Author:
Yanina Gavizha
Factors influencing the automation of purchases
In our previous article we told what it is worth beginning automation of purchases and what her main objective in the company with. In this article we will open some more major factors which influence efficiency of the automated processes and we will share the experience as from “influence factors” to transform them to “aid factors”.
And so, allocate three factors of influence on automation of purchases:
А. Maturity level of procurement processes.
В. Personnel.
С. IT architecture and infrastructure.
Let’s consider each of these factors in more detail.
А. Maturity level of procurement processes
1st level – Basic: «need» – «procurement» – «use in work».
This level is inherent in small companies, where most often the process is not regulated, but is carried out “out of habit”. For such companies, the lack of automation of procurement processes is not critical, and, perhaps, there is no need to implement any specialized software. Will enough use functionality of an electronic document management system or to tune up the existing ERP planning (for example, 1C). Such automation will not be expensive, but it will be already to allow you to formulate reports and consolidate information about suppliers and contracts in one place.
2-nd level – Developed: «initiation» – «suppliers selection» – «procurement» – «contractual relationship».
For this level of maturity of the procurement process, automation is already becoming necessary; a large amount of data is processed: applications, marketing reports, tender information and proposals, contracts, covenants, reports, etc. Companies need to think about implementing a specialized IT solution for automation of procurement processes and be sure to integrate data with other existing systems.
3-rd level – Advanced: «planning» – «initiation» – «organization of procurement procedures» – «suppliers selection» – «contractual work» – « registers of suppliers and contracts» – «reporting».
The companies with such number of processes at insufficient automation lose controllability. And the more purchases occur, the manual control becomes less effective – the probability of mistakes, information loss, unauthenticity of the reporting, etc. increases. At such level of maturity process of purchases automation is obligatory! Before choosing of specialized IT solution it is necessary to form a complex and detailed business requirement for automation which will allow to gain the expected effect with the optimal budget.
В. Personnel
In many companies, employees work with a large array of data in Excel tables, enter information manually, track it, and generate reporting.
And even in the presence of any IT system, workers by the principle “it has historically developed”, basis duplicate information in ordinary files and systems. In our practice, we faced cases when experts consciously didn’t pass to the automated processes, being afraid to lose the value in the companies and even work. It is very important to interact with collective on all the life cycle of automation projects. Pay attention to readiness of personnel for changes and motivate them attracting to projects and voicing the company’s strategic goals.
To manage processes in an automated mode, it is not necessary to be an IT specialist. It is enough for the employees to prepare a clear and consistent instruction on working with the system, the described business process and the procedure for its implementation.
In companies which conduct automation of procurement at higher level trainings since IT system constantly are updated and appear new modules and algorithms have to be held training for personnel, online and offline.
And what remains not less important – it is necessary to cultivate in the company the culture of “digitalization”, to accustom personnel to be innovative and technologically advanced.
С. IT architecture and infrastructure
To begin with, I would like to draw a parallel between the IT budget and IT architecture. The more IT systems in the Company, the more the costs of their contents (infrastructure, licenses, maintenance, etc.) and the more staff of IT departments. Modern IT architecture is a single, economically proved and managed eco-system that is aimed at speed, continuity and business security.
Incorrectly constructed IT architecture of the company complicates, including, procurement processes:
- there is no integration of data with ERP system, which does not allow to connect processes of planning / budgeting with purchasing activity
- the system of internal control can’t be customized for all process because of a large number of software that is involved in the process
- any change in templates / lists or algorithms requires a lot of time and mandatory participation of IT professionals (sometimes outsourcing is fee-related)
- a large number of systems complicate the process of their administration. The absence of a history of changes / modifications of the software makes the Company “dependent” on specific employees
To avoid all this, modern companies form IT strategies, which describe not only the mandatory rules of management and administration, but also connect the business need with real tools.
IT strategy is formed for 3-5 years, but is revised every 6 months. Dynamically developing technologies have to motivate the Company to continuous improvement, however to leave invariable the adopted rules of IT architecture and infrastructure management.
