Current State Assessment Cheat Sheet

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🎣 The Catch Up

Hi there,

Last week, I covered how you should use analyst reports when shopping for Procurement Technology.

This week, I wanted to cover what you should be doing in parallel before you “sign on the dotted line” for a ProcureTech solution: assessing the current state of your Procurement function.

You can't really know where you are going until you know where you have been as the great Maya Angelou has oft reminded us.

This is as true in business/Procurement as it is in life!

Without a clear idea of where you currently are, it’s hard to correctly scope out the effort required to get to your objective.

I hope the below proves helpful.

Have a great week ahead.

Best,

Joël

P.S. In case you missed it, here was my most popular LinkedIn post of the week:
Inevitably, you're going to get kicked in the teeth when continuously improving your Procurement processes...

🌙 Sunday Night Note

The Current State Assessment

The theory behind scoping a Procurement transformation initiative is simple.

You take stock of your current situation (current state), establish an objective (desired end state) and plan to get from point A to point B.

In practice, this can get thorny because of the number of moving parts involved in any business. Establishing a desired end state isn’t too difficult because this is an unconstrained exercise (you can design a desired end state however you want when starting with a blank page)…

However, putting together an accurate representation of your current state is more difficult. It is constrained by reality (😅)… It is crucial to get an accurate picture of your current state as it determines “the distance” to travel to get from point A to point B.

Substituting a current state assessment with a quick, faulty, unrealistic set of assumptions has been the foundation on which many Procurement digital transformation failures are built…

So how do we get the Current State assessment right? Well, the best way is to avoid having to do it as a “heavy lift" in the first place… How? By having great operational documentation practices.

Sadly, I don’t often encounter organizations that do this well.

What do I mean by “operations documentation practices”?

It means that as part of your operations, you explicitly document and maintain:

• Policies

• Business rules

• Business processes

• Roles and responsibilities

• Technological architectures

This is hard. “Emergencies” get in the way… There’s no time to document. Plus, good writing is hard in general… Nevermind technical writing…

However, the clients I’ve worked with that have the best documentation are also the most nimble. Why?

Everything is explicit. There’s no time wasted on meetings to “realign everyone” on how things work (or ought to work) as part of operations… It’s all laid out in operational documentation.

Below, I’m giving your the “gold standard” list of deliverables I would produce as part of a current state assessment (with no budget or time constraints).

You’ll notice that all these documents are useful for day-to-day operations as well → That’s the head fake.

What’s the pro tip? Start working on this documentation today. Your operations will benefit immediately. It will also greatly reduce the cost, time and risk involved with any future digital transformation initiative.

“Gold Standard” Procurement Current State Assessment Deliverables

As usual, I come back to the operational triad (People, Process, Technology + Data) as the lattice on which we hang the deliverables:

Process Documentation

• 1/ Procurement Policy (and related policies/appendices) → Your business’ Procurement business rules.

• 2/ List of purchasing categories → E.g. How have you cut up your Category Management?

• 3/ Business Process Hierarchy (BPH) → The scope of Procurement processes executed in your business

• 4/ Business Process Diagrams (Swimlane diagrams) → What those processes actually entail

  • Include roles by activity

  • Work Procedures (where applicable)

When it’s not viable to have a process flow diagram for whatever reason, I revert to verbal interviews with process stakeholders according to the BPH. I produce meeting minutes to reflect the context and high level steps of the process.

I use the list of purchasing categories to validate that the BPH covers the entirety of what is purchased in the business (e.g. there are no missing processes).

For more details on what to put in these documents, you can read the following 2 posts that goes into greater detail:

(one is free 🔑, the other is for premium subscribers 🔒)

People Documentation

• 5/ Roles and Responsibility Descriptions

  • A portion can be deduced from your Swimlane process diagrams (activities executed by given roles).

  • For the rest, I turn to the formal HR job descriptions for Procurement roles.

• 6/ Staffing Levels per Role

  • How many people are assigned to each role?

Technology

• 7/ List of current systems

  • This includes any Excel, SharePoint, etc. used to support processes today (any technological tools used to support the processes)

  • Most of these should also be referenced in your Swimlane process diagrams

• 8/ Procurement System Architecture Diagram

  • All existing interfaces (connections) between the systems in your list of systems and any other core systems in your business (e.g. ERP system, HR systems, etc.)

9/ Data Picture

Captures both existing data volumes and run rates (e.g. how much data gets created over time).

• Master Data

  • Vendors

  • Materials

  • Transactional contracts (price lists)

  • Catalogs and Catalog Items

• Transactional Data

  • Sourcing events

  • Contracting projects (legal agreement draft to signature)

  • Vendor/Contract risk evaluations

  • Requisitions

  • Purchase Orders

  • Goods/Service receipts

  • Invoices (PO & Non-PO)

  • PCard transactions

• Spend Data

  • Spend by purchasing category

  • Transaction volume by purchasing category

  • Transaction volume by business process (e.g. how much of the spend is on PO vs. Non-PO Invoice vs. PCard Spend)

If you hire a consulting firm to carry out a current state assessment of your Procurement function, you will get a combination of the above based on the scope you agree to. However, these are all documents, facts and figures you are realistically able to produce internally with the help of a Business Analyst.

The only exception is the 10th and final deliverable of a current state assessment:

• 10/ Maturity Assessment

  • This is where the external perspective adds value. This deliverables gives you a sense of the maturity of your function when compared to the rest of the market. This leads to the logical next step of a maturity assessment: opportunity identification for the target end state.

Moral of the story?

If you want to:

• Find operational “quick wins” yourself

• Fast track an eventual current state assessment

• Start mitigating your digital transformation risks right now,

start putting together the above documents today.

All you need is a good Business Analyst and you’re off to the races.

Doing this will pay compounding dividends…

Over the next few weeks, I’ll give you examples of the deliverables for which I did not share any guides. Stay tuned.

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