Is tech always a source of benefit?
To benefit from a sourcing system, employees need to use it, notes Rob Hornyak, an assistant professor of Information Systems, who teamed up with Arun Rai of Georgia State University to explore adoption of a sourcing enterprise system (SES) at one the largest consumer products companies in the United States. During the study, Hornyak was "embedded" in the firm. After an 18-month field study tracing employee acceptance and use of a sourcing enterprise system, Hornyak and Rai found that high levels of system use by sourcing professionals did not always lead to an increase in job satisfaction and performance.
The old saying, “You have to spend money to make money” has a corollary: If you spend less money, you make more profit. No wonder companies are trying to spend more wisely by spending $2.7 billion annually to procure procurement technology, according to Gartner analysts. The analysts add that sourcing application suites account for almost half of that total.
To benefit from a sourcing system, employees need to use it, notes Rob Hornyak, an assistant professor of Information Systems at the W. P. Carey School of Business. He teamed up with Arun Rai of Georgia State University to explore adoption of a sourcing enterprise system (SES) at one the largest consumer products companies in the United States. During the study, Hornyak was "embedded" in the fir
After an 18-month field study tracing employee acceptance and use of a sourcing enterprise system, Hornyak and Rai found that high levels of system use by sourcing professionals did not always lead to an increase in job satisfaction and performance. In some instances, higher levels of use lead to decreases in job satisfaction and performance. Researchers found that job outcomes from higher or lower levels of system use depended on the employee’s work process context. For example, sourcing professionals whose jobs involve a lot of interaction and collaboration with internal customers and external suppliers reap higher levels of job benefits from lower levels of sourcing system use.
Employees often report dissatisfaction and lower job performance immediately following the implementation of new technology. Hornyak and Rai found that these outcomes may persist if the employee’s work process isn’t considered in combination with use requirements.
Purchasing plus
The technology Hornyak and Rai examined was more than simple procurement software. An SES supports strategic sourcing, not just the transaction behind the buy. So, while the transactional part of procurement largely focuses on price-based supplier selection, strategic sourcing encompasses a more complex set of considerations. For instance, strategic sourcing may examine the total cost of ownership, which is influenced by things like quality, lead times, tax credits and partnerships with suppliers.
Plus, an SES can help procurement professionals through multiple steps of the sourcing process: from requirements determination to supplier selection all the way through contract execution. So, you’d think that the sourcing team would spend a lot of time on the system, and that could prove its effectiveness, right? Not according to Hornyak.
“Traditionally, researchers have understood system use by measuring things like time on the system, numbers of features used or how many times an employee would use a system each day,” Hornyak says. “We realized that just because you’re spending a lot of time on a system, that doesn’t mean you’re using it in an effective way. It could mean you’re lost or if you keep using two or three features only, maybe those are the only features you understand. They might not be the features that would most help you be effective on the job.”
Hornyak and Rai looked at use of the SES as it related to two crucial functions: supplier selection and supplier governance. They also examined how that use interacts with the employee’s work process to impact job satisfaction and ultimately job performance, noting that correspondence to performance has been uncovered in prior research.
Essentially, how employees do their jobs — such as using an SES — affects how they feel about their jobs, and that attitude may impact job performance. If employees like the technology they use in doing their work, they are more likely to like their jobs as well, and this positive effect may partly explain an increase in job performance. The converse can be argued, as well. If employees don’t like using the technology, this may negatively impact how they feel about their job and ultimately lead to lower job performance.
Finally, the researchers looked at a variety of factors that might impact both system use and job outcomes. Among the job characteristics the scholars examined were autonomy (the freedom employees felt they had to choose their work methods), interdependence in performing job-related tasks and standardization of their work processes.
Although the sourcing professionals were required to use certain features of the SES to do their sourcing projects, Hornyak says the employees using the SES welcome technological change. “Sourcing professionals are folks who’ve earned gold stars in education and work experience,” he explains. “They’re highly motivated to use new tools to do their jobs better because they have constant quantitative feedback on how well they’re doing their jobs. They’re like salespeople, but instead of being measured on revenue, a sourcing professional looks at cost savings and cost reduction.”
Hornyak also made sure he would be getting honest viewpoints by making this an “embedded” research project: He had an office and regular hours at the company’s headquarters. “That gave me access to the project team and folks whose jobs were being impacted by this project,” he says. “By being embedded in the company, people get used to seeing you in meetings and in the halls. You have coffee and lunch with them, and their guard goes down. They begin to trust that you’re not a spy for management; you’re not evaluating them or going to embarrass them. You’re trying to understand what is going on and to capture that as accurately as possible.”
