The Purchaser 18 - Patrick, Sebastian and Nicolai

W O R D S: M AT T H IG H

PATRICK SEBASTIAN & NICOLAI REIMAGINING DIGITAL PROCUREMENT AN INNOVATIVE APPROACH TO DIGITAL TRANSFORMATION IS A CRITICAL ENABLER OF ROCHE’S NEXT-GENERATION PROCUREMENT TRANSFORMATION

THE DIGITAL MEDIA PLATFORM FOR PROCUREMENT AND PURCHASING LEADERS

The Purchaser is the destination for procurement and purchasing leaders, innovators and entrepreneurs— your essential source of C-level interviews, news, information, ideas and innovations.

READ THE LATEST ISSUE NOW

ROCHE

Rather, every conversation with Foelck or any of the supremely capable team he works with is a school day – and a good one, at that. The importance of taking calculated risks (think, turning your back on the large procurement technology providers out there to tell the

business you’re building something better, and from the ground up), the intricacies of working fast and flexibly with innovative tech startups in a way that few in the industry do, the sheer complexity of creating customised digital strategies that support broader transformation work, and building a procurement department centred around experiences and problem solving supported by technology. You name it, it’s covered.

| I S S U E E IG H T E E N

You’d think, two articles into our series exploring the next-generation procurement transformation at Roche, I’d join Patrick Foelck and his colleagues knowing what to expect.

In some ways, I do: bold ambition, a truly innovative approach to the profession, an understanding of not just how to change but why, and a confidence in the entire team’s ability to evolve, rise to any challenge or business problem, and bring real value to the organisation. That it’s all delivered in an honest, frank and engaging way makes it all the easier. But don’t think that makes each discussion any less inspiring or unique.

Roche is in the midst of a journey to nextgeneration procurement built both on design and necessity - Foelck matter-of-factly told me during our first discussion, that if the procurement function doesn’t transform to offer superior outcomes and value beyond the savings story, it will get replaced by digital solutions and specialised external service providers. For Roche, next-generation procurement is based on an understanding 63

| I S S U E E IG H T E E N ROCHE

“Solutions out there now enable procurement for users and let the function drive a completely different role in the enterprise that isn’t self-contained or insular any more; it’s helping us to break out of the mould we’ve been set in for the last 30 or 40 years.” Nicolai that it holds a unique value proposition that can only be unlocked by reinvention: end procurement for procurement’s sake, focus on value creation, ditch the outdated savings-focused approach to procurement performance, and embrace innovative approaches and technologies to support the delivery of solutions that meet real business problems like security of supply, shareholder value, ESG and more.

Digital transformation underpins the work of Foelck and the team. It is, he states, a critical enabler of the entire next-generation procurement evolution. But unlike in many organisations, for which ‘digital’ has simply become a byword for doing exactly the same but faster, or with less human interaction, technology is viewed with an entirely different mindset and culture

by Roche’s procurement team.

In this instance, it is considered from the perspective of customer-centricity and user

64

experience, as a set of tools to enable those in the function to work differently and do new things, and in more value generating and innovative ways. It is a facilitator of transformational change rather than incremental improvements, and from a ‘bestof-both’ strategic stance: co-create a solid foundational core with a tech partner that can be simply and rapidly complemented with other digital assets, fit-for-purpose solutions built in collaboration with startups, and by creating and investing in a digital ecosystem that helps enrich and enhance procurement’s work. To find out more about what this looks like in practice, and the steps taken so far in delivering the vision, I spoke to Foelck for one last time. We were joined

by Roche Procurement Digital Enablement Lead Sebastian Ebers, and Nicolai Jensen, CEO of LeanLinking, one of several startups contributing to Roche’s transformation journey.

DIGITAL AS AN ENABLER “Technology is critical for our future success, enabling our evolution to next-generation procurement,” says Foelck, expanding on how innovation is helping to drive evolution.

“In terms of enablement, there’re a couple of ways you can look at it. Digitalisation lets us become lean, more automated and efficient, and enables a higher return on procurement investments. I call that the ROI choice – do what we do today, but do it more efficiently.

