All posts by Aysco Consulting

Founder of AYSCO Consulting FZCO
Digital Transformation, Strategy

Good Data is a Virtue

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One of my favorite sayings with respect to data quality is ‘Garbage In, Garbage Out’. Data needs to be respected yet many organizations are apathetic around the need to control and manage data quality. It typically falls to certain administration functions to manage but often they lack the understanding of the base information.

And those same organizations are first to complain about bad data.

Quality is not an act, it is a habit

– Aristotle

Bad Habit Practices

Practice 1: Information is power. Let’s maintain our own data silo’s – information is leveraged with those that need to know. “It’s the way senior management like it!”

Practice 2: Role Perception: “I am too busy to waste time in administrating data entry. The procedure is not user friendly”; and there is little incentive, or penalty, to enter data completely.

Practice 3: Data capture importance: “It’s not my problem, someone else will check it and clean it”. This is also further complicated as many organizations are constantly changing – there is a lack of consistency, the goal posts are always moving!

Practice 4: Poor data transparency means it is easier to hide true performance. It suits to keep it opaque as “we are more likely to keep our jobs”.

Cost of Quality

The cost of quality rule (1:10:100) illustrates how the cost of error builds up exponentially as it moves down the value chain. This rule states the cost increases by a factor of 10 if an error remains undetected in each stage of the chain. For example, to remedy a quality issue when captured at the start of a manufacturing process costs $1; however if that same issue was to remain undetected at the end of the manufacturing process and go on to impact an external customer, the cost of quality failure would be $100. The learning is that prevention is better than the cure: prevention is less costly than correction, and less costly than failure.

Despite this rule, it seems some organizations pursue workaround strategies. These strategies unfortunately do not address the root cause issues, paper over the cracks, and end up being more costly than a direct, target source data strategy.

Correction Approaches

Challenge 1: Data Analysis, such as spend analytics solutions, will isolate bad data, and only map good data. Aside from being after the event, the challenge: Who trains the solution to know what good and bad is, and what happens with the bad data? Additionally if inputs are inconsistent and highly variable, this becomes a never ending high touch exercise, and any gaps will cause the entire data set to be questioned.

Challenge 2: Send all the data to be screened; audited and cleansed. As with Challenge #1, this suffers from the same limitations as well as throwing up potential delays. Do you have an army to administrate this? Probably not – a more robust approach is required!

Whilst these workarounds can compliment an organization’s capability in controlling and managing data, a better way is to initiate good data at the start.

Strategy Tips to achieve ‘right first time’ data

  1. Create user accountability – bad data and poor workmanship is a result of a cultural habit that disregards {good} data significance. Leaders must champion data quality.
  2. Join up data sources electronically. Ensure you have a single source of truth for the respective datasets.
  3. Standardize the data terminology, format and follow a logical hierarchy.
  4. Structure the data to ensure that it works for the different user perspectives. Enrich the data where appropriate for the user, but it must remain connected with the source of truth.
  5. Enter the complete information once. Combine a maniacal attention to detail at the start of the process with the use of templates and checklists. Design solution forms to elicit data entry in the most user friendly and intuitive manner, and avoid having forms that contain irrelevant fields or fields that are blank.
  6. Utilize automated system rule sets to perform stage 1 ‘checks and balances’. Prevent the garbage entry possibility!
  7. Reduce the temptation to have multiple approvals to validate the data. This approach has a poor success rate (as well as delaying the process). See item #1.
  8. Employ users that ‘get it’ – void those that do not. Good and bad data cannot be mixed – this corrupts the entire data set.

Data integrity is more than good data. It is about establishing processes that control and manage the data to ensure that it is accurate, consistent, complete and timely. With the emergence of big data, getting these fundamentals right will be critical.

We are all accountable for good data. To err is human, but to really foul things up requires a computer. Contact Us.

Talent

The Age of AI: What’s Procurement’s fate?

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We are now living through the fourth industrial revolution, and our daily life is being influenced and augmented as IoT, cloud, cognitive and artificial intelligence tech becomes more prevalent. The trend towards increased automation is benefiting business and improving procurement’s ability to transact.

But will it really revolutionize the way we work?

