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Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation

08/31/2020 By

Anyone familiar with YouTube “influencers” knows that they’re not trying to engage you for your benefit, but for their own. They intend to monetize that influence for themselves and their corporate backers.

Speaking of the corporate realm, the ability to influence others isn’t exactly a new concept. In fact, you can go back 85 years to read Dale Carnegie’s book “How to Win Friends and Influence People.” There, you will learn more about “Fundamental techniques and handling people,” “six ways to make people like you,” “12 ways to win people to your way of thinking” and “how to change people without giving offense or arousing resentment.” In short, you can learn how to manipulate people to sell them something and get what you want.

Let’s now translate this to procurement organizations that are looking to influence stakeholders in order to influence their spend.

The procurement mission can indeed be noble in terms of helping the organization spend less wastefully to free up cash to invest in the enterprise mission. However, from the stakeholder view, what they often hear is “Hi, I’m from corporate procurement and I’m here to help you reduce your spend so that I can claim savings to justify my existence … and then have your budget reduced by corporate finance.”

Do you think the stakeholders like being influenced like this? They end up viewing procurement something like this Dilbert cartoon.

Although the situation is obviously not as bad as a dinosaur leading procurement, it does highlight the disconnect and misalignment that can lead to stakeholders not inviting procurement to the proverbial table. Of course, procurement can get mandated into the process via policy, but those policies are usually fairly toothless, and when procurement does get involved, it is often at the tail end of the process when most negotiating leverage is long gone. This is why the metric of spend under management (SUM) is more about the quantity of late-stage involvement than the quality of early and deep involvement/influence (for more on this topic see our PRO article Procurement KPIs Series (Part 4) — Deep Diving into ‘Spend Under Management’).

This earlier involvement does lead to higher savings in the short term, but you can’t “save yourself to zero,” and procurement’s influence in more strategic business settings where key decisions are made is a work in progress — based on 450 CPOs surveyed last year ...

Improving the situation requires more than sitting at the end of a sourcing process with a catcher's mitt waiting for the stakeholders to come, and having a value proposition that’s more than just transient cost/spend reductions, but something more transformational.

It requires transformative leadership, and that leadership has many elements to it: mission/vision, strategy, empathy, affinity, inclusion, empowerment, enablement, brand, respect, competence (to deliver value), trust, guidance, transformation, collaboration, clarity, coordination/orchestration, protection, agility, intelligence and even inspiration.

These are some of the contexts and the levers of real influence.

In this multi-part Spend Matters PRO series, we’ll explore these elements, how technology can enable them and a case study of a procurement organization that’s pulling these levers likely better than any other organization on the planet.

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