The problem is, if you focus your digitisation efforts solely on efficiency gains, it becomes a threat to the function: in a highly digitised core-procurement process environment there’s limited value creation by the procurement practitioner and no meaningful communication between procurement and the business and, if everything is automated, we can no longer leverage the unique capabilities and great talent we have and hence may not be needed in the future.

“Rather, we see technology as the tool that lets us step up and take what we do to another level,” he says. “That means digitising or automating to augment what we do, and help us work more efficiently and effectively to then refocus/reinvest the freed-up capacity, the great people we have across the function and

ROCHE

| I S S U E E IG H T E E N

65

| I S S U E E IG H T E E N ROCHE

their capabilities to deliver true shareholder value, develop solutions to business problems, bring ideas from the market and co-create with suppliers, and become embedded in the business. That’s the road we’ve chosen: use tech to become better at what we do today, invest in new value-add capabilities and deliver a user experience that delights the business and helps to strengthen the relationship through credibility and trust.”

Successfully navigating that road falls in large part to Ebers and the team he heads up, which shapes procurement’s digital strategy, identifies opportunities, scouts solutions and partners like Jensen and LeanLinking, and has built an effective backbone upon which a digital ecosystem can flourish. “I often talk about the two Cs,” he says, discussing the 66

evolving use of technology in procurement.

“Previously, we’ve had legacy procurementcentred solutions that everyone in the function had to use, and which were set up largely for compliance and control reasons.

The other ‘C’ – contribution – is where we’re focused. That means viewing technology as a vehicle to move away from just compliance, reporting and processing, to a future where we contribute to the organisation far beyond savings, and focus on ease of use and user experience to drive adoption of our strategies and solutions.

Things like workflow automation, predictive technologies, Generative AI, cloud, low-code/ no-code, and more open up a whole new space for us to explore and make the potential we have really exciting.”

“Digital became the critical enabler to help answer that question, meet our ambitions and goals, become more efficient and reinvest in new valueadd capabilities and areas that we hadn’t considered relevant for procurement before.” Sebastian

No change can occur in isolation. Roche embarked on its operating model evolution centred around shifting procurement from a reactive to a proactive organisation, building on the belief that procurement can deliver far superior outcomes through

| I S S U E E IG H T E E N

BUILDING A DIGITAL STRATEGY

an efficient core, new value-add capabilities and a stronger focus on customer needs and priorities. The team knew a dedicated digital strategy was essential. Within this, a core procurement technology solution represents a lean backbone focused on operational and transactional activities across up and downstream workflows, and is complemented with relevant innovative solutions from the digital ecosystem, delivering superior user experience, automation efficiencies and self-service capabilities. Fundamental principles of the digital strategy include co-creation and collaboration with external partners, a best-of-both approach, the ongoing engagement of multiple stakeholder groups, and the rapid deployment and ongoing evolution of solutions in order to drive continuous improvement.

ROCHE

“Sebastian is right,” says Jensen, a start-up leader with 15 years of experience in leading various tech companies and building and implementing innovative digital solutions and strategies for small and midsize businesses and enterprise clients. For Jensen, digital innovation is all about being truly bold and challenging the status quo - and always being user centric. “Regardless of whether any of these monolithic legacy solutions is good or bad, the point really is that since the 80s it’s been procurement for procurement’s sake, technology for the procurement community, focused on procurement‘s measures of success. But it doesn’t always drive a great deal of value and impact across the organisation in the broader sense.

The solutions out there these days enable procurement for users and let the function drive a completely different role in the enterprise that isn’t self-contained or insular any more; it’s helping us to break out of the mould we’ve been set in for the last 30 or 40 years.”

“You can’t create a future-leading organisation without challenging your processes and your technology, and we knew from the outset that we wouldn’t transform if we looked at the typical pillars of people/organisation, process and tech in isolation – it had to happen together,” says Foelck. “We also knew there was no way we could rely on the traditional method of bringing in technology to a large corporation: select one big solution provider, spend years and significant amounts of time and money on customisation and, 5 years 67

later, realise it’s already outdated. It just wasn’t an option. Instead, we had to rip out what we already had and take a more creative approach driven by the best-of-both mentality and approach we’ve defined in the strategy.”

