The BIG SEVEN in 2023 for Procurement Series: #1 Digital Strategy and Implementation

Posted by Mita Gupta on Jan 5, 2023 11:17:56 AM
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What is a digital strategy, and how do you implement it successfully?

While there continues to be an ongoing debate, most see it as a digitization effort – meaning, let’s take all of our analogue stuff, like data and putting it into a digital platform.

But digitization is not digitalization.

The notion of digital strategy implementation and business transformation is more than just stitching best-of-breed platforms together in either a physical location or virtual cloud. The cloud is simply a new and different place – it is a location. Simply put, the movement of data to any platform is digitization – it is not digitalization.

Conversely, redefining a process or building for the way the world should work versus improving the way it does work is what digitalization is all about – thank you, Aaron Levie!

The Way Things Should Work

Now you may be asking yourself, “what does Mita mean when she talks about building for the way the world should work?”

The difference between “should work” (digitalization) and “does work” (digitization) is about transformation versus automation.

In her February 2019 article “When It Comes To Digital Transformation, Don’t Get Lost In The Cloud,” Dell Technologies' Pamela Pelletier talks about digital transformation and how it is “very easy to get lost in a cloud of terminology and overarching expectations.”

Based on my experience, getting lost in the cloud comes down to a "digitization first" approach, in which expectations are based primarily on the efficiencies and cost savings an organization can realize when they move to a cloud-based platform.

There is no doubt there are savings to be had with digitization. But you ultimately need to transform how your business works, not just make the existing inefficiencies operationally less costly or more user-friendly to be successful.

The Proof Is in the Results

Before chastising me for being too harsh in my assessment of digitizing the supply chain, let’s consider two critical findings.

In their annual Global CPO Survey, Deloitte found that most CPOs were dissatisfied with their digital transformation strategy results.

Another stat worth noting is from an IDC Cloud and AI Adoption Survey indicating that “80% of customers are repatriating workloads from public cloud environments.”

Before we get lost in the tall grass of a cloud migration debate – especially given the impact of the COVID-19 pandemic on the need for virtual and remote proficiency, I am not anti-cloud. Quite the opposite is true.

I am saying that moving to the cloud is an exercise in digitization. Digitalization is the actual transformation of the processes that define your current supply chain practices utilizing emerging technology such as AI.

Digitalization and Transformation

Research suggests that one of the most notable areas of transformational business impact is the ability to “unleash hidden capacity.”

More to the point, digital transformation ultimately creates the efficiencies to free up procurement professionals from functional tasks to focus on more strategic activities. These activities include new and expanded roles such as data analysis, risk assessment and risk management to help organizations achieve critical objectives.

As a side note, we will talk more about the changing or evolving roles of procurement professionals in a “digitally transformed” world in Part Four of this series, "Job Security and the Talent Wars.”

In the meantime, when it comes to the transformation of your supply chain, you need to ask whether you are digitizing the old way of doing things or digitalizing a new and better way to deliver optimal business outcomes.

Next Up: Part #2 - Inflation/Shrinkflation

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Topics: Commodities, Procurement