Sprint has hired a new chief procurement officer (CPO) in an effort to improve the wireless carrier’s standings in the market. Sprint’s CEO Marcelo Claure announced that former AT&T Wireless CPO Frank Boyer (who was also CPO at EDS) will now serve as the company’s CPO. Claure said Boyer will "oversee our efforts to evaluate where we spend every dollar and look for ways to improve our cost structure."
Large telecoms like Sprint are already fairly efficient based on standard procurement benchmarks (due in part to large economies of scale), but Sprint does have some room to improve its cost discipline. Its operating expense runs 48% of revenues (based on 2013 financials), and Boyer will have his work cut out for him to take out costs that don’t also harm revenues. According to reports, Sprint is aiming to trim $1.5 billion in annual spending in 2015. Claure said he realizes Sprint needs to act fast to turn the company, and it’s profits, around. “Controlling our costs” is a major part of that, Claure has said.
Claure hopes the new appointments and changes to the executive board will help Sprint regain its footing as a top wireless company. For years, the carrier has struggled, lost about 336,000 of the industry’s most lucrative customers and dropped to third place in the top wireless carrier ranking. To shake things up, Claure has made 20 reassignments in top company positions within the company. And, Jeff Hallock, the chief marketing officer behind Sprint’s “Framily” marketing campaign, is leaving the company. The Framily plan was scrapped due to a lack of success and some confusion over how it worked exactly.
Marketing spend is a massive spend category at Sprint, and one that truly represents an “investment” as marketing (and marketing procurement) professionals like to call their spend. See here for more information on marketing services spend management. While Boyer could potentially improve procurement’s efficiency, large telecoms real opportunity is on procurement effectiveness, and, more broadly, spend effectiveness.
Perhaps a more rigorous agency management approach could have prevented the “Framily” debacle, but Sprint’s procurement group will certainly be challenged (in a good way) to help support the $1.5 billion cost takeout, but will hopefully also not waste the crisis and forego the increased mandate and influence that it can leverage to drive more value. It’ll require the right efforts, but also the right talent. As CEO Claure wrote in his memo, "It's often said that the people are the greatest asset of a company. I disagree. The right people are the most important asset."