The State of Procurement (Part 1): People First, Starting with the CPO
Two old friends were enjoying a pint in a downtown Chicago bar on a cold winter’s day after work. One had recently moved on from his CEO role at a technology provider, so the other challenged him to share his insights about procurement since he was no longer “biased.” He accepted the challenge.
I am thrilled to welcome my old friend Jim Wetekamp, former CEO of BravoSolution, to Spend Matters as an independent columnist. Jim will begin by contributing a three-part series that looks at the state of the people in procurement today, including the modern CPO; the state of the process, specific to the buying of procurement technology solutions; and the state of technology, specific to procurement technology that’s available today. Below is his first installment, which looks at the “State of the People.”
Take it away, Jim! — Jason Busch
The State of the People
“How did you like selling to procurement?”
This has been one of the most frequently asked questions I have received since stepping away from BravoSolution, following our acquisition by Jaggaer in November 2017. People usually ask in a tongue-in-cheek way, expecting the response will be negative — comments about outdated and non-business-focused processes, burdensome and often overlapping or conflicting checklists, constant demands for discounts and the like.
To be honest, there is some of that. But there is also so much more. Selling to procurement is to know procurement today. And it’s a complex being.
Who is the Modern CPO?
Chief procurement officers today are stars on the rise, and most match a certain “CPO persona.” In general, these executives are:.
- A trusted, business-oriented advisor
- Integrated into the business, from product or service idea to end-customer delivery
- Aligned with overall corporate strategy and objectives
But I don’t envy their position.
It can be hard to manage today’s challenges, which are typically on offsetting fronts. How do you maintain the professionality and rigor of the procurement process, while at the same time creating a transparent and open competitive environment to drive the best value (financially, ethically, and environmentally) to the organization? How do you do this while also moving with the speed, agility and creativity to recognize the best partner for the current need, in the best position to deliver that value, today and tomorrow?
Whew. No small task! The good news is that today’s CPOs are ready to face the challenge.
The CPO: Value and Technology
Identifying whether or not a person is suited to the role of the modern CPO, however, is easier said than done. There are two key attributes you will see in a successful candidate, as well as several questions you can ask to confirm your choice:
- You will see how they create value
- Do they identify issues covering the entire problem, or do they stretch the team’s perspective into broader and deeper insights into issues?
- Do they develop a comprehensive approach to their piece of the problem, or do they structure challenges into the context of the overall business need?
- You will see how they apply their experience
- Do they narrow technical solutions down to a few strong options, or do they have a vision of the role of technology in solving ongoing business challenges?
- How to use technology to solve challenges involving multiple stakeholders?
- Are they just good problem solvers, or do they have a strong understanding of the issues affecting potential new products and services for customers?
- Are they an expert in procurement, or could they provide leadership in one or more domains within the business?
From the CEO’s perspective, key among evaluation criteria for CPO partners are the same as any other role in executive leadership: Can they build and improve the talent of the team? Can they develop and transfer a vision? And can they harness technology and data to drive key decisions and constant improvement?
The way vendors will react should be considered, too. It’s great news if you provide a clear and differentiated value. Do you have the best product? Do you have the lowest cost? Are you the most responsive partner? Today’s CPO drives an environment that is much more likely to recognize differentiated value beyond just lowest cost, creating a far more competitive, complex and level field for evaluation.
Finally, there’s that all-important decision-maker: the customer. Procurement is now active across the full span of company strategy, integrated throughout the lifecycle of market analysis, corporate strategy, product strategy, marketing and sales, delivery and support, and maintenance. If you’re a customer and the vendor is strategic, it’s necessary to understand your vendor’s procurement process, sources of supply and vision for procurement across the dimensions of social responsibility, environmental protection, cost control and quality management. Your strategic vendor’s CPO is nearly as much a part of your procurement approach as your own.
Input for Today’s CPOs
In addition to the key leadership criteria identified above, tomorrow’s procurement leaders will command over several additional spaces: 1) harnessing the power of institutional and ecosystem information to drive decision-making, 2) applying design thinking to collaboration across the business partners within their organization to increase the impact of procurement on value creation, and 3) relationship building with deeper integration with their strategic suppliers, benchmarking with peers and collaborating with industry influencers. They’ll only be in a position to do so, however, if they don’t stay overly beholden to process. More on that and the overall embracing of the process in Part 2 of this series: The State of the Process.