Working around the world in different clients, I am struck by the size of effort that goes in to implementations of various ERP systems. It is immense. Whole groups of people are channelled into the development and delivery of a system roll out, across multiple countries, departments and cups of coffee. Benefits of immense proportions are believed to exist at the end of this journey and, indeed, much is made of efficiency improvements in many of the financial and enterprise planning systems.
However, back in the world of procurement, the benefits seem to be harder to find. Although much of the spend of the organisation is being channelled through the system, the data appears to vanish into an unnavigatable black hole, into which data pours but no knowledge ever re-emerges.
There must exist a huge opportunity for data mining within this huge amount of data capture, but very few people seem to be able to access the data sets or have access to analytical tools which deliver insight and knowledge back to the users of the system.
What might we expect? What we spend with whom, when we spend it and what it is for seems to be a good starting place. However, this seems to be a low bar to set. Insight into how pricing varies from one part of the world to another for the same goods and services would be good. Variation, both seasonal and over longer time periods, could provide an excellent view. Linkage of one set of goods or services to another could provide a way of proving dependence, and show lag ( e.g. fuel oil prices for heating linked to plastics prices). Indicators on pricing change could be developed to provide early warning of market conditions. Money pricing must be in there somewhere, with its contingent effect on everything from stock costs to payment cycles. We could get really clever and use real world pricing changes to predict when we should take pre-emptive action to avoid upcoming price changes.
The challenge appears to be the ability to mine the immense amount of data which is in place. There must be an opportunity for a smart vendor to look at the possibilities in this area, rather than have us face the challenge of not having bought the module which provides that particular analysis.
We hear the cry of ‘no data available’ so often that the benefits of ERP implementations for procurement folk need to be seriously challenged. Perhaps we should look at the original business case for the ERP implementations and see how the value delivery is shaping up!
Mark Hubbard is Co CEO and Founder of Positive Purchasing Ltd.