MTN Group – The Hackett Group 2022 Digital Award Winner – Source-to-Purchase

The Hackett Group Principal Vin Kumar talks with MTN Group CPO Dirk Karl about the company’s digital transformation effort in procurement, which won the company a 2022 Digital Award from The Hackett Group.

Show Notes

Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Vin Kumar, Digital Enablement practice leader and principal at The Hackett Group. Featured in this episode is one of the seven winners of The Hackett Group’s 2022 Digital Awards. Hear about a cutting-edge company that is operating with a clear advantage of measurable solutions at scale using digital transformation solutions.

MTN Group is a $10 billion company based in South Africa. They operate in 21 countries across Africa and the Middle East and run Africa’s largest cell phone network. MTN Group received an award in The Hackett Group’s Source-to-Purchase category for their predictive procurement strategic sourcing system, which helped them transform their procurement operations. Joining us to talk about their efforts is MTN Group’s Chief Procurement Officer Dirk Karl.

To begin, Dirk identifies the unique challenges MTN Group aimed to address with their solutions. The driver was the alignment of their group’s sourcing strategy with their business strategy, which was in the middle of business transformation. Since their aim was also to be the largest tech company in Africa, they bring a focus on connectivity to Africa, their enterprises, and platform thinking. Their first solution was what they refer to as their Believe Strategy, which first analyzes environmental, social and governance for a sustainable future, then looks at business insights, value, savings, and entrepreneurship.

Then, Dirk shares how the conflicts of information technology (IT) infrastructure presented further challenges for the organization to overcome. The aim of overdoing these challenges was to make smart procurement decisions under the face of uncertainty. First and foremost was changing the mindset of the team and the landscape demonstrating the true value of data. The challenge was not the typical one of integration and passwords, but the fact that the digital culture was missing. They needed to translate data information into smart information to be used for real-time insights. These challenges prevented them from proactively spotting business opportunities before they arose and exposed them to the risk of making nonoptimal sourcing decisions. Without redrawing the processes that enable agility governance and proper data capturing, Dirk reveals that you cannot truly experience the benefits of the digitization journey. Upskilling and change management became the largest challenges.

MTN Group utilizes a significant number of digital components, such as artificial intelligence, natural language, chatbots, robotics process automation (RPA) and more, in their solution. Using these tools, they were able to identify three high-impact areas: pipeline of sourcing events, influencing decisions and a high-impact optimization opportunity using RPA automation to underline agility. Bringing all ongoing sourcing activities under one nerve system was crucial in allowing them to be strategically focused. Their recommendation engine is an industry-first tool developed in-house to design data-driven category strategies. RPA is analyzed, Dirk reveals, for efficiency rather than effectiveness.

The two main challenges in building and launching predictive procurement initiatives were data and resource mapping and organizing a cross-functional team. Having both a data and sourcing background is MTN’s secret to deliver predictive procurement initiatives. Listen as Dirk details the value this solution has generated for MTN Group overall after going live. First, it has increased their sourcing business by more than 30% in terms of external revenue. Procurement is now seen as a strategic stakeholder to unlock new opportunities for business within the organization. The predictive systems they have built helped them to navigate the perfect storm through the supply chain disruption over the last several years. Other benefits are in the areas of automation of key sourcing process, commercial terms and conditions, data prediction, reduced cycling time, and more.

As the episode begins to wrap up, Dirk shares the ways MTN Group’s supplier relationships have shifted. MTN is leading another industry-first initiative in Africa, which will enable the digitization of local suppliers by providing them with a B2B procurement marketplace. Then, he predicts where the company will go from here in their journey. He highlights again that the key enabler of agility is about changing the organization’s digital DNA. New tools cannot stand alone but need to be embedded within the company’s culture and daily work. The next 12-18 months will consist of a complete revamp of their procurement and supply chain operations. Meanwhile, they will continue to challenge the status quo.

Timestamps:

• 0:48 – Welcome to this episode hosted by Vin Kumar.
• 3:23 – The problems MTN Group were working to solve.
• 8:02 – How IT infrastructure presented further challenges.
• 12:29 – The various digital components used in MTN Group’s solution.
• 16:57 – MTN Group’s recommendation engine.
• 20:03 – How game theory helps to determine solutions and strategies.
• 23:30 – The two biggest difficulties of integrating end-to-end technologies.
• 27:34 – The value this solution has generated for the MTN Group overall.
• 31:46 – How MTN Group’s relationship with suppliers has changed.
• 35:20 – Where will MTN Group go from here?