What are the key barriers in digitising organisations’ procurement function and how to

overcome them
Bienhaus, F., & Haddud, A. (2018). Procurement 4.0: factors influencing the digitisation of
procurement and supply chains. Business Process Management Journal, 24(4), 965–
984. https://doi.org/10.1108/bpmj-06-2017-0139

This part will show some simple barriers that arise whilst explaining approximately procurement
digitalization and how to be conquered them.

Considering the enterprise itself most candidates spotlight that their enterprise is not always
geared up for digitisation as a result of 3 main factors. First, no longer all corporations have
recognised the innovative impact of digitisation thus far because supply chain standards and
associated chance management gear aren't aligned to digital tactics. Second, most of the
candidates spotlight a lacking digital strategy of their corporations to get a clear photo of the
impact for all department based on the vision and mission of the organisation. Third, personnel
within the corporation do not have the precise resources, capacities, in addition to abilities for the
virtual transformation.

The used construct to examine potential barriers to digitising organisations and ways to
overcome them consists of ten items including; existing infrastructure within the organisation
can handle the digital transformation; existing job functions, roles, and descriptions can be
transferred to the new role of procurement; leadership management within the organisation
supports “creative freedom” for creativity and innovation; suppliers within the organisation are
already included in the process of digital transformation; the communication structure within the
organisation is lean and flexible; the organisation wants to implement digitisation and has no
uncertainties and fears; the organisation has a risk management tool in place concerning the
digital transformation; the organisation has a clear digital strategy; employees within the
organisation have enough resources and capacities for the digital transformation; and employees
within the organisation have the appropriate capabilities for the digital transformation.

Top 5 Barriers to Procurement Digitalization and How to Overcome Them

R., A. (2020, June 5). Top 5 Barriers to Procurement Digitalization and How to Overcome
Them. https://www.linkedin.com/pulse/top-5-barriers-procurement-digitalization-how-
them-anne-riihim%C3%A4ki?trk=pulse-article_more-articles_related-content-card

The first barrier on this list is also probably the hardest to overcome.

The simplest and easiest way to dismiss any idea is to say it doesn’t fit the company’s budget.
It’s the single most significant barrier to digitalization.

Ultimately, every organization has a limited pool of resources, and every expense has to
realistically justify its investment. Digitalization is not difficult to justify in terms of returns, but
it does have a few things working against it:
Decision makers with incomplete information, and a culture of valuing quick wins over long-
term growth.

Showing a matter-of-fact ROI calculation is crucial to get stakeholder buy-in for the project.
Learn and Educate

To combat the lack of information, the first thing you need to do is get informed. Start by
learning the current state of digitalization technologies. Focus on what digitalization can do, but
also learn what it can’t. Getting a clear picture of what’s available is the most essential tool when
presenting a digitalization project.

When you know what’s out there, you can start figuring out how it applies to your organization.
With key capabilities and cost estimates in hand, you can create a plan that fits your budget.

Furthermore, consider piecemeal implementation. At Cloudia, modules are sold individually for
organizations that want to take a gradual approach. That allows every piece of the package to
prove its worth before moving on to the next. It also makes stakeholders less anxious when big
spending decisions can be broken up into smaller ones over time.

Lastly, your biggest weapon is going to be raw numbers. With a reliable cost calculation of your
current procurement practices, compare it to a pragmatic estimate of the costs under a fully
digitalized procurement process. Showing a matter-of-fact ROI calculation is crucial to get
stakeholder buy-in for the project.

No Quick Wins

Companies are always under pressure to produce results. However, fixating on fast results can
lead to poor decisions for continued growth. To start implementation, you’ll have to move away
from those quick wins.

For instance, chasing after a quick win can lead you to skip over the essential planning steps
leading up to a negotiation. Instead, focusing on a methodical approach to finding a system that
fits your needs can produce lasting success in the organization. If your business has access to
data but never gets around to using it, you’re losing the resources spent to acquire it and the cost
of opportunity of using it.

Furthermore, even if you’re not in a financial position to consider full procurement digitalization,
you’re not powerless. There are concrete steps that your organization can take in preparation that
won’t produce a major impact on your cash flows. Even if it doesn’t make sense now, being
prepared is key because you’ll need it to remain competitive sooner or later.

The sooner you start on the path to digitalization, the more time your organization will have to
adapt and learn.
Barrier #2 – Fear of Innovation

Most companies fall into the category of early-majority or late-majority adopters. That’s no
surprise, but it can be a huge problem when it comes to genuinely disruptive technologies such
as procurement digitalization.

The benefits of early adoption are significant. It gives your organization a big head-start over late
adopters and makes you flexible and responsive to changes in the technology.

Waiting to adopt a technology that will eventually be ubiquitous inevitably puts you on the back
foot. Instead of making proactive changes to adapt your business model, you’ll have to react to
changes from your competitors to keep up.

