Sourcing Innovation Series: Wither Procurement as Strategist in 2008?

Before offering up my contribution to the fall 2007 Sourcing Innovation series, I'd like to first commend Michael Lamoureux for chasing after his fellow bloggers to share our thoughts on what might be to come. Without question, these cross-blog series are a good idea, and we'll be sure to capture them on Spend Matters Navigator.

The topic and focus of my innovation post is a bit contrarian. Personally, I'd like to suggest that some of the largest areas in procurement innovation in 2008 will not come from procurement, but from tangential stakeholders and areas of the business. But while many procurement leaders will be forced to embrace these changes only because their business will require them to do so, others will be out on the vanguard, proactively forging links between their function and others that depend on it. I'd like to pose the obvious rhetorical question at this point to get you thinking: which side of the fence will you be on?

What are three areas where procurement will be in fact become less influential in determining strategy?

First -- procurement outsourcing. I strongly believe that procurement will be less influential in determining outsourcing strategies and direction in the coming 12 months. Increasingly -- except in more advanced procurement organizations -- these decisions will be determined by CFOs and other executives. In fact, I'd suggest that the recent uptick in such procurement outsourcing deal activity is coming at the behest of those both inside and outside procurement (but decisions are often made typically at the finance and operations level in many of the larger deals).

Second – dashboarding, performance management and improving finance's view into procurement. I agree with Burton Goldfield of Ketera that finance needs to take a more active role in procurement. And the first step to better involvement and oversight is the gathering and visualization of spend, performance, risk and related data. Just as Hyperion and Business Objects essentially took basic BI, slapped on some lipstick and sold it as finance-focused performance management, we'll see similar things from a handful of vendors in the Spend Management world as well. And I'll bet that at least in some cases, they'll succeed at selling these capabilities into finance directly over procurement's head.

Third -- risk management. In talking with hundreds of procurement professionals in the past year, I've determined that while risk management is a topic on everybody’s mind in procurement, very few individuals and companies are really willing to step up to the plate to proactively tackle it -- changing behavior and making the right sets of investments. My prediction is that supply risk will continue to rise in importance, but we'll see internal audit groups, business units heads and supply chain practitioners take the lead in dealing with it. The fact that the great majority of procurement organizations still see their roles as entirely focused on cost and tangible cost avoidance (e.g., price increases, but not potential disruptions) is what has led me to this observation.

In a post next week, I'll tackle three additional areas where I believe procurement will be less influential in determining strategy, but will still have their jobs and roles impacted as a result of decisions by others in the company. And I'll also share some thoughts on why it's never too late to get involved in these areas and how its possible to capture the ear of the business before they go over your head with their own sets of initiatives and mandates. After all, there always is hope. But hope is not the same as action, results or getting the mindshare and investment dollars you need to make a difference before others decide to make it for you.

Jason Busch

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