IT Innovation and Procurement as the Driving Force
By Hugo Britt | November 8, 2022
Whose job is it to drive IT innovation?
Is it the Chief Information Officer? The Chief Technology Officer? Or does the job belong to the heads of functions that require IT solutions such as marketing, HR, or finance? Or is it procurement?
The answer is: everybody.
Everybody has a role to play in bringing IT innovation into the organization. Functional heads are the subject-matter experts who know what they need to achieve business goals. IT can determine if the new technology will integrate with the existing architecture and the complexities involved with implementation. Procurement can act as the gatekeeper of supplier innovation and the vital connection between all the parties involved in the purchase decision.
Most innovation comes from outside the organization
Unless you work in a software development company, it is highly unlikely that the innovation you seek is coming from within the organization. While the public perception is that ideas are developed inside a company, tested, and commercialized, the reality is that we operate in an interconnected knowledge ecosystem where innovation comes about through relationships with suppliers.
Research from OECD found that companies “get their most significant ideas for innovative products, services, and processes from outside the business” – with one of the most important outside sources being your supply base.
Here are six ways for procurement to help drive innovation into the organization.
1. Broaden your understanding of what constitutes innovation in IT
Innovation doesn’t need to be game-changing or disruptive. It can be as simple as a small process improvement that will save hours per week or simply finding a better way of working together.
These sorts of innovations will help drive continuous improvement and may save or generate more revenue for your organization in the long term than ground-breaking technological innovations such as Blockchain, the Metaverse, or the Cloud.
2. Think beyond cost when considering IT suppliers
A myopic focus on cost can lead to procurement becoming an innovation blocker rather than a conduit. While a supplier may not be the cheapest option on the market, they may be the most innovative and have the potential to drive much more profit over the long term than you will have saved in the short term by choosing a more affordable supplier.
3. Run innovation workshops
CIPS recommends that procurement engages in “innovation scouting” to build supply market intelligence by hosting supplier innovation days, workshops, or hackathons. Innovation days could be entirely open-ended (where suppliers can bring their best ideas) or be focused on innovation that solves a specific business challenge.
4. Encourage and incentivize supplier innovation
Do your suppliers know that you are interested in their innovative ideas? Unless you communicate this to them, they may not even consider that you might want something new.
Raise the topic of innovation during supplier meetings to understand what your suppliers are working on. Ensure you communicate your organization’s interests, goals, and targets to help suppliers determine where they can best help you with innovative solutions.
Incentivize suppliers to bring new ideas to you by ensuring the benefits will flow both ways – for example, you could share the cost savings that stem from a process improvement. Otherwise, suppliers will hesitate to simply hand over their ideas without receiving any benefit in return.
5. Procurement at the crossroads
One of procurement’s advantages is its position as a connector between different functions in the organization and the supply base. This means procurement can act as a silo-smasher, knocking down barriers to the free flow of ideas and innovation. Procurement can help others see the bigger picture and connect the dots in a way that will unlock new ideas and solutions.
6. Learn how to nurture a new idea to fruition
Coming up with a new idea is only the start of the journey. The real challenge lies in steering that idea through the organization. Start with a small trial to generate early wins and proof-of-concept. Build a coalition of supporters across different functions, then take the innovation to the right decision-maker and present its benefits in a way that appeals to their set of priorities.
Looking to expand your supplier portfolio and encourage more supplier innovation? Una works with the nation’s top suppliers, offering purchasing solutions that meet your needs. Contact our team to learn more.
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