Procurement Performance Management is gaining traction as an extremely effective approach to managing the span of operational procurement project tracking and reporting to the strategic measurement of value creation and future planning. Because procurement teams must execute a variety of tasks across the source-to-pay process, it has been challenging to access dedicated reporting without an easy way to bring all the data together into a single source of truth. Procurement is in need of a central, transparent hub where they can gain a true picture of the sourcing pipeline and easily view project progress.
In this two-part blog series, we’ll review options for achieving Procurement Performance Management (PPM) and recommend a seven-step checklist to help you weigh the decision of either buying a solution like Per Angusta for PPM versus building it yourself or via a hired IT consultant.
Why is Procurement Performance Management Important?
With PPM, Procurement teams have a clearly defined approach to managing their internal processes while making their progress visible to the business.
Key elements of a Procurement Performance Management approach include:
- Project management, from planning to tracking, with management oversight to maintain the strategic agenda
- Reporting capabilities that communicate the progress toward key KPIs
- Value tracking to demonstrate financial and non-financial gains made by Procurement projects
- Alerts and notifications to trigger attention and action for projects when necessary
- A single source of truth where all metrics can be viewed and shared with internal stakeholders
- Integration options to connect with essential data in other procurement tools
Implementing Procurement Performance Management
Eventually, every organization will seek to implement PPM, as many visionary CPOs worldwide have already adopted this approach and proven its value. Once you have decided to take the leap, you have to select your path forward to achieve your PPM goals. As organizations evaluate their needs, the question arises: “Do we build or buy?” Often, internal management first wants to take a look at current tools and processes to see if there’s a solution to be found there.
The Temptation to Improve Existing Tools
The capabilities needed for Procurement Performance Management are often viewed to be easily within reach, and some may feel that existing tools, such as Excel, Google Sheets or general project management tools, can be used to make a PPM solution of your own.
Or perhaps the argument is made to customize or optimize those existing tools to find a way to make them work for the purposes of PPM, especially if there is a belief that these tools will be cheaper because you have already made the investment.
However, none of those generic tools are purpose-built for procurement, and they certainly don’t offer any degree of scalability, data governance, inherent procurement best practices, or S2P integration connectors that can be found in ready-made PPM software platforms. Nearly all procurement teams will quickly recognize that they can’t make proper PPM happen using a mixed bag of these incumbent workplace tools.
So now, the solution planning moves to a truly “bespoke build” vs. the choice of “buying a PPM platform” discussion.
The Temptation to Build
It’s common for internal management to lobby for engaging IT to build a solution that will fit your needs. The internal argument of not buying a dedicated solution most often revolves around cost control or the tempting prospect of creating a custom solution for your exact specifications (or a combination of both). But the costs associated with building can quickly escalate in areas that are not associated with the purchase of licensing and implementation.
Money is often spent in areas that simply aren’t expected or measured.
So what are those “gotcha” areas that every procurement team needs to consider with a DIY approach?
In Part II of our blog series, we will present that seven-point checklist to help you make the best decision.
In the meantime, learn more about our Platform or request a 30-minute demo of our product.