration. Technical integration is necessary but not sufficient to achieve your objectives.
More applications mean more complexity employees must master to be successful:
Multiple user interfaces providing a poor user experience
Different terms for the same concept across applications (e.g., Plant vs. department vs. business unit)
Lack of clarity on what inputs are required by the next steps of the process
Lack of visibility over the end-to-end Procurement process due to fragmentation in different applications
As people arrive at your company or change roles and responsibilities, the deck is stacked against them. First, they need training to learn how to execute your processes within your different applications while respecting your Procurement policies and strategies. Second, they have to climb a steep, difficult learning curve as training is typically only given once without much reinforcement. This leads to subpar comprehension of the process and “frustration with Procurement” becomes the default business process.
As for employees who have been in their roles a long time, they are either still operating the applications as they first learned how to use them or, if they don’t execute purchasing tasks often, their knowledge has eroded to the point of a new employee. The key takeaway is that you are always fighting an uphill battle against the knowledge and skill of your user population to ensure they follow Procurement processes as they were designed. Constantly training to combat decaying user adoption of your processes, the chief measure that translates to compliance and value, isn’t viable. It’s a losing battle.
This is where Process Orchestration technology like Tonkean comes in. Essentially, it brings your static business process and Procurement policy documentation to life by integrating it directly into the applications your employees use, allowing procurement teams to coordinate or “orchestrate” processes across applications and people.
For example, a user can launch a vendor creation request from Teams, Slack or wherever they like to work. Depending on the context of their request, Tonkean will notify the appropriate stakeholders and execute transactions on their behalf with the information they provide.
This reduces the need for constant training by simplifying the user experience to a conversation. Employees don’t need to be trained on how to follow procurement processes because the processes meet them where they are.
Taking a step back, process orchestration platforms allow you to tailor these kinds of experiences for employees across the procurement lifecycle. In a nutshell, they provide you a means of making the most efficient use of your organization’s moving parts—its people, processes, applications, and data—in accordance with your internal policies.
4. The Solution: Guided Procurement via Process Orchestration
While carrying out regular business operations, the same business user may need to:
Request Procurement’s help to source a new supplier
Request changes to a vendor master record
Buy office supplies
Return goods to a vendor
Using a process orchestration tool, you can create workflows that facilitate all this for employees at scale, across teams and environments — as a maestro might orchestrate a symphony’s component parts to create an artistic whole.
By creating executable process models (workflows) for all of these different use cases in a fit-for-purpose tool, you drive user behavior and adoption without the need for extensive training. You meet the user where they are in terms of comprehension. This leads to higher compliance with your Procurement policies and strategies, maximizing the value extracted from your existing applications. The only way organizations can begin to increase process adoption is by creating process experiences that are both easy to follow and that provide real value to requesters.
But how can adding another system to the mix reduce complexity? We’ve just made the case for the opposite…
Platforms like Tonkean effectively sit above your other tools. The point of process orchestration and workflow automation is to help you use your existing tools better together. To get the most out of each one.
And for employees, this actually reduces the number of user interfaces they need to learn how to navigate, because it allows them to engage procurement processes from the tools they already spend time in. You reduce the total number of applications in that user’s world without losing any of the functionality you need in the background.
The key to making this work is ensuring your process application and workflow automation tools are truly connected with all your organization’s other applications, communication tools, and data systems in the back end. In our vendor creation example, this would mean that you’ve connected your ERP system to the Process Orchestration tool. Then, when all the information is gathered from the appropriate stakeholders (e.g., requester, finance, vendor, risk, legal, etc.), the Process Orchestration tool sends the vendor information to your ERP to create the vendor master record without anyone ever having to sign into ERP. The vendor number created in ERP is sent back to the Process Orchestration tool and users don’t have to understand what happened in the background. Goodbye to the perception of complexity.
If you can do this for all the major use cases that require the implication of average users, you’re on your way to solving the end user knowledge decay problem.
5. Building the Business Case for Process Orchestration Software
As with any technological change, the key to success is to start small. This minimizes the risk required to prove the concept. Once the solution and its benefits are confirmed with a smaller scope, you can deploy more processes to more people in your organization. Process Orchestration as defined above is possible with tools available today, such as Tonkean. The challenge, as always, is integrating this technology into your specific environment.
Here’s how you can maximize chances of success:
Start with a process currently full of pain points that spans multiple systems, multiple stakeholders and contains manual steps (e.g., vendor returns coordination)
Model the process within the tool, determining the inputs you require from users at different steps in the process. In parallel, connect the required back-end systems to your Process Orchestration tool. Organizations like Tonkean do this for you. In other cases, you might need your IT to help.
This allows you to create/fetch data and/or transactional documents in the source systems directly from the Process Orchestration tool.
Select a motivated cohort to test the tool in their day-to-day for this new process. Craft a minimal communication and training plan to ensure people understand the objectives, their role and the targeted benefits (“What in it for them”). Create buy-in (“We want you to be able to request a vendor return directly from Teams”). Show them how to use it. This will be quick!
Gather feedback from an initial cohort with usage and adjust your process as needed in the tool.
If you did this right, processes will execute themselves as you monitor from your “Procurement traffic control tower” and address exceptions. Users will be asking to deploy more processes within the tool. You can grow the scope in processes and users from there according to a business case that makes sense (e.g., the cost of modeling/deploying a new process or cohort vs. the benefits associated to process execution within the process orchestration tool).
Typically, these tools will charge you based on the number of processes / activities supported by the tool and/or usage volume for your modeled processes. This can be built into your cost assumptions of deploying a new process in a Process Orchestration tool.
Additionally, Process Orchestration tools are not just for Procurement. Your business casecan include other functions who also want to coordinate cross-functional processes. Build a coalition!
Employee experience matters. Happy employees is a noble goal in and of itself but it’s much more important than that. Why? Because positive employee experience drives user adoption of your processes. This translates into compliance with your policies and strategies which drives value and, ultimately, profit for your company. Good employee experience is simply good business.
By leveraging Process Orchestration technology in Procurement, you maximize the return on investment of your existing applications and technology. Leverage Process Orchestration. Liberate yourself from silos and firefighting.