In the first post in this series, I provided context around why CIOs are getting more involved in procurement and supply chain technology buying decisions (and some of the irony behind their current increasing level of involvement). In the second part of this column today, I'll offer up a few case examples where CIOs are inserting themselves into our world. In addition, I will also examine in more detail some of my hypotheses about why CIOs are getting more involved in Spend Management buying decisions in the current environment. Before I dig into the material you've been waiting for, let me first apologize for the length of this post. I know, it got out of hand. But hopefully you'll find the examples, observations and opinion worth spending a few minutes curling up to, especially if you're looking to make the most of your CIO's involvement in this and related functional technology areas.
I'll start by citing some examples of CIOs becoming more relevant to procurement buying decisions. For the first case I'll speak to, I know of a rather large supplier information management initiative taking place inside a Fortune 50 company driven not by procurement -- either centralized or individual operating units -- but rather a corporate CIO. In this situation, the CIO took charge to help his firm's individual operating units better manage multiple forms of external supplier information (e.g., certifications, documentation, etc.) While I am not privy to all of the specifics of this particular case, it appears that the budget for the program is coming from a centralized technology group (I'm not sure if individual operating units are being charged back).
Spend visibility represents another case where recent corporate CIO involvement inside a Fortune 200 company played an important role in both evaluation and buying decisions. In this case, as with the somewhat related supplier information management initiative, above, CIOs and IT leaders appear to be inserting themselves in situations where data exists in multiple places -- in the case of spend visibility, both inside and outside the four walls -- but where a centralized group can drive process and usage approaches. Even in the case where suppliers are driving data entry and updating (e.g., supplier registration and portals), the organization is tightly controlling all aspects of the external workflow process whether it takes place via a browser and/or email.
In my view, CIO involvement with internal data, process and workflow is nothing new, although such involvement has been a novelty in many procurement buying decisions in recent years. But from an external data management perspective, this level of interest and activity is new, representing a new charter for IT leadership. In this new world, the concept of Chief Information Officer applies to all aspects of enterprise and extended enterprise data.
It's clear that certain CIOs appear to be inserting themselves into the technology buying decision and management process for both internal spend and external supplier management when it comes to all aspects of procurement information. But are CIOs getting more involved in SaaS-based P2P or eProcurement buying decisions now that many ERP upgrade cycles -- including SRM migration -- are now on hold? Most typically, the answer is no or a highly conditional and limited yes. In other words, procurement leaders still seem to be driving many of these decisions, perhaps consulting with IT. But they're not actively soliciting CIO or IT involvement -- let alone leadership -- throughout vendor selection and implementation relative to spend visibility and supplier information management decisions.
In the first post of this series, I offered up three hypotheses about why CIOs are getting involved in an increasing number of Spend Management technology projects (whether as passenger or pilot -- or any level of involvement in between). The first reason I suggested was that "they're looking to help the business because they have less to do around IT upgrades" is more of a statement of fact than anything else. CIOs need to justify what they're up to these days. And with many upgrades on hold and cost reduction/management programs on autopilot, IT leaders need to find new ways to justify their value. And branching out into functional procurement areas seems like a reasonable extension.
The second hypothesis goes beyond simply being a statement of fact. To wit, CIOs are finally "getting SaaS religion and are no longer defending the ERP code block or stumping for ERP like they used to" because they realize such a legacy strategy will spell doomsday for budgets and overall influence in the business. In the case of procurement, many CIOs are starting from scratch when it comes to non-IT knowledge of buying decisions (in other words, many CIOs are adept at managing their own services, outsourcing and hardware/software buying decisions, but they often have little process knowledge about how procurement works outside of their environment). For this reason, procurement leaders should actively seek to identify IT leaders who want to lend a true helping hand to involving themselves in procurement technology buying decisions. And once they pinpoint these potential IT allies, they should focus on educating their new advocates on how the business of buying actually works across the business.
My third hypothesis, that CIOs are "going back to basics and looking for more customers in the business to justify their organization's role given the changing budgeting environment," is more of a survival strategy than anything else. We could also view their involvement in procurement as based on a realization that our corner of the enterprise, in IT-speak, is finally worthy of their attention. Of course they should have come to us a decade ago, but provided the incentives are aligned, and they're supporting us based on the metrics we care about (i.e., savings and cost avoidance, not systems TCO), we should still embrace the extra attention they're finally starting to pay us.