Digital Alignment: The What and the How

This article was originally published on the Comprara website.

A lack of communication kills many things. From relationships to profit margins, misinterpretation and silence can lay waste to nearly all aspects of human life. It’s frustrating, because it’s fixable.

Failed IT projects account for $14 billion in losses every year for the world’s biggest 500 companies, and it’s all due to poor communication. The solution is digital alignment. An organisation achieves digital alignment when the appropriate digital infrastructure – such as information systems and data management strategies – work to support corporate goals.

If you want digital alignment between procurement and the business at large, then procurement must be clear on the goals and objectives of the business. Once the holistic aims have been clearly articulated, then it’s time to procure the necessary digital infrastructure to support those aims. But, remember, this digital infrastructure includes procurement. In other words, procurement cannot forget itself.

Compliance dashboards, automated tender platforms, reverse auction software – procurement has a plethora of digital tools and resources at its disposal. If an organisation is to achieve digital alignment, procurement must align with the business to maximise efficiency and savings. But how?

What we’ve got here is failure to communicate

The goal of procurement is to return savings. $14 billion in failed projects suggests we have room for improvement. A lot of IT waste is down to poor communication between business, procurement and vendors. This can lead to a misjudgement of requirements and the purchasing of IT infrastructure that ultimately adds little value.

But failed IT infrastructure can also be a result of poor communication with staff. If they do not understand that change is necessary, they won’t take the time to retrain and learn how to use the new system or comply with new digital protocols.

With communication in mind, CIO has come up with four steps to achieve better collaboration between IT and Procurement. They are:

1.     Align technology to business needs: develop a strong understanding of procurement and finance function objectives. You want to be aware of key technological challenges that these groups face. It’s especially important to keep in mind that technology is always advancing; a problem that may not have had a solution six months ago might now be addressed by a new player entering the market.

2.     Agree on the business goals: communication again. It is vital to have a clear understanding of expected outcomes from a technology standpoint. Don’t allow your digital alignment to be added to an IT waste statistic.

3.     Pool knowledge to identify the best solution: the ideal solution from a technology point of view may not be the best solution from a procurement point of view. Negotiation and dialogue are essential to finding the right requirements for tender processes.

4.     Create a broader ecosystem: avoid tech silos and instead focus on complementary technology and work with each other to provide end-to-end solutions.

CIO suggests that the above steps require a Chief Information Officer (CIO) for proper implementation. But we think that CPOs can take the initiative and work to increase efficiency by digitally aligning procurement with the business at large.