Machines are efficient at performing repetitive work, however where there are dysfunctional, chaotic, and unchartered environments; and where rules of engagement have not been established, replacing humans with machines would be considered untenable (and for future tech, seemingly improbable). For many of us, the last few years have been unprecedented, unpredictable and extraordinary. In the world of procurement, whilst many the problems have similar themes, each day brings different challenges. Although we would love to structure the business in such a way that would make it more predictable, the reality is that a large number of transactions do not follow a ‘happy path’.

the People Factor ……

Procurement act as natural trouble shooters, ‘go to’ individuals, champions of external relationships (who does the supplier call when they have an issue!), and supply chain disruptors. BUT the desired goal is not to develop a bunch of hero’s. Hero mentality reflects a process truly out of control and extraordinary effort is required to put things back on track.

Creativity, innovation and relationships are positive human factors. Unfortunately conflicted motivations, self-inflicted disarray, and obstructive organizational politics are human downsides. Typical organizations have elements of both good and bad, which means intermediaries, such as the procurement function, will continue to be in demand.

Strategy vs Transaction

Given the challenging complexity of procurement process, today’s AI investment market is targeting the simpler transaction problems: aiding and accelerating the PR/PO transaction, processing invoices that already match, asking if we want fries with our cheeseburger selection etc. This is a great start, but we want more!

AI, as a tool, has potential to add the greatest value with Spend Analytic Insights (e.g. spend trends and patterns, price variances, focus points), Contract Lifecycle Management (e.g. contract formation, key term assessment, meta data analysis, and renewal support), Demand Management (e.g. resource forecast, material shortages, order and inventory reorder), and Risk Management (e.g. spend irregularity identification, price outliers, suspect supply situations, block /value chain) Solutions.

Work impact … Advanced Procurement Business Management

Assuming we have laid the right foundations, our fate is to advance our value proposition. This is a hugely positive outcome. I am not suggesting that Procurement are more important than other functions; we are all part of the same team, however imagine a football team without a goal keeper and midfield players. Procurement can help secure and play the ball forward to ensure a team win.

Good procurement functions wear three hats: gatekeeper, subject matter expert and business partner. AI will give Procurement the ability to grasp new insights, manage by exception and develop deep expertise. Of course, the tech still needs to catch up with the hype. It will 🙂

Super powers to kick ass. Hero’s are not required!

Change Leadership, Digital Transformation

Dysfunction, Change and Insanity

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We know change is constant, and organizations need to keep current. So why do organization changes happen, yet a number fail to make any real difference? Is your organization addicted to frequent reshuffles? Do leaders understand how to manage change and resolve dysfunction?

Change is not change when people perceive no difference. If an org chart changes, but the way people work remains unchanged, then it is just more of the same. A common mistake is that reorgs are sometimes considered and confused with a business strategy. Reorgs are not a business strategy; they can underpin a business strategy. Expecting different results without a refreshed business strategy – well that’s insanity!

Albert Einstein image and insanity definition caption

Good leadership understands that a systematic approach is needed, not only to understand the how and why, but to prepare a detailed plan > if there is a failure to commit sufficient time, money and resources to support the reorganization then this is a clear indication that the business strategy element is missing,

By drawing a parallel with reorgs, digital transformation programs suffer similar challenges: lack of detailed design, unclear or missing business targets, insufficient investment, and limited understanding of the impact on the way work will change (see my article on the establishment and importance of digital culture).

Does your organization reshuffle or are they committed to resolve dysfunction?

>>Spoiler Alert<<

If the organization wants sustainable change, systems need to be modified to support a changed way of working. The hardest part according to Harvard Business Review 2016 Getting Reorgs Right is to ‘get the plumbing and wiring right’. HBR uses the analogy of leaders driving the car faster with no steering wheel.

As leaders, we need to step up and avoid the temptation to produce an org chart without a corresponding business strategy. Extending the HBR analogy, add the need to have a dashboard to monitor and measure the change (performance and health metrics: speed , fuel consumption etc.), and a navigation journey plan (map).

For digital transformation projects, the same learning can be applied. Start the journey. Gear up!

Happy Thanksgiving.

Are you driving change or a reluctant passenger? Contact Us.

Sustainability

Eating your own dog food

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Or my preferred “Drinking your own champagne” are terms to describe the practice of using your own products and services. It serves as testimonial evidence that practices what the company preaches, and demonstrates a high level of faith in the quality and value derived.

It seems strange therefore that organizations marketing sustainability credentials, citing net zero aspirations, but have a reputation not to “walk the talk”, expect third parties to sign sustainability pledges without question. This lack of leading by example is a quick way to destroy credibility of the program before the start.

According to Forbes, there are 6 mistakes that organizations make when building a sustainability program:

  1. Setting goals before properly assessing the impact
  2. Failing to identify the right do-ers and deciders
  3. Not effectively measuring progress towards your goals
  4. Using sustainability only for PR
  5. Failure to test strategies before applying them to scale
  6. Not asking for help

This research was conducted over 2 years ago and is still relevant today.

