Meet Your New Procurement and Operations Boss: the CFO (Part 4)

In the first three posts in the series (Part 1, Part 2, Part 3), we considered the shifting role of finance in different procurement-related decisions, and how this input has evolved over the past 12 months, including 2011 joint priorities. In this next look at how this collaborative effort is coming along -- and often-new reporting structure is evolving, either directly or indirectly, between procurement up to the CFO -- we'll consider the evolution of specific working tactics to take advantage of the joint opportunities on the table for both organizations. Most important of all on this list is the need to build the right teams and talent to meet changing requirements. From procurement resources that understand commodity management and enterprise risk management strategies and tactics to finance leaders that fully comprehend the impact of working capital management strategies on the supply chain, talent is key.

Next, both organizations should collectively invest in systems to support functional business users capable of shaping strategy and driving results (not just on maintaining systems of record and building better transactional environments). This is not to say: "give SAP, Oracle and Ariba the boot." Rather, it's to suggest the critical importance of looking at a new breed of application, in some cases proffered by large software vendors as well to enable to empower a specific task or process (e.g., applications designed implement, document and capture savings and working capital management strategies based upon sourcing/vendor management results).

The next joint operational priority between finance and procurement involves finding ways to do more with fewer (or flat) resource levels. Many companies we speak to have found that despite the returns associated with procurement investments, gaining additional full time resources continues to be a challenge (some of the ways companies are overcoming this is through staff augmentation programs that leverage third-party resources in key areas, albeit at rates often significantly lower than hiring consultancies). At the same time, procurement and finance leadership in companies are beginning to realize the tactical importance of developing strategies, teaming approaches and supporting tools that bridge functional groups such as procurement, A/P, treasury, internal audit, etc. It's often the intersection of these areas -- rather than siloed enablement -- that is so critical in a collaborative effort.

In the next post in this series, we'll continue to investigate how (and where) procurement and finance should focus overall cost management and related priorities in 2011 -- and how finance can play an increasing role in guiding procurement in specific areas.

- Jason Busch