What Procurement Can Learn from IBM (Part 1)

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Many people have different opinions of IBM. Most tend to view it as a sprawling technology and services powerhouse that is too big to fail, but it also seems to constantly be fighting every technological shift that many predict will bring it down. I’ve been a supplier and analyst/advisor to IBM at many firms, and indeed the firm can be its own worst enemy, including in the procurement arena, where it has numerous business units in e-commerce services, e-commerce apps, business applications (e.g., IBM Emptoris; Coupa partnership), consulting, BPO, analytics and AI (i.e., “cognitive computing” via IBM Watson) that don’t always work together seamlessly.

But IBM is also an extremely innovative firm and is actually the world’s top generator of patents. IBM’s procurement organization is also an innovator, but when Gene Richter was CPO for a decade, good things were bound to happen. IBM set up essentially lights out P2P over a decade ago (albeit with mostly proprietary tools) and at that time was doing voice-of-the-supplier surveys before “customer of choice” works became in vogue a few years ago. It’s procurement integration into the product design and development process is world class. And it was a pioneer in procurement BPO services.

If you flash-forward to today, the firm is still innovating and most recently with its multibillion dollar bet on “cognitive computing” (AI) via its Watson business unit and some of the work IBM is doing more broadly in analytics. I’m personally very excited to see what they’ve been cooking up lately when Dan Carrell comes to our upcoming procurement technology conference in March to share some of IBM’s developments. Dan is a very interesting guy who wears (and has worn) many hats. He started in financial services but earned his stripes at IBM in global procurement in both the physical supply chain and the “services supply chain” supporting global services. He also was a general manager for IBM Ireland and now is the vice president for global operations and client services procurement

Anyway, let’s return to the theme of this multipart series and see what lessons learned that procurement organizations can glean from IBM’s ongoing transformation.

Lesson 1 – The Pivot to Services

Back in the early 90’s, IBM made a focused push into global services. As mainframes had become disaggregated to client-server hardware and applications, someone had to connect all these things together. IBM had always been the safe choice as the one-stop-shop for all things IT, so it made sense that IBM shifted from just pushing its own technology to a more fundamental role of strategic account management that focused on cementing the deep client relationship regardless of shifts in technology.

In 2016, as everything is becoming a service in an everything as a service (XaaS) role, procurement has had a slow pivot to becoming a services provider to the business. The main reason, in my opinion, is that many procurement organizations have had a hard time viewing themselves as service providers. The term "service provider” denotes being a vendor of sorts, and the term "services provider” either conveys a role of consultant (horror of horrors!) or a transactionally focused shared service entity rather than a business partner. Yet, you don’t have to call yourself a service provider to actually be service provider. You can use the term colleague, peer, partner, advisor, consigliare (works well in New Jersey) but yet still adopt the best practices adopted by world-class professional service providers of all sorts.

In subsequent editions of the series, I’ll focus on this topic of services in addition to topics such as service evolution, branding, platforms, innovation, transformation, complexity, knowledge management, strategy and other topics. As always, stay tuned!

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