This is an important and necessary topic from another sphere. To get more detailed information on IT architecture and infrastructure, you can send an inquiry to our IT expert: info@gpi.kz
In our previous article we told what it is worth beginning automation of purchases and what her main objective in the company with. In this article we will open some more major factors which influence efficiency of the automated processes and we will share the experience as from “influence factors” to transform them to “aid factors”.
And so, allocate three factors of influence on automation of purchases:
А. Maturity level of procurement processes.
В. Personnel.
С. IT architecture and infrastructure.
Let’s consider each of these factors in more detail.
А. Maturity level of procurement processes
1st level – Basic: «need» – «procurement» – «use in work».
This level is inherent in small companies, where most often the process is not regulated, but is carried out “out of habit”. For such companies, the lack of automation of procurement processes is not critical, and, perhaps, there is no need to implement any specialized software. Will enough use functionality of an electronic document management system or to tune up the existing ERP planning (for example, 1C). Such automation will not be expensive, but it will be already to allow you to formulate reports and consolidate information about suppliers and contracts in one place.
2-nd level – Developed: «initiation» – «suppliers selection» – «procurement» – «contractual relationship».
For this level of maturity of the procurement process, automation is already becoming necessary; a large amount of data is processed: applications, marketing reports, tender information and proposals, contracts, covenants, reports, etc. Companies need to think about implementing a specialized IT solution for automation of procurement processes and be sure to integrate data with other existing systems.
3-rd level – Advanced: «planning» – «initiation» – «organization of procurement procedures» – «suppliers selection» – «contractual work» – « registers of suppliers and contracts» – «reporting».
The companies with such number of processes at insufficient automation lose controllability. And the more purchases occur, the manual control becomes less effective – the probability of mistakes, information loss, unauthenticity of the reporting, etc. increases. At such level of maturity process of purchases automation is obligatory! Before choosing of specialized IT solution it is necessary to form a complex and detailed business requirement for automation which will allow to gain the expected effect with the optimal budget.
В. Personnel
In many companies, employees work with a large array of data in Excel tables, enter information manually, track it, and generate reporting.
And even in the presence of any IT system, workers by the principle “it has historically developed”, basis duplicate information in ordinary files and systems. In our practice, we faced cases when experts consciously didn’t pass to the automated processes, being afraid to lose the value in the companies and even work. It is very important to interact with collective on all the life cycle of automation projects. Pay attention to readiness of personnel for changes and motivate them attracting to projects and voicing the company’s strategic goals.
To manage processes in an automated mode, it is not necessary to be an IT specialist. It is enough for the employees to prepare a clear and consistent instruction on working with the system, the described business process and the procedure for its implementation.
In companies which conduct automation of procurement at higher level trainings since IT system constantly are updated and appear new modules and algorithms have to be held training for personnel, online and offline.
And what remains not less important – it is necessary to cultivate in the company the culture of “digitalization”, to accustom personnel to be innovative and technologically advanced.
С. IT architecture and infrastructure
To begin with, I would like to draw a parallel between the IT budget and IT architecture. The more IT systems in the Company, the more the costs of their contents (infrastructure, licenses, maintenance, etc.) and the more staff of IT departments. Modern IT architecture is a single, economically proved and managed eco-system that is aimed at speed, continuity and business security.
Incorrectly constructed IT architecture of the company complicates, including, procurement processes:
- there is no integration of data with ERP system, which does not allow to connect processes of planning / budgeting with purchasing activity
- the system of internal control can’t be customized for all process because of a large number of software that is involved in the process
- any change in templates / lists or algorithms requires a lot of time and mandatory participation of IT professionals (sometimes outsourcing is fee-related)
- a large number of systems complicate the process of their administration. The absence of a history of changes / modifications of the software makes the Company “dependent” on specific employees
To avoid all this, modern companies form IT strategies, which describe not only the mandatory rules of management and administration, but also connect the business need with real tools.
IT strategy is formed for 3-5 years, but is revised every 6 months. Dynamically developing technologies have to motivate the Company to continuous improvement, however to leave invariable the adopted rules of IT architecture and infrastructure management.
This is an important and necessary topic from another sphere. To get more detailed information on IT architecture and infrastructure, you can send an inquiry to our IT expert: info@gpi.kz
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