LIVE Dispatch: Capturing the Ear of the CFO

Earlier today, Ariba announced the publication of a survey conducted in conjunction with CFO Magazine that investigates finance's view of procurement. Most of the results are not necessarily surprising given the findings that many of the goals of CFOs, controllers and the like are aligned with those of procurement executives. For example, spending on production inputs and indirect goods / services tops the list of areas where finance believes there exists opportunity for cost reduction (as one can assume it does for procurement as well, since that's our job, after all).

Perhaps the most insightful finding in the survey is how finance views it can expand its role in improving performance related activities in procurement. What finance is not interested in is improving core transaction processing for the finance function (ding-dong, core ERP is dead ...) Hence what matters most in the view of finance executives is how a company spends its money on items outside the firm such as production inputs and auxiliary goods and services, not managing internal labor and benefits costs.

In addition, the ability to sense and respond to market dynamics outside the firm can yield real benefit. The irony of this is that risk management and business planning/forecasting are the two top areas where finance believes their organization needs to improve from a procurement perspective. In other words, finance desperately wants to more effectively govern and exert influence outside the four walls into the supply community. But the function is hamstrung by a lack of tools, processes and systems to make this vision a reality. Hence, finance's burning platform for procurement really is improving the quality of information to support the optimal set of business decision making.

What else did I find interesting in the study? For one, it's not surprising that finance executives in manufacturing view procurement as playing a greater role in their business than non-manufacturing businesses. In addition, the study found that those finance executives who have adopted technology see less room for improvement than those that have not (even though I would argue that this finding stems from the critical need to educate finance about what's possible, not necessarily just what is commonplace today).

Jason Busch

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