ROCHE

| I S S U E E IG H T E E N

“The operating model evolution was built on a key question: ‘What do we want to achieve as an organisation?’,” says Ebers, which led to the new approach to technology. “Digital became the critical enabler to help answer that question, meet our ambitions and goals, become more efficient and reinvest in new value-add and business critical capabilities and areas that we hadn’t considered relevant for procurement before – it opened a very

“We define our own roadmap, our own priorities and pace, and the people we work with who can bring innovative ideas, fresh perspectives and approaches to our business problems that we can incorporate into our journey and may never have considered.” Patrick different procurement world. In terms of what that looked like, it came down to an openness to embracing new ways of working, thinking more about solutions, outcomes and user journeys, and putting the customer and their experience in the centre. Transferring this customer-centric approach to the digital transformation means running customer experience sessions, for example, for our user community both to get buy-in and understand what they truly need. It allows us to userenhance our digital ecosystem and drive up adoption, and digital and procurement strategy realisation.”

As a representative of one of the best-ofbreed startups, with which Roche is working to complement their backbone, Jensen has the enviable position of bringing an outside

68

perspective to this considerable programme of transformation. “You don’t see this kind of approach that often,” he says. “There’s a real perspective in Roche, as well as a clear vision and understanding on what to build and not build, and what direction we’re going in together. Very often, that’s lacking. The change management piece Sebastian talks about is essential in that. Often you see large corporations look at a typical transformation as 70% of your budget goes into the change you’re making and 30% has to go into managing that change. When it comes to digital transformation you flip it because it has such a big impact on the way that people work. To bring in digital effectively, you need

a different mindset and approach to learning: think big, start small, move fast and keep innovating, while bringing everyone along with you. It’s critical to making this kind of strategic direction a success.”

THE BEST-OF-BOTH APPROACH Equally as critical is the core foundational layer or backbone upon which digital assets and best-of-breed solutions are added. Says Ebers: “In the past, the decision always had to be ‘do we do best-of-suite or best-of-breed’, but we felt we didn’t want to make such a binary decision – there is no one size fits all, so the first step was working with our IT and business process management teams to have everyone agree with the direction and endorse the change of mindset. We believe in the

ROCHE

“It’s an important point about e2e technology vs point solutions,” adds Ebers. “E2e Technology is good to address foundational requirements, but you only start to deliver real value and provide superior user experience when you complement it with innovative solutions. These solutions address specific challenges and opportunities you have and fuel the ecosystem with relevant content, and that’s what we can now do by working with startups – that’s where teams like Nicolai and

everyone at LeanLinking comes in. They have an idea, we have use cases and we bring them together and go on the journey collaboratively in an environment where we’re co-invested, joined up for the same outcomes, and learn and develop together. Yes, we believe in endto-end connectivity and having something as a connecting tissue, but we’re also inspired by tapping into all of the other opportunities out there because one solution just can’t have the best of everything. This way means we really can provide more value to the organisation faster.”

| I S S U E E IG H T E E N

cloud and in standards, but we also believe in continuously adopting and enhancing in a way that makes sense to us as a unique business and not to the solutions provider’s roadmap, supporting their profit margin or growth agenda. We chose an established technology as our backbone to drive core processes, from sourcing and buying right through to paying invoices and it was really important to establish that base. But that’s also just doing procurement more efficiently, so best-of-both really means thinking how we can advance by complementing the foundational layer with a broad toolbox of innovative startups, content, and other point solutions.

Foelck expands on why the best-of-both approach is the right one for Roche’s next-gen procurement vision. “As a large corporation and with the complexity we have in our business, it just wouldn’t have been possible to have best-of-breed startups addressing all our requirements and use cases, and somehow connect those solutions together effectively. We had to have a foundational layer to connect core workflows, and enterprise technology with processes and use cases we have covered by startups and point solutions. However, we had to keep it 69

ROCHE

| I S S U E E IG H T E E N

light and agile – so, we didn’t invest heavily in time and money draining customisation and tailored modules that are too special and complex to ever change again. Our backbone partner was willing to go down this co-creation journey with us; be part of an environment in which we constantly evaluate new solutions to understand whether they fit existing or new use cases better or not, scale back or take backbone modules out of scope, and develop and connect startup and point solutions in parallel. It’s getting us closer to a true digital ecosystem customised to Roche’s needs.

