Buy or Build: Choosing Your Path to Digital Procurement Transformation

Procurement performance management is gaining traction as an effective approach to procurement project tracking and value creation measurement. Because procurement teams execute in a variety of platforms across the source-to-pay process, it has been nearly impossible to access dedicated reporting in a single source of truth. Procurement professionals need a central, transparent hub where they can gain a true picture of the sourcing pipeline and easily view project progress. 

In this two-part blog series, we’ll review options for achieving procurement performance management (PPM) and recommend a seven-step checklist to help you weigh the decision of either buying a solution like SpendHQ’s PPM versus building it yourself or via a hired IT consultant. 

Why Procurement Performance Management Is Important

With PPM, procurement teams have a clearly defined approach to managing their internal processes while making their progress visible to the business. 

Key elements of a procurement performance management approach include: 

  • Project management, from planning to tracking, with management oversight to maintain the strategic agenda 
  • Reporting capabilities that communicate progress toward KPIs 
  • Value tracking to demonstrate financial and non-financial gains made by procurement projects 
  • Alerts and notifications to trigger attention and action for projects when necessary 
  • A single source of truth where all metrics can be viewed and shared with internal stakeholders 
  • Integration options to connect with essential data in other procurement tools 

Implementing Procurement Performance Management

Eventually, every organization will seek to implement PPM, as many visionary CPOs worldwide have already adopted this approach and proven its value. Once you have decided to take the leap, you have to select your path forward to achieve your PPM goals. As organizations evaluate their needs, the question arises: “Do we build or buy?” Often, internal management first wants to take a look at current tools and processes to see if there’s a solution to be found there. 

The Temptation to Improve Existing Tools

The features needed for procurement performance management are often viewed as easy to replicate. Some may feel that existing tools, such as Excel, Google Sheets or general project management tools, can be used to make a PPM solution of your own. 

Or perhaps the argument is made to customize or optimize those existing tools to find a way to make them work for the purposes of PPM, especially if there is a belief that these tools will be cheaper because you have already made the investment. 

However, none of those generic tools are purpose-built for Procurement, and they certainly don’t offer any degree of scalability, data governance, inherent procurement best practices, or S2P integration connectors that can be found in ready-made PPM software platforms. Nearly all procurement teams will quickly recognize that they can’t make proper PPM happen using a mixed bag of these incumbent workplace tools. 

So now, the solution planning moves to a truly “bespoke build” vs. the choice of “buying a PPM platform” discussion. 

The Temptation to Build

It’s common for internal management to lobby for engaging IT to build a solution that will fit your needs. The internal argument for not buying a dedicated solution most often revolves around cost control or the tempting prospect of creating a custom solution for your exact specifications (or a combination of both). But the costs associated with building can quickly escalate in areas that are not associated with the purchase of licensing and implementation. Cost can quickly skyrocket where you least expect it. Are you prepared to lead the creation and implementation of new software? 

Find out by continuing to Part 2, where you’ll get an in-depth look at the pros, cons, and challenges of building a procurement performance management system in house!