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Analysts’ Corner: It’s planning and budgeting season, and procurement pros should step up to demonstrate their value

09/01/2021 By


Editor’s note: Spend Matters’ analysts write about what they’re thinking in the Analysts’ Corner feature for our weekly email updates, like this post about the annual planning process, budgeting and procurement. On occasion, we publish these insights for our wider audience. To read future Analysts’ Corner posts, sign up for our weekly email update.

Well, it’s coming to that time of year when many procurement organizations are beginning their annual planning processes that coincide with enterprise annual planning and budgeting processes.

Unfortunately, this is also usually a time of missed opportunity for these companies and the providers who serve them. Most procurement organizations will do some level of stakeholder check-in and planning for major spending and programs/projects, and also do their own internal planning in terms of budgets, hiring, S2P projects, training, and setting/negotiating targets for savings or other value metrics.

CPOs and other procurement pros should check out Spend Matters’ new 5-step “Procurement Technology Buyer’s Guide.”

However, the better organizations are also running formalized events with all stakeholders, including business units and functional partners alike, and exploring and aligning to business strategies, customer strategies and mega enterprise programs (digital transformation, “ONE company,” sustainability, agile, inclusion/engagement, analytics, etc.). They are also getting more granular alignment to spending plans/budgets and projects that are getting formalized in those stakeholders’ same planning processes (where procurement should be actively involved). It is a key “moment of truth” when procurement can also do things like: showcase the value it delivered the previous year across the business; highlight what other peers are doing externally; where it wants to invest to help build capabilities for the business; and where it wants to improve and expand its digitally enabled services (and metrics) to deliver. And only a rarefied few are doing this work continuously and sharing these plans with solution/service providers in the market.

Most solution providers have CPO advisory council meetings, but they usually do not proactively explore how the providers can help CPOs bring additional value to these sessions with these stakeholders. It could be market intelligence insights, advanced analytics (e.g., obligation/risk analytics in contract management), emerging product development for early adopters in sustainability (e.g., Scope 3 GHG modeling), category-specific capabilities (e.g., contingent workforce capabilities to support extended workforce planning), IT related capabilities (e.g., license management, asset management integration, or anything that helps make a CIO an ally rather than a detractor), machine learning prototypes, co-creation opportunities for industry-specific problems, new partnerships for content/services/financing, open innovation pilots, and really anything that brings digitally enabled supply market innovation to the CPO to bring to the business for new value creation.

Consulting organizations similarly have an opportunity to package up some of their capabilities and community for this scenario if they don’t already have it specified in their portfolio of digital transformation use cases. It not only brings together a confluence of capabilities that they and their partners bring in areas such as spend planning, zero-based budgeting, next-gen scenario planning, digitally enabled performance/capability diagnostics, industry-specific innovations, etc., but it highlights the “art of the possible” in their client base, especially when it bridges into other practices like Finance, Risk, IT, HR, etc.

Finally, procurement organizations themselves should be asking the supply markets what they can offer to help procurement’s stakeholders and even external customers. CPOs understandably struggle themselves to fight the tyranny of the tactical and pursue this type of innovation scanning. The procurement startup contests and awards events are a good start, but they aren’t very precise or driven by customer use-cases — and perhaps there are better ways to match up this supply market innovation to these requirements. We’re certainly moving in this direction generally at Spend Matters as we broaden our market intelligence beyond our mega deep dives in our array of  SolutionMap technology categories, so, we have a role to play here as well. And if anyone reading this in our ecosystem wants to collaborate on something, please let us know! Until then, make sure to cause a little “good trouble” and make sure that CPOs know that you can bring some new value to help them bring more value to the table during this key moment in the business planning process.

— Pierre Mitchell, Spend Matters’ Chief Research Officer

How does your company find the right procurement technology and vendor? Spend Matters’ new 5-step “Procurement Technology Buyer’s Guide” can help — with how-to documents, checklist templates and other tips.