Need help. Contact Us.

Change Leadership, Digital Transformation

The importance of Digital Culture

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The relationship between humans and technology continues to advance rapidly. For many us, interacting with Siri or Alexa is now second nature, however assuming that individuals will automatically understand and adopt technology is not a given. These developments are creating another set of challenges (and opportunities) for the organization.

Digital culture describes how technology shapes the way we think, interact, behave and communicate, and as technology revolutionizes, there is invariably an impact corporate culture. Being digital savvy is more than just being paperless, it is about being attuned to the opportunities presented to the organization – all of which need considered management.

For example. remote working technology implementation delivered efficiencies, speeding up work and empowering the workforce. The COVID pandemic accelerated the deployment of these remote working technologies and demonstrated that users could be both productive and effective working from home. Post pandemic, having now grown used to these technology benefits, it is not surprising that a large number of users are resisting the call to the return of a 5 day per week office working. It will be interesting to see how the recent Twitter employee backlash unfolds on the scrapping of the working from home policy.

As these technologies become more embedded, building on the previous theme, hybrid (home and office) working becomes a digital cultural norm, and therefore likely to be a standard employment practice to attract new employees into an organization. Organizations that foster and embrace an environment where users can explore, experiment, develop, and benefit from technology innovation lead to a more motivated workforce.

“Putting People first in Digital Transformation” Survey 2021: 66% are optimistic about the opportunities that technology can bring to their career and work.

Ricoh

Further advancements in cognitive technologies that mimic the human brain: perceiving, judging, thinking and reasoning will continue to challenge the digital culture. There is a whole new profession in the making.

Bottom line: It’s not about the technology, it’s about the way people will use the technology. This should be a key assessment when designing and planning your digital transformation.

To bring home the point, here’s a link to footage of two teenagers completely baffled on how to use a rotary phone. It is easy to forget how rapidly culture evolves!! How are you managing change?

From

Rotary analogue phone

To

Does your digital eXPerience have P for People? Contact Us.

Operating Model, Talent

Buying, Purchasing and Procurement – What’s the value difference?

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For those working in the supply side profession, the perceived performance difference between these roles can be enormous. Is this because we are fixated by titles and getting recognized? Probably.

Titles aside, the challenge within any organization is articulating your value add. Where organizations are inclusive, and there is an understood benefit for a particular role, titles become less important. The team normalizes effort and then starts to synergize performance.

In those organizations where the functions are less mature, and or management is less experienced with best practices, there is a need to establish and build a function brand / reputation to underscore your targeted value add. There is a broad spectrum of skill set expertise / emphasis which requires us to position and differentiate roles. To confuse further, organizational roles titles may be interchanged which blurs the understanding around the role deliverable emphasis.

Key supply side function roles

Buyer: This role traditionally supports and generates the PR/PO transaction. This administrative role is important but tends to be overshadowed by the more strategic elements involved in supplier selection, negotiation, contracting and management (buying process). Check out a couple of Buyer job descriptions. Getting a super star that delivers the strategic elements as well as attending to the administration detail is rare. Individuals tend to have either strategic or transaction skill biases.

Purchasing: This role incorporates the strategic elements of the buying process, however there is more emphasis on compliance and governance activities. A common complaint about the purchasing process is that it seems to be arranged to hinder business, is risk adverse, and too focused on price rather cost. Together with a tendency to be reactive, ticking boxes rather than adding value can be an easy trap for less developed purchasing functions.

Procurement: This role includes all of the purchasing elements, and is typically targeted to add value and improve total cost of ownership. Procurement is much more strategic than Purchasing, and better aligned to organizational goals. Moving from a reactive to proactive approach is a key enabler for the function to deliver value. There is a much more emphasis on relationships. The downside is that the long game requires more effort and time investment. The upside is that business benefits are much greater (see my article x10 Impact).

The supply side source, contract, purchase and pay cycle is common throughout all the roles; but depending on how you position the function, the emphasis changes. For those within the supply side function, procurement positioning is generally preferred because of its strategic nature. This is not to suggest that the emphasis associated with the other roles is less important. Many larger organizations separate out the roles within the overall function to help manage the different elements of the value chain. Super stars are difficult to find, and harder to scale when you expand the function.

Positively, a recent survey suggests that 85% of respondents position the function as strategic. This is great news, however a more in depth survey is required to better explore the organizations understanding and valuation of their supply side function.

