I was recently asked the question "Will we save more if we use Provalido?” and to my shame I didn’t actually know the answer! There was only one way to find out, so we performed an analysis across our clients, comparing their reported savings prior to using Provalido with their savings in the first full year of using our system. Here’s what we discovered:
Average Savings Increase: 18%
Average Annual ROI (on cost of Provalido): > 50x
Average Payback Time: < One Week
So the numbers are pretty convincing, but the question then turned to “Why do organisations save (or at least report) more when using Provalido?” Provalido is cloud-based software for procurement teams to capture savings ideas and opportunities, plan and manage cost reduction projects, guide process compliance with approvals and workflow, ensure procurement savings are realised with transparent savings tracking and report with live savings reports and dashboards. This is all fine and useful, but the tool doesn’t actually make the savings itself, so what’s driving the increase?
Listening to customers about what they have experienced since adopting our tool, there are some key themes that the increased savings could be attributed to:
Collaboration – being a cloud solution the whole procurement team on every site has access to the system. It provides a central place to work together on projects, collaborate across traditional silos, learn from each other and combine procurement targets and goals.
Digital Transformation – sometimes it takes a catalyst such as a new technology to change the way people work, and in turn redefine a process (is a process something you follow, or a description of what you do?). A system with project plans, cross-organisational goals, approvals, workflow and live reports provides a new way for procurement teams to achieve their savings objectives.
Guided Approach to Projects – not every procurement professional is experienced in running cost reduction projects. Using a tool that can be configured with a variety of project types along with project templates including standard task structures can help with this, enabling procurement teams to hit-the-ground-running, taking a simple consistent approach and focusing their efforts on the savings activity more than the plan.
Gamification – Live project reporting, savings dashboards, financial visibility and transparency all bring the whole savings process to life, making it a collective effort right across the organisation. It provides a direct link between organisational and personal objectives and day-to-day business activities. When personal success and bonuses are linked with savings targets the game becomes one of constant focus and achievement.
Cause or Consequence?
It’s possible that some of the increased savings “would have happened anyway” and that using Provalido is a consequence of a heightened focus on savings within an organisation. However, the analysis provides a strong case that Provalido is at least partly the cause of the increase in savings. Whichever way round it is, there’s no doubt that best practice demands a savings management tool like Provalido, while the Provalido tool itself will drive best practice, and with the right process and the right technology, procurement performance will be optimised.