This approach brought in thorough and candid evaluations of the SES from both supporters and detractors. Through this feedback, Hornyak found that one job characteristic was consistently coming up in conversations. That factor was interdependence, which Hornyak defines as “The number of collaborators you interact with to get your job done and the degree to which you depended on them for information.”
Gaining buy-in from the buyers
Hornyak says it’s easy to see how interdependence can be an inhibitor to SES use. “If you’re sourcing a million red plastics pellets, that's a pretty standardized process to follow, and that can be easily automated. Using an SES is going to help you see everything you need to be able to make decisions, because those decisions are going to be based on an apples-to-apples comparison of price, delivery and other attributes.”
But what about complicated sourcing of a complex product or service? “You may need to spend more time going back and forth with collaborators,” Hornyak points out. That process – or interdependence – is the game changer with sourcing system use, he found.
According to Hornyak, it’s common for sourcing professionals involved in procuring complicated items — capital equipment, for instance — to have “an informal process of pushing a document back and forth,” during which negotiations take place. “Using the SES, the sourcing professional might post a red-lined document into the system, and the system might automatically notify the other person of the changes. Now the other person has to log into the system and pull down the contract to see what changes were made. That kind of inconvenience can create dissatisfaction and leave people not wanting to use the system at all.”
One sourcing professional engaged in capital projects with 20 collaborators said that the “RFP process needs to be much more emergent and has to integrate timely customer input, but the enterprise system is too structured.” This same person called the SES price comparisons “not meaningful” and claimed negotiation was key when sourcing complex, risk-filled projects.
Meanwhile, sourcing professionals buying less complicated fare where the process involved less interdependence found the system helpful: A boon to both job satisfaction and project results. One praised the system for making decisions more objective because it helped limit the kind of information would-be suppliers could provide, thereby making comparisons simpler to conduct.
Another also liked the control of information flow, noting that vendors could “blow pages of smoke” about things like quality testing rather than address the specific information requested. Yet another liked the way the system forced vendors to address specific price components, preventing them from burying such details in bundled pricing schemes.
In contrast, those engaged in sourcing complex projects, items or services, found that the governance tools of the SES fell short. One said the systems monitoring of service-levels was insufficient; site visits and phone calls were necessary to keep governance up to snuff.
On the flip side, those engaged in simple sourcing with little interdependence liked the tool for governance. They praised the version control of contracts the system enforced, the ease of monitoring simple service-level agreements, such as delivery dates and the system’s ability to eliminate “unnecessary meetings.”
It was the job characteristic of interdependence that made system users say “yea” or “nay,” suggesting that characteristics of work processes, not just the technology itself, should come under investigation when looking at enterprise systems.
“Enterprise systems typically are implemented under use mandates,” Hornyak says. But, sometimes, “more technology is not better.”
Bottom line
• Sourcing enterprise systems (SES) aim to help procurement professionals with requirements determination, vendor selection and supplier performance management.
• While use of these systems can be a boon to procurement professionals buying commodities, one study found that the systems proved to be a hindrance to procurement staff involved in complex projects at a large consumer products company.
• Complex project sourcing may require more back-and-forth negotiation. An SES didn’t facilitate that process, sourcing professionals said.
• In research conducted at a consumer products company, the characteristics of a sourcing professional’s job duties determined whether the SES had positive or negative impact.
• The most important job characteristic at play was interdependence, or how much the sourcing professional needed others’ input to complete the job.
“Traditionally, researchers have understood system use by measuring things like time on the system, numbers of features used or how many times an employee would use a system each day,” Hornyak says. “We realized that just because you’re spending a lot of time on a system, that doesn’t mean you’re using it in an effective way. It could mean you’re lost or if you keep using two or three features only, maybe those are the only features you understand. They might not be the features that would most help you be effective on the job.”
Hornyak and Rai looked at use of the SES as it related to two crucial functions: supplier selection and supplier governance. They also examined how that use interacts with the employee’s work process to impact job satisfaction and ultimately job performance, noting that correspondence to performance has been uncovered in prior research.
Essentially, how employees do their jobs — such as using an SES — affects how they feel about their jobs, and that attitude may impact job performance. If employees like the technology they use in doing their work, they are more likely to like their jobs as well, and this positive effect may partly explain an increase in job performance. The converse can be argued, as well. If employees don’t like using the technology, this may negatively impact how they feel about their job and ultimately lead to lower job performance.
