How do I Measure the Success of Digital Change Management in Procurement?

Are you considering or in the middle of digitising your procurement processes? Make sure you have digital transformation metrics in place.

According to Gartner, almost half of organisations fail to define these crucial metrics. As a result, they cannot tell if a digital initiative is succeeding or not, including if the users are even adopting the new system.

Below is a list of recommendations on how you can measure the success of your digital transformation project.

“If you don’t do an assessment at the start, you don’t have a baseline, and that in itself means the project is born to fail,” according to Silke Therhaag, Senior Consultant at ArcBlue, part of Bain and Company.

It’s simple but sound advice – without knowing where you were, it’s impossible to tell how far you’ve come.

As a supplement to this, you can also measure against industry-accepted benchmark data on top of past performance. This will help with measuring digital transformation success.

A common mistake when choosing KPIs to track is to throw in every stat you can think of. This might sound like a good idea at first: more metrics give a better view of what’s going on, and different divisions may have unique metrics they find important.

However, this is a bad idea for measuring change management for the following reasons:

• It’s hard for the senior management team to digest
• It doesn’t send a clear message about priorities
• Divisional KPIs are not always useful for the wider business
• It can be tempting to pick ‘vanity metrics’ to focus on

You should choose metrics that focus on what’s really important – it’s tough to keep it lean but doing so will make it easier to keep the higher-ups on board. Remember, management metrics are often geared towards getting certain business outcomes, so this is what’s going to resonate.

The ideal number of metrics as a rule of thumb is between five and nine – and all should be relevant and actionable.

It’s all good and well for your project team to choose a transformation metric, but do you have an easy way to report against it? Is it quantifiable, and will the data be accurate?

Depending on the digital procurement system you are implementing, there may be reporting tools available, or customer support representatives who can provide you with the data you need.

Alternatively, there are a number of survey tools such as SurveyMonkey or dedicated change management tools that allow you to gather data directly from users.

We asked Michael Culican, Director for Metacognition Consulting, about the best methods for judging the success of a digital transformation initiative. He has helped businesses such as Commonwealth Bank and Colonial First Estate with digital change management, and has implemented procurement solutions like VendorPanel for his clients.

“One of the best ways to judge success is by surveying the users with SCARF. SCARF stands for Status, Certainty, Autonomy, Relatedness, and Fairness.”

According to neuroscience research, these five domains influence all human decision making. Specifically:

• Status: How important we are to others (Am I a valuable employee?)
• Certainty: How well we can predict the future (What is going on with the change?)
• Autonomy: How much control we have over events (Am I getting a say or being consulted as part of the change?)
• Relatedness: How safe we feel with others (Do I belong in the organisation as a result of the change?)
• Fairness: How fair the exchanges we make with others are (Am I being trained and treated equally along with everyone else across the change?)

“If those who are receiving the change or are alongside the change can actually say ‘yes’ to these things, that indicates success.”

One way to measure this is by surveying staff before and after the digital transformation is implemented. You can use SCARF to determine the questions you include.

Another way to judge the success of a procurement transformation is how well the change helps you meet your organisation’s values and requirements.

For example, some organisations feel cost avoidance is the most relevant measurement. Are they getting a return on their digital investment? However, other organisations are broadening their definition of value and innovation.

“Some people may think ‘Defining innovation is simple. I can just do a three-percent reduction in price each year’,” said Dr Andrew Jacopino, Senior Advisor at Ngamuru Advisory. “But is that innovation, or just a cost reduction activity to meet some contractual objective?”

“When you’re looking to innovate, it is important to define what success looks like.”

For some organisations, this may come in the form of measuring spend in local areas or with social enterprises. Solutions such as VendorPanel allow for reporting on how much has been spent with social, indigenous or disability enterprises, local businesses, and more. It also allows for determining how much has been spent under contract, or within or outside of existing panels.

Operational efficiency is another potential metric to track. Are your business processes faster as a result of the transformation?

Suppliers are half of the equation when it comes to procurement, and for many organisations, keeping these relationships healthy is very important.

If your suppliers are stakeholders in the new solution, are they happy with it? Have they been successfully onboarded, and are they engaging with the new platform as part of your digital transformation efforts?

These are all important questions to ask; whether they make up one of your five to nine metrics depends on how vital supplier relationships are to your organisation.

Another metric of success may be how you create value through new opportunities available through digitisation. For example, if a Council implements a new Source-to-Pay solution, regional collaboration can be fostered by sharing supplier lists with neighbouring Council areas.

If you’re seeking to create new value and this is a primary driver for your digitisation initiative, this may be one of the metrics you choose to track.

While digital transformation metrics are useful, you shouldn’t fixate on them, especially with long-term transformation projects.

“The majority of transformations are listed down as 12 months, but most projects take longer than that,” Silke said.

As things change in the business, what is considered success might also change. Setbacks are also inevitable, and how the business handles these is important. Reporting may not show month-on-month linear improvements.

“For longer projects, it might always fizzle out a little. It’s important to quantify the expected value of transformation.”

And the digital transformation project should be a work of constant improvement, not just something with a start and stop date.

“You don’t just stop, you keep going back, asking for more improvements and enhancements, and measuring the points about how people feel about the transformation,” Michael said.

This whitepaper is an excerpt from our 45-minute panel discussion on “Change Management on a Shoestring: Start with a First Step”

Click here to watch it and learn from change management specialists and industry experts.

Alternatively, you can read our whitepaper: “9 Ways to Succeed at Digital Change Management: A Best Practice Checklist".

Measuring success is one thing but getting there is another. VendorPanel is a Source-to-Pay procurement platform that has helped countless public and private-sector organisations meet their goals, such as the Victorian and Queensland State Governments, BGIS, Melbourne Airport, and McDonalds. We are also used by hundreds of Councils across Australia.

To learn more about how we can help you transform procurement in your organisation, contact us today. Alternatively, read our case studies to see how others have benefited from partnering with us.