How procurement leaders can become catalysts for enterprise transformation: A Q&A with Globality’s Keith Hausmann

The way that businesses buy and sell services and goods has dramatically changed over the past few years. Procurement leaders are rapidly revisiting their operating models and investing in capabilities that provide ongoing business continuity as well as position their companies for long-term growth.

In “AI-powered solutions turn procurement into a catalyst for company value,” Spend Matters wrote about how procurement departments can use digitization as an effective means to uncover new ways to gain visibility across departments, reduce costs, increase efficiencies and minimize risk. The follow-up to that piece looked at how services sourcing is being dramatically changed by AI, bringing with it significant business opportunities.

In this article, Globality Chief Revenue Officer Keith Hausmann shares some of the important actions that procurement leaders can take to become the impetus for enterprise transformation, driving new sources of value for their companies and stakeholders.

Q&A

 Spend Matters: Recently, the conversation has ramped up around the unprecedented opportunities that procurement leaders have to play a much larger role in their companies’ overall business operations. Is there a bigger opportunity for procurement leaders, and what’s different now?

Keith Hausmann: The role of the chief procurement officer (CPO) has historically focused on cost and supply performance. Now it has steadily expanded to include problem-solving for business growth, customer acquisition, sustainability, social impact, business agility and working with suppliers as strategic partners. As we start to see an increasing number of progressive, digital-first companies looking to their procurement team as a competitive advantage, the dramatic redefinition of the role will continue to accelerate.

For one thing, the CPO is increasingly focusing on stakeholder experience and impact. Business stakeholders are demanding the same seamless and intuitive experience in the workplace as they have in their personal lives. The consumerization of the enterprise, with corporations adopting consumer-like solutions for business use, has become increasingly pervasive — and procurement and sourcing are no exception.

Additionally, CPOs recognize that delivering innovative products and services requires a long-term partnership approach. Pitting the same set of suppliers against one another repeatedly and tightening the cost structure simply cannot deliver the desired results. Instead, CPOs are using a consultative approach. This requires active, collaborative engagement before and during the sourcing process, along with continued strategic partnerships with suppliers, especially those for complex, high-value services.

Procurement leaders are in a unique position in the company to drive enterprise-wide transformation through their deep knowledge of most functions of the business. CPOs’ ability to successfully lead company-wide change requires a major shift in the strategy, priorities, processes. The mind-sets of their team, key stakeholders across the company and suppliers must also change. The most successful CPOs are also change leaders who actively engage all of the resources available to them, including talent, technology and external partnerships.

What are some of the traits that differentiate transformational CPOs from their peers?

The CPOs who are leading the pack are delivering unprecedented levels of value to their organizations’ top and bottom lines, in addition to being change drivers. Their transformational impact may start within procurement, but they also have the ability to reach every corner of the enterprise deep into the value chain. Transformational CPOs possess the right balance of vision, purpose, collaboration, flexibility and empathy. Common elements include:

• A compelling platform for change that unifies procurement, stakeholders and the executive team; this helps them understand the purpose and value associated with the changes they are carrying out.
• The belief that change is an opportunity rather than a threat. They are open-minded about what is working and what is not, placing importance on being completely transparent with everyone in the organization to fully leverage investment and maintain alignment.
• The ability to challenge convention, seek different ways of doing things, and lead internal and external partners through times of uncertainty.
• The skills to collaborate with business stakeholders inside the company and across the value chain; this includes working well with diverse business leaders and external partners, keeping everyone focused on mutual success and shared goals. This is advanced ecosystem management.
• The foresight to foster continuous learning while modeling a healthy attitude toward risk and an acceptance that failures and mistakes may occur.
• The investment in constant and consistent communication, anticipating and sharing information in advance of ever being asked.

Spend Matters: This sounds like something every procurement leader should aspire to, but putting all of these elements into practice can be difficult. How can procurement leaders disrupt the status quo and drive meaningful change for their organizations, both within and beyond procurement?

Bold thinking and an appetite for change must be at the forefront of any procurement evolution. The most successful procurement leaders realize from the outset that a major cultural shift is required before procurement is viewed as a strategic partner to business stakeholders.

Most CPOs understand they have a significant amount of legacy to overcome, and using the same methodologies and processes their companies have used for decades will not set them up for the future. They are seeking a simple, trustworthy digital process that will make the procurement and sourcing experience fully seamless for their teams — and all of the business stakeholders and suppliers they work with.

Although examining the technological art of the possible is an important step, procurement leaders also need to consider delving into the voice of their customers to understand how they perceive the agility, accuracy and simplicity of their processes and technology. This has the potential to awaken a desire for an alternative and demonstrate the positive impacts of this different experience. To accomplish this, procurement leaders must foster strong relationships across the company and have a willingness to react to feedback decisively.

Often, business functions — including IT, HR, marketing and legal — wince at the idea of abiding by traditional procurement processes. This can be a challenge because these departments are responsible for a large portion of the company’s outside spend. Using  technology to manage this spend is often nonexistent or inconsistent across the enterprise. Business leaders want to have autonomy, which creates a major stumbling block for procurement leaders trying to implement improvements across their organization.

Procurement leaders find themselves facing a dilemma. How can they successfully introduce a new solution that gives the people who are the most resistant an autonomous, self-service way of working that also sticks to the guidelines, policies and best practices of procurement?

Once procurement breaks through the resistance, users are able to experience how technology can help them gain more control over their time and decision-making while still complying with procurement policies. The digitally savvy members of the workforce are often key to helping all users successfully transition because they expect an experience that is intuitive, collaborative and transparent.

Some CPOs have said that technology has made them “more human.” At its best, it can enhance the roles that their team members are playing, allowing them to focus on relationship management and innovation. This type of work is much more rewarding and fulfilling for employees. It also attracts new and more diverse talent to the procurement profession, which is critical for the long-term growth of the field.

How should procurement leaders measure their impact as they move their organizations from understanding to action?

Many companies measure the success of procurement through cost savings and efficiency. These are relevant benchmarks, although they should be seen as table stakes of any strong procurement program. They’re not transformational, so the view has to extend far beyond them.

As more companies gravitate toward the supplier-partnership model, the most progressive CPOs are adopting a new set of KPIs around strategic-partner-relationship management. These KPIs measure outcomes based on procurement leaders’ efforts to cultivate innovation and overall business improvement. More sophisticated modeling will also become available to measure procurement’s contribution to revenue growth, speed to market, customer retention and other key metrics reviewed by the operating board.

As demand for suppliers with cutting-edge capabilities continues to build, new KPIs will also emerge that measure procurement’s effectiveness at introducing diverse thinking and ideas through the supplier base. Sourcing teams could even be rated and compensated based on the diversity of ideas delivered with the suppliers they have onboarded.

Ultimately, CPOs need to rally their entire team, stakeholders across the company, partners and suppliers to deliver growth and innovation so they can move from a singular focus on supply and cost savings. The challenges are significant, but the opportunities are deep and extremely rewarding for those who are ready.

This Brand Studio post was written with Globality.