“Sourcing and how we came to work with Nicolai and LeanLinking is an example,” he adds “We wanted a negotiation capability that would enable more and better negotiation outcomes, delivered faster. We understood that our existing sourcing module did not cover our requirements in terms of negotiation enablement. So we scouted the market for the right solution and partner, identified LeanLinking as a potential candidate, and went into a proof of concept phase following our own methodology on how to engage with and bring in startups. We truly co-created a solution almost from scratch together over the course of 18 months that we’re starting to roll out now, and which really helps our sourcing team to deliver more and better negotiations, and avoids spending precious training budget and hours on traditional procurement negotiations training.

“From the start we’ve known it’s an approach that requires a very different mindset and a different way of looking at risk taking,” says Ebers. “It’s quite unique to find an organisation of our size working with very small, but very innovative startups like this and truly co-creating together something that has a big impact on the business. Selecting and implementing products from a well established and big solution provider often doesn’t win you many brownie points in terms of user experience and value-add but also doesn’t get you into much trouble. But, having taken the decision to say ‘no, we don’t want the big approved solution providers with their often functioning but one-size-fits-all solutions and multi-year roadmaps’, it means a lot of risk and responsibility falls on us. The flip side 70

of that of course is that it absolutely puts us in the driver’s seat. Usually when you select technology and work with larger partners, you’re dependent on their roadmap and development strategy to a degree. Here, we define our own roadmap, our own priorities and pace, and the people we work with who can bring innovative ideas, fresh perspectives and approaches to our business problems that we can incorporate into our journey and may never have considered. It’s a fundamentally different approach to excellence and succeeding that will enable us to achieve next-generation procurement much faster while delivering superior user experience and greater returns from our tech investments along the way.”

THE POWER OF CO-CREATION LeanLinking was built on a vision to transform supplier relationships and negotiation management in order to help organisations like Roche capitalise on the value creation potential that exists in procurement. It has two solutions it is working with Roche on: LeanLinking RELATIONS and LeanLinking DEALS. The former is a solution that helps Roche effectively manage supplier relationships, governance, and performance on the strategic, operational and tactical levels. The latter is centred on empowering and enabling negotiators to deliver the best possible negotiation outcomes faster and more efficiently for all parties involved. It uses Roche internal and external data, and market intelligence to guide users through best-practice negotiation workflows, while providing automated insights and benchmarks along the process.

“What Roche has managed to do,” says Jensen, reflecting on the two companies’ cocreation journey from a partner perspective, “is to have created a nimble and flexible organisation that doesn’t feel like working with a large enterprise customer – as the solutions provider it makes it very easy to buy into that culture and the transformation that’s happening. The best-of-both approach makes a material difference in, first, how solutions are selected to plug into the backbone, and secondly, how the engagement with us as

ROCHE

“We’ve two key programmes,” he continues.

“One is around managing supplier relationships for larger strategic and business critical suppliers that drive a lot of value and/or are key to Roche’s ability to operate and continue providing life-saving medicines to patients. The second is centred on empowering and enabling negotiators to deliver the best possible negotiation outcomes faster and more efficiently for all parties involved. When Roche first approached us, they explained very clearly that they needed a supplier management solution that meets their needs, delivers value in practice within months not years, and one that can complement their technology backbone. This gave us the opportunity to really demonstrate the benefits of working with a startup,

in terms of approach, mindset and actual solution performance. Because we’re smaller and more focused, we are more agile, go faster and deeper than larger solution providers that claim to do everything.

And that was really needed. Roche has a large number of suppliers on its books that support many different business areas with varying requirements across the globe, and that level of complexity can’t be managed with the same diligence – you have to have the ability to segment, prioritise and align with specific processes, while providing a practical and scalable solution. That was the capability we brought.”

| I S S U E E IG H T E E N

a solutions provider happens. It’s far more targeted, we are very much part of one transformation team, and I’ve not really run into any other companies that are building their technology capabilities in this way.