LinkedIn Survey screenshot

Operating Model

An operating model is the way an organization does its work, and considers the structure, roles and collection of processes it uses to perform the work. Depending on the supply side function capability and aspiration to build its brand/reputation, an appropriate operating model needs to be developed. Starting with the basic role building blocks and moving up the value stack is a journey and a valid strategy. Note: matching capabilities with the operating model is a continual balancing act. Change management is required.

For those organizations with the supply side function already positioned at the strategic procurement level, I wonder if the operating model is truly aligned with the targeted brand/reputation – Is it where you want it to be? We know there is always room for improvement and alternative ideas and strategies exist.

To conclude, titles and positioning statements are a matter of matching and marketing the function. The reality is that customers value what they value! The real test is whether you have the capability to deliver that value.

What’s your value add? Have thoughts. Please share. Contact Us.

Collaboration, Talent

I’m a Celebrity … Get Me Out of Here

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For those Brits in the UK and aboard, we cannot help getting hooked into this reality TV classic. Throwing a whole load of celebrities into the jungle, restricting creature comforts and keeping them hungry is not only an entertaining formula, but surprisingly, a great insight into talent management and team dynamics.

On reflection, there are seemingly a set of lessons arising from life in jungle that can be learnt and applied in your organization:

1. Setting a common goal

Winning stars that are linked directly to the amount of food the camp receives creates a unifying goal that motivates all individuals in the same way.

2. Team membership

Individuals earn stars for the camp. Each individual knows how important their contribution is to maintain camp accord. They have accountability combined with a sense of duty to do their upmost for the team. As the individual wins, the team wins, and over time, the camp understands sustained success and longevity is dependent on overall team performance. Individuals identify themselves as a team member.

3. Sticking to your swimlane

Whilst bush tucker trials are allocated randomly by public vote, individuals naturally adopt and manage roles and tasks inside the camp that they perform well and are comfortable with. Leveraging members strengths and staying within a swimlane, actually maintains stability within the camp and earns recognition from other team members. Discord arises from individuals moving into other member swimlanes, or being tasked to move outside their own comfort zone. Similarly in business, where individuals fail to respect functions and process, and step on toes that others consider their responsibility; this invariably leads to friction.

Lessons

For those advocates for off-site or on-site team bonding courses – I would agree these are fun, but often when the team gets back to the day job, the core alignment elements are missing.

Team dynamics are delicate and good leaders understand the need to allocate and delegate in an inclusive way. Understanding swimlanes, defining common goals and building teams that perform together is a winning recipe.

Motivating and moving forward in business is of course more complex; and maintaining accord is challenging. As in the camp, regular discussion, feedback and praise is needed to ensure that team members feel valued. Conversely, offering creature comforts that are not valued or creating barriers to isolate team members is proven to be a poor strategy.

Keep your team talent and avoid the alternative “Get Me Out of Here” discussion!!

Have an insight?

Rumble in the Jungle. Contact Us.

Digital Transformation

Painting by (Part) Numbers

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There are some amazing painting by number kits available in the market today. Interestingly the concept was first introduced in the 16th century by Michelangleo to assign sections of his ceiling masterpieces to students to paint; pre-numbering each section to avoid mistakes. In isolation these sections seem not to make sense, but as a come together, they complete the whole picture beautifully.

Within manufacturing, the use of part numbers and bill of materials deliver a similar outcome to ensure consistency and repeatability. Services use procedures and checklists to ensure compliance. And for all the above, the goal is to standardize, manage and quality control outputs, as well as leveling-up productivity.

Heads Up: My Digital Opinion

Maintaining data quality is one of the biggest challenges within organizations, particularly rapidly growing organizations. This observation is not a commonly shared view, yet digitalization is often positioned as a silver bullet in magically solving organizations quality challenges. This over simplifies the underlying effort and work needed to define, structure and cleanse data that organizations can confidently trust.

For example, much of our Spend Analytics data accuracy relies on individuals entering and creating purchase requisitions correctly. If these inputs are free text, mainly descriptive, and open ended, inputs will absolutely vary dependent on the individual entering the dataset, and despite normalization (either via initial data screening, scrubbing or future use of RPA and AI applications); they will not be considered reliable enough to trust without further manual touch and investigation. If it is not 100% at the get-go, we need to check!

Where items can be procured via catalog and/or using a part list, these part number codifications deliver the confidence that the purchase is what it says it is, and supports an apple to apple analysis and baseline. Unfortunately not all businesses are that clear cut.

