We interviewed over 400 procurement experts around the globe to learn the most pressing issues in procurement today.
Our journey took us from startups getting ready to hire their first procurement role to fortune 10 companies with very large procurement teams. What we learned comes directly from experts in Procurement, Finance, IT, Legal and Vendor Risk doing their job every day.
What we found was three-fold:
Users are bypassing procurement due to an overly difficult process they do not see value in.
Companies desperately need an effortless intake process with full visibility for all stakeholders.
Business growth is being limited due to extraordinarily high decision times.
For context, decision times for intake to procurement of software (mainly SaaS) was between three and eight months, with outliers of 14 - 18 months. This is the ultimate lagging indicator all teams were trying to reduce and optimize for.
But there’s good news. Even though every organization we spoke with is facing some form of procurement bottleneck, the root cause always fell into one of a few similar, solvable issues.
So let's jump in.
Intake: Headwinds In Action
Why does the workflow for intake to procurement take so long? As anyone approving purchase requests would tell you, it's complicated.
First, to kick the process off there's a purchase request. Across the board stakeholders told us this is the make or break moment. One Director of Procurement at an organization with 2,000 people said how their employees complete this task is what decides whether the tool goes through the approved process or skirts the system entirely and gets put on an expense card.
We found large organizations tend to build their own intake tools with internal developers. And after the tool is built it's never touched again. So it ages, gets more complex and more questions get tacked on to it. Until finally, one day, the employee filling out this once elegant and helpful intake form realizes they can't go through this again for a simple tool that’s within their budget.
So what do they do? Expense it, of course!
And who can blame them?
But what about smaller companies? Same issue. Only their intake tool tended to be a simple form. One would think this should make it easier to change and be more agile. But what we found is when more stakeholders got involved, more questions got asked. Even needless ones that didn't apply to a given tool. Ultimately, even simple forms suffer the same fate as in-house tools built by large enterprises: question sprawl.
And when that happens the form is avoided at all costs.
So what can a company do?
Hang on, we'll get there.
Stakeholders: Can I Get A Status Update?
What an innocent question from a well meaning employee. They just want to know the status of the tool they requested. (nevermind the fact it was requested yesterday…)
What they don't know is Procurement is about to respond to the 32nd email of the day asking the same question. Confession time, we uncovered procurement usually doesn’t know the answer. Not because they aren't good at their job. They are. (And FYI we only talked to procurement rockstars) It’s because they can’t see the status of other departments.
So when the dreaded status update question is asked, what does Procurement have to do? If you’re in the thick of it, you already know. Procurement has to chase down every stakeholder in the process to get an answer. Finance, Legal, IT & Security, Privacy, the requester, their manager, the vendor. Everybody.
And here's the dirty secret…those departments don't know either! Everybody is going back through their emails, checking to see if they got a response on their last query asking for a questionnaire or a certification. And then they send another email. And on and on it goes.
Days go by. Weeks even. And progress grinds to a halt.
And as one VP of Procurement so eloquently put it, “When this whole thing breaks down, and a tool is still stuck in review 3 months later because a vendor isn’t responding, who gets blamed? We do.”
Which brings us to the next issue.