CPO masters of complexity (Part 2): A new approach to augment talent
The digital transformation occurring in enterprises both large and small is creating unprecedented opportunities for CPOs to leverage new technologies and create value streams beyond simple procurement process automation. Data from Deloitte’s 2019 Global CPO Survey suggests that high-performing organizations are more effectively leveraging contingent talent along with cloud-based digital technologies (especially those with predictive analytics) and extending them to stakeholders to deliver value to the business itself.
The survey findings suggest that procurement organizations that were able to deliver multi-pronged value in high complexity environments had demonstrably stronger digital capabilities than their peers. They also had tighter alignment with key stakeholders such as information technology and risk management while adopting more flexible, digitally-enabled operating models. In the pursuit of more optimized solutions, organizations are creating alternatives to the traditional procurement function that are faster, more accurate, and more integrated with digitally transformed IT, operations and sales. Commitment to a clean break from traditional leadership often alleviates much of the pain associated with change and helps maximize value in ways that were not conceivable in the past.
At the same time, many procurement leaders are finding it hard to balance a variety of competing demands for their limited resources. One common theme expressed was the challenge of how to find, recruit and retain the talent required to implement and optimize a more digitally complex and increasingly sophisticated procurement function. Many organizations are using this opportunity to challenge the traditional operating model, including the roles, responsibilities and skill sets required for this new digital world.
Demand for top talent in the global procurement space continues to outpace supply, even as the expectations from the corporations they serve continue to increase. While investment in training in both technical and softer skills appears to be rising, the CPOs surveyed felt the negative impact of a “talent drain” on their ability to keep pace with the increasing complexity of reducing costs and risks while implementing digitally-enabled procurement functions.
As enterprises are embracing digital change, the nature of the workforce is also changing. There is an increasing shift of knowledge workers away from traditional work arrangements toward freelance arrangements. The “gig economy” increasingly consists of complex services and highly skilled workers, many of whom are intermediated by digital talent marketplaces. Instead of the traditional model of hiring talent, taking years to train and develop their skill sets, and creating employee information silos, CPOs now have the ability to connect the appropriate talent with the appropriate roles regardless of the source.
With change comes opportunity. Digital transformation is providing real-time data to streamline decision-making, as well as analytics to help increase value. Technology is enabling procurement operations to become more agile and more responsive to all stakeholders. But with change also comes discomfort. In this new data-driven world, CPOs will need to overcome the trepidation of restructuring their department and leveraging new sources of contracted help while simultaneously developing confidence in tools like artificial intelligence, machine learning and robotics.
As we all know, technology does not substitute for strategy. Technology can however, free up procurement teams from managing transactions to put more time and energy into strategies and plans that drive additional value. Technology can mitigate the effects of the “talent drain,” and it can also replace good guesses with a more fact-based decision-making process. Technology will lead to new ways to structure workforces and impact where organizations spend time, money and labor to drive the right outcomes.
Mastering digital and procurement technologies isn’t quick or easy, but it is a path to more effectively and efficiently deliver on the mission of most procurement operations: reducing risk and expense, while providing a high-quality service and user experience. Getting stakeholders aligned will take time and will not be easy. However, the payoff of digital transformation resides in the creation of futuristic solutions that were not possible before — finding hidden value, and streamlining and speeding decision-making processes.
Deloitte’s eighth annual Chief Procurement Officer Survey is available online here. Watch a replay of our CPO Survey webcast, which discussed the report’s top findings across the four areas of complexity.
Jennifer Brown is a Deloitte Consulting principal.
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