I spent the better part of yesterday at Forrester's Sourcing and Vendor Management Forum in Chicago, which featured a number of excellent presentations by practitioners and Forrester analysts on both IT/services procurement and the broader sourcing and vendor management landscape. The first non-analyst of the day to speak was Michael Chaney who serves as Senior Director, Procurement Relationship Management, Global Procurement Services, at Cisco. Chaney gave a drink-from-the-fire hose detailed summary of the global procurement transformation underway in the indirect/services area at Cisco. He began by sharing that procurement "change is about connecting differently to the business" on a global basis. This is especially important when 45% of your 76,897 employees are "engineers and sales people," in Chaney's words.
Chaney's story of transformation isn't all that different from most companies. But Cisco's frenetic growth and global expansion makes managing indirect and services spend all the more demanding. He characterized that in 2008, procurement at Cisco was "reactive/tactical and had disaggregated supplier engagements (unleveraged spend)." Furthermore, the focus was on "spend registration, spend reporting, and policy/compliance" rather than on taking action and engaging business stakeholders. The vision for 2010 and beyond takes a different approach, placing emphasis on " demand planning, spend management, client driven reporting, project collaboration, program management and portfolio management."
How is Cisco undertaking this transformation? In part, they're focusing on three key underlying principals. These include the "engine" of procurement that involves supplier development, category management, contract management and supplier performance management. It also incorporates the "factory" aspect of the function, relying on "procurement operations, BPO, speed, efficiency and effective buying services such as sourcing events, eAuctions, RFPs and catalogs." Last, Cisco is focused on the "Connection" between procurement and the business. This "Connection" is the interface that drives procurement relationship management, joint planning, demand signals and overall service delivery coordination. Underlying these four areas are a combination of platforms and tools including systems to support centralized authorized processes, business controls, compliance, benchmarking, business management, performance, and communications.
How is Cisco succeeding so far in its early-stage global transformation efforts across its indirect and services spend? Stay tuned.