From this initial scope of work, says Jensen, the relationship between the two organisations quickly developed with LeanLinking presenting its supplier negotiations solution concept and its potential to create more impact faster, and deliver better results with less effort. “We pitched it, and the team said very quickly ‘let’s do it, you bring the 71

| I S S U E E IG H T E E N ROCHE 72

technology and we’ll bring the content and the subject matter that makes your solution relevant’. This true co-creation approach is really important to recognise in terms of how we collaborate. As a solutions provider you can bring technology, and that’s great, it works and helps. But it’s only really useful if you furnish it with the right content and within the context of an organisation that wants to do things the right way. That’s why, in terms of what we’re talking about, one plus one makes far more than two and our relationship is closer to that of a joint venture than a technology provider because Patrick, Sebastian and the team work very differently.

From our side, it requires a willingness to jump in and take the risk and the ability to invest in constant market exploration so I can have an intelligent, informed conversation with the team and bring the right external perspective to supplier relationship management and negotiation to constantly evolve and enhance the solutions.”

CONTINUING THE JOURNEY There is, of course, always inherent risk in any transformation of this magnitude and Foelck concedes the work to date has been challenging. The team under Ebers, he says, is fundamental to the success of the programme, explaining that the nature of the approach to bringing in multiple innovative digital solutions that complement the backbone whilst deploying it across 150+ company codes across the world, meant it was essential to build up new capabilities and bring skills to the organisation.

“We have a ‘one team’ mindset, and open and honest conversations,” says Ebers. “It’s a different set of skills we’re looking at, it’s not traditional procurement 101. We have someone dedicated to user experience, for example, which traditionally isn’t a capability you would find in procurement.

You need to step into the users’ shoes, bring tech that they see value in and tell the story

using their words; our role is to ensure everyone in the business understands how the technical landscape translates into their work and what the benefits of the tech we bring are.

That drives buy-in and adoption and that’s why it is important to care about user experience rather than just focusing on getting the job done. We have tough conversations across the organisation, balancing different, sometimes conflicting, requirements and priorities, e.g. functionality versus user experience, and that’s this team – right at the intersection between the wider internal community and our needs, as well as our partners internally and externally.”

| I S S U E E IG H T E E N

“The framework stays the same, but what evolves is the value each of the solutions can bring,” says Jensen. “That comes down to continuous learning, exploring and development. Take the negotiating solution as an example. It was originally built around a few use cases for a smaller group of procurement users working with strategic suppliers. But now the environment is evolving, there’s a new influx of talent, inflation and other disruptions that mean

“The house is built, now it’s about content furnishing, fueling the solutions with data and information and continuously evolving our digital ecosystem based on user feedback to bring the technology to life,” Foelck expands. “For everyone, this notion of supercharging technology with knowledge will be critical. Our function has never been more important. We need knowledge from a broad spectrum of people built into the solutions that are being brought forward, be it risk, sustainability, negotiations or anything else, which will also allow us to be a catalyst for talent in procurement. If you bring somebody from finance, from manufacturing, from a commercial function into procurement and allow them to leverage the talent that they have within the context in procurement enabled by the solutions we have deployed, then you have a material step forward to drive more value from our procurement function.

ROCHE

Roche is just over a year into its new operating model and well on the way to next-generation procurement. Specifically with regards to technology and the delivery of the digital strategy, Ebers explains that driving adoption, tackling new challenges and opportunities and continuing to develop as a team will be key. “It’s a case of bringing stability to the organisation, while continuing to change most of what we are just getting used to,” he affirms. “We’ve established the core and are now enhancing it based on usability and functionality topics in order to further drive value for the business, for our suppliers, and our colleagues in procurement.

We’re also embarking on co-innovation initiatives when it comes to enabling things like Roche’s sustainability roadmap, supply chain continuity, and risk management frameworks. It’s not just point solutions, but what I call platforms that enable so many more use cases to be explored and connected.

That’s not just about working differently, but together in that wider ecosystem to really increment the value delivery.”

we already need to change and evolve the product so it addresses more use cases and is accessible to a wider audience in Roche.

Roche procurement has a huge agenda around bringing in solutions to complement the backbone, which means we have to constantly be very sure we’re addressing the relevant pain points and challenges at any given moment.

“We are well underway on our journey towards next-generation procurement, already delivering significant value in areas far beyond the traditional procurement scope and known measures of success; digital plays a critical role enabling our step-change in performance, functional productivity and user experience, and allowing us to invest in new capabilities and value-add services.”

WWW.ROCHE.COM

73