Finally, the researchers looked at a variety of factors that might impact both system use and job outcomes. Among the job characteristics the scholars examined were autonomy (the freedom employees felt they had to choose their work methods), interdependence in performing job-related tasks and standardization of their work processes.
Although the sourcing professionals were required to use certain features of the SES to do their sourcing projects, Hornyak says the employees using the SES welcome technological change. “Sourcing professionals are folks who’ve earned gold stars in education and work experience,” he explains. “They’re highly motivated to use new tools to do their jobs better because they have constant quantitative feedback on how well they’re doing their jobs. They’re like salespeople, but instead of being measured on revenue, a sourcing professional looks at cost savings and cost reduction.”
Hornyak also made sure he would be getting honest viewpoints by making this an “embedded” research project: He had an office and regular hours at the company’s headquarters. “That gave me access to the project team and folks whose jobs were being impacted by this project,” he says. “By being embedded in the company, people get used to seeing you in meetings and in the halls. You have coffee and lunch with them, and their guard goes down. They begin to trust that you’re not a spy for management; you’re not evaluating them or going to embarrass them. You’re trying to understand what is going on and to capture that as accurately as possible.”
This approach brought in thorough and candid evaluations of the SES from both supporters and detractors. Through this feedback, Hornyak found that one job characteristic was consistently coming up in conversations. That factor was interdependence, which Hornyak defines as “The number of collaborators you interact with to get your job done and the degree to which you depended on them for information.”
Gaining buy-in from the buyers
Hornyak says it’s easy to see how interdependence can be an inhibitor to SES use. “If you’re sourcing a million red plastics pellets, that's a pretty standardized process to follow, and that can be easily automated. Using an SES is going to help you see everything you need to be able to make decisions, because those decisions are going to be based on an apples-to-apples comparison of price, delivery and other attributes.”
But what about complicated sourcing of a complex product or service? “You may need to spend more time going back and forth with collaborators,” Hornyak points out. That process – or interdependence – is the game changer with sourcing system use, he found.
According to Hornyak, it’s common for sourcing professionals involved in procuring complicated items — capital equipment, for instance — to have “an informal process of pushing a document back and forth,” during which negotiations take place. “Using the SES, the sourcing professional might post a red-lined document into the system, and the system might automatically notify the other person of the changes. Now the other person has to log into the system and pull down the contract to see what changes were made. That kind of inconvenience can create dissatisfaction and leave people not wanting to use the system at all.”
One sourcing professional engaged in capital projects with 20 collaborators said that the “RFP process needs to be much more emergent and has to integrate timely customer input, but the enterprise system is too structured.” This same person called the SES price comparisons “not meaningful” and claimed negotiation was key when sourcing complex, risk-filled projects.
Meanwhile, sourcing professionals buying less complicated fare where the process involved less interdependence found the system helpful: A boon to both job satisfaction and project results. One praised the system for making decisions more objective because it helped limit the kind of information would-be suppliers could provide, thereby making comparisons simpler to conduct.
Another also liked the control of information flow, noting that vendors could “blow pages of smoke” about things like quality testing rather than address the specific information requested. Yet another liked the way the system forced vendors to address specific price components, preventing them from burying such details in bundled pricing schemes.
In contrast, those engaged in sourcing complex projects, items or services, found that the governance tools of the SES fell short. One said the systems monitoring of service-levels was insufficient; site visits and phone calls were necessary to keep governance up to snuff.
On the flip side, those engaged in simple sourcing with little interdependence liked the tool for governance. They praised the version control of contracts the system enforced, the ease of monitoring simple service-level agreements, such as delivery dates and the system’s ability to eliminate “unnecessary meetings.”
It was the job characteristic of interdependence that made system users say “yea” or “nay,” suggesting that characteristics of work processes, not just the technology itself, should come under investigation when looking at enterprise systems.
“Enterprise systems typically are implemented under use mandates,” Hornyak says. But, sometimes, “more technology is not better.”
Bottom line
• Sourcing enterprise systems (SES) aim to help procurement professionals with requirements determination, vendor selection and supplier performance management.
• While use of these systems can be a boon to procurement professionals buying commodities, one study found that the systems proved to be a hindrance to procurement staff involved in complex projects at a large consumer products company.
• Complex project sourcing may require more back-and-forth negotiation. An SES didn’t facilitate that process, sourcing professionals said.
• In research conducted at a consumer products company, the characteristics of a sourcing professional’s job duties determined whether the SES had positive or negative impact.
• The most important job characteristic at play was interdependence, or how much the sourcing professional needed others’ input to complete the job.
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