When a key supplier or customer ultimately requires partners to have a level of digital interaction
that you can’t provide, you could lose that business. And, new competitors born into a digitized
environment will be miles ahead of you as soon as they open their doors.

The sooner you start on the path to digitalization, the more time your organization will have to
adapt and learn.

Some Quick Wins

Ironically, the best way to get over the barrier of early adoption fears is to focus on what
digitalization can immediately impact. It often hurts implementation, but it can help with
adoption.

Showing what the short-term effects are can make it easier to get across how critical the switch is
now rather than later. To do that, you’ll need to focus on your specific organizational needs.
Focus on the most significant bottlenecks for your employees and stakeholders and show how
digitalization can help.

For instance:

 Help you draft and manage sourcing contracts effectively

 Reduce or eliminate tedious procurement tasks
 Optimize and eliminate bottlenecks in your sourcing process
 Reduce or eliminate maverick buying

These are only a sample of the potential short-term impacts.

Barrier #3 – Fear of the Unknown

Any new system or tool requires a commitment to learning how to use it. However, it also
requires a commitment to learning how things will be different going forward. That kind of
commitment and potential for mistakes makes some people nervous, naturally.
Your goals in overcoming this barrier are twofold:

1. Give your stakeholders access to enough information to ease concerns about systems
operation.
2. Work to make the transition to a digitalized system as frictionless as possible.

Educating potential users is your first concern. There are a lot of resources at your disposal to
assist in that. Services providers will usually be more than happy to walk you through the
implementation process and provide information. It’s something that Cloudia provides for
prospective clients.

You can also tap into your network to find companies that already have some experience with
these types of systems.

If you manage to implement a transition, but users refuse to adopt it, it’s a massive waste of
resources.
Easing the Transition

When you’ve managed to explain how the systems will work and what will change, you can
focus your efforts on ensuring a smooth transition.

When people adjust to a particular way of doing things, they can become entrenched. It takes
some convincing to get them to change to something completely different. Here too, as with
budgeting, a piece-by-piece transition can be beneficial.

Adopting a single element at a time puts a smaller demand on people to learn new
methodologies. Furthermore, the benefits of the system should be communicated every step of
the way on an individual level.

A full transition into a digital procurement transformation isn’t a simple IT upgrade. A much
more holistic approach is necessary to ensure success. Stakeholder support is required at every
level.

If you manage to implement a transition, but users refuse to adopt it, it’s a massive waste of
resources. The transitional process should involve all essential stakeholders. That can include
anything from line employees to C-level executives.

Focus on providing clear goals and communicating to individuals how their actions contribute to
those goals.

A successful digitalization ultimately aims to merge all data into a unified source. This helps to
both ensure data quality and allows an integrated approach to data security.
Barrier #4 – Security Issues

Another important and valid concern is the security of your organizational data when migrating
to an entirely digitized model. You may put not only your own data at risk but your suppliers’
and clients’ data as well.

But digitalization may actually do more to secure your data than it does to make it vulnerable.
For one, many organizations still have siloed data models (i.e., their data is stored on fixed
repositories isolated from each other). That’s both a huge security risk and a problem for
digitalization. A successful digitalization ultimately aims to merge all data into a unified source.
This helps to both ensure data quality and allows an integrated approach to data security.

Overcoming this barrier will boil down to finding secure partners in your digitalization
efforts. The right partner will help you establish secure workflows within your organization and
make data security their top priority. When choosing a supplier, ask them to discuss their
security certifications. Also, make sure that you have the ability to set data access rules and
permissions on their platforms.

Cloud services have good security standards on the whole, but that doesn’t remove the need for
strong endpoint security. Ultimately, a two-pronged approach of a reliable supplier and strong in-
house security is best.

Having a single source of final information is vital to ensuring a smooth deployment.

Barrier #5 – System Deployment

Briefly discussed in barrier number three, system deployment is another important hurdle to the
digitalization process. Your efforts will never find much purchase if you don’t have a concise
plan for how to deploy the system. That’s where your choice of vendor comes into play the most.

The right vendor will work with you to design a deployment process that works for your
organizational needs. Furthermore, they can provide support and guidance through the entire
process on both the individual and the corporate levels.

Moreover, the right procurement solution will be simple to deploy over top of your existing ERP
solutions. Everything from case management to storage and even financial systems won’t be
affected by a successful deployment.

As you already know, digitalization is a comprehensive process. To be successful, you’ll need to

design a deployment process that involves stakeholders at every level.

Furthermore, it’s a good idea to designate a project manager whom people can turn to. Having a
single source of final information is vital to ensuring a smooth deployment. The project manager
can work with everyone individually to come up with a deployment schedule.
Digitalization in a Nutshell

As you can see, the process of eProcurement digitalization is not a simple one. However, it has a
host of benefits for any organization. You may find other barriers when implementing your own
digitalization, but these are common to most efforts.

Budgeting is probably going to be the biggest obstacle. Once you’ve overcome budgeting
concerns, you’ll have a solid foundation to base the rest of your digitalization strategy on.