The question is how can we structure inputs, particularly in the acquisition of services, to improve the output. User training itself is not the solution. There are strategies that require collaboration with Finance (Chart of Accounts), Operations (Maintenance Schedules), Construction (Bill of Quantity), Accounts Payable (Invoices) etc. that redefine and reshape data entry to create more end to end codification, using guided assistance and part numbers (and variations thereof) to deliver a win/win. As with painting by numbers, in isolation, this may not make sense to those that are involved in a process subset, however if you trying to paint without numbers (and digitally operate) you are likely to struggle in delivering the picture you envisaged (artist skills aside!!).

Prepare, build and accelerate the journey to complete the picture. Contact Us.

Change Leadership, Digital Transformation, Talent

Costing (‘the avoidance of’) Digital Failure

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How do we qualify the cost of failure and reflect this in the business case to underscore the need to invest adequately? There is well documented research on the low success rate of digitalization initiatives, poor adoption and delayed deployments, but little on the actual $’s involved.

In order to better understand the cost dynamics, imagine an iceberg. The visible tip is the smallest part of the iceberg. This is analogous to the cost of software. The largest part is below the water line, often hidden, and is analogous to the cost of the professional services to implement and execute a digital platform. It is not uncommon for the software: professional services cost profile mix to be around 1:9.

iceberg above and below sea

Software 10%

Professional Services 90%

To clarify, digital platforms require end-to-end integration – they are not standalone apps. Given this cost imbalance, getting to grips with the professional services element is critical.

Professional Services costs are determined by skill set rate card multiplied by days effort. For large and complex projects, forecasting skills and effort can be challenging. Taking a leaf from the manufacturing industry, lean and six-sigma practices, I am reminded that:

“Cost is more important than quality, but quality is the best way to reduce cost”

Genichi Taguchi

How do we increase the probability of success? My article ‘Improving Your Digital Transformation Success Rate‘ outlines key factors that an organization needs to address to improve success rates. The downside is the investment required as business cases can be challenging at the best of times.

How do we get value for money? Organizations need assurance that costs will be fixed and controlled. There is a temptation to cut corners and if the true cost of the professional services element is hidden; the business case becomes software centric and likely to become another failure statistic. A better way is to qualify the costs of failure when assessing the scope and level of professional services. What if we need to rework, increase the volume of change requests, write-off work, delay the project, perform more tests, suffer from low adoption etc. ? How would that impact the business case? This cost avoidance argument can be used to balance and justify a broader understanding of a more comprehensive business case.

How do we mitigate and reduce the cost of failure? Allocate the best talent to the initiative, and perform in depth due diligence on any external professional services provider to ensure you get the best quality professional services. Low price, administrative, unskilled resources will have a negative exponential impact and increase the cost of failure (adding to the below the water line iceberg).

Organizations that fail fast, learn fast have inherent capability to adapt and course correct as they ride the wave and are typically those already operating best in class with a high level of maturity. For the remaining majority, digitalization can be complex and daunting. We learn from our mistakes, but sometimes we need it ‘right first time‘. Otherwise, failure becomes extremely expensive.

Need Help. Contact Us.

Collaboration, KPI, Strategy, Talent

10x Impact

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I was asked the other day to articulate the secret recipe to become a successful procurement individual. A great question!

My on-the-spot response was that procurement offered a service and by placing the customer (our stakeholders) at the center, engaging to understand needs, and collaborating with the customer to develop solutions, procurement would deliver value add that the customer actually values.

Together with this positional change, and to ensure procurement understands the business, procurement needs to act as a ‘business manager’ to appreciate the cost, quality and time factor interlock. Too often functions operate in silos and lack appreciation of what happens upstream and downstream.

A win in one function which leads to a failure in another part of the organization is not a success for the business. The challenge is finding a way forward that respects each contribution and gives individuals the opportunity to play their part within the time constraints. Moving from a reactive to proactive way of working pulls effort forward and essentially delivers more time for collaboration, but needs a level of business maturity.

Unfortunately many organizational success measures are not consistent; they can conflict and sometimes force a short sighted and short term approach within the respective function. Establishing common goals will enable individuals to work together as a team, and focus on a shared objective. The sum of the whole is greater than the parts!

My favored recipe:

  • Customer centric mindset
  • Business acumen and value creation skills
  • Team work
  • Focus

Successful procurement individuals that enact and advocate these attributes will deliver 10x impact compared to their counter parts.

Have a better and or improved recipe ? Alternatives welcome. Please share and comment.