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Today we're here again with Jon Hansen. Jon is the chief editor of the Procurement Insights blog, which has more than 25,000 followers. Today's topic is change management in the digital age. Jon, thanks for being here today.



It's always a pleasure. You know what I find is amazing is technology because you and I are on opposite sides of the world. You're in China; I'm out of North America; you're in morning; and I'm coming into night. But that's the great equalizer, isn't it?



Yes, and I'm happy to be here with you again today. My first question is regarding change management. Can you talk about whether you think change management is still relevant in the digital age?



It's an interesting question, Dustin, and we had talked a little bit about this in the virtual grain room. Traditionally, when we look at the ERP backend systems, the limitations of the technology caused us to adapt the way in which we operated in the real world to work with the technology. In other words, the technology was the focal point of operation, and so how we did business was centered around making that technology work. Now the challenges with that is they generate — and I talk about this in the paper — is that you had things such as vendor rationalization strategies.



You had the concern with eliminating maverick spend. Those are two of the main things that were elements, if you will, of the process that forced people to change. Because if you look at maverick spend and its traditional breakdown, it's people not buying within the framework of negotiated contracts and would do off-contract spending. With this problem, it really hit me when I was speaking to a large audience of automotive industry people, and the Power Transmission Distribution Association indicated that in the United States, 39% of all purchases were maverick or off-contract.



In Canada, that number ballooned to 79%. Now if you look at that, are we dealing with procurement people who are not inclined to follow rules? Are we dealing with people who are being, I guess, deliberately disobedient to the system? What was the problem there? Why was there that high percentage? And maverick spend, as you know, Dustin, because you've been in the industry a long time, it was one of the biggest problems we often face. The problem that we found out with that is that, in most cases, the buyers, the procurement professionals who had relationships, who knew where the best opportunities were, who knew that some of the contracts that were negotiated weren't necessarily reflecting the best value, especially when you get into indirect MRO materials.



They would buy off-contract because they could get better deals. So change management strategies to try to eliminate maverick spend, change management strategies to rationalize vendor supply bases, all were driven, really, by the technology of the time and not necessarily by the best process or the best potential outcomes. Do you see where I'm going with that, Dustin?