5 Key Takeaways for CPOs and CFOs from Coupa’s Executive Summit in New York City
Every day, Chief Financial Officers (CFOs) ask: How much? And when will we see the benefit? These two questions are more important than ever as many companies think of new ways to respond to high-interest rates and a slowing economy. At this year’s New York Executive Summit, one method seemed to dominate the conversation: the CFO turning to the Chief Procurement Officer (CPO) for help.
Spend and supply chains — where companies have much more control than increasing sales — give CPOs strategic levers to reduce costs, improve margins, and become more agile when a recession is looming. After all, recession doesn’t have to mean retreat, according to a recent article in Harvard Business Review. Below, I’ll explain in more detail why that is and other big takeaways from the finance and procurement summit on how to harness your spend to invest and grow.
1. The spotlight is on procurement to deliver margin impact — often for the first time
Procurement struggled for years to get a seat at the executive table. Now, as they pivot their focus, many CFOs are coming to CPOs for the first time to pull back on unnecessary spend, capture savings, and positively impact operating margins.
Shifting from fast growth to improving profitability is how Carvana CPO Anthony Posillico helped his company see the value in procurement. As a newer voice at the executive table, CPOs must remember that CFOs and finance leaders will primarily be interested in when the financial impact will be delivered, and how much it will be.
Meanwhile, savings from on-contract buying and digital transformation from the back office freed up valuable resources at Leukemia and Lymphoma Society (LLS), said CFO J.R. Miller, part of a growing finance community which sees the financial benefits that a Business Spend Management (BSM) approach brings. LLS saved more than $5.5 million in 2021 alone to support research and treatment for blood cancer patients.
2. Spend visibility is a powerful tool for operators
Beyond simple negotiated savings, spend visibility helps companies manage costs on a day-to-day basis. Carvana has been able to break down General Ledger categories like “Parts” into distinct items like tires. Now the company knows if tires cost more in one location than another. This kind of real-time information, rather than the future information from Financial Planning and Analysis (FP&A) or the backward-looking information from the Enterprise Resource Planning (ERP), is what managers need to get costs down.
3. A strong charter is critical for change management success
In a panel discussion on change management, Coupa’s Doug Duker shared the importance of a project charter that clearly lays out the challenges to be addressed, benefits of completion, executive and operating stakeholders, and the expected financial impact of the project. The best projects carry this charter through software implementation and go-live into operations. Quarterly business reviews should refer back to the expected benefits and financial impact to ensure success.
It’s also important to keep things fun. One Coupa customer let their employees order a cupcake through Coupa to be delivered to their desks — celebrating the project launch and making sure that on the day the system went live, each employee knew how to use the basic ordering process.
4. CPOs and CIOs must partner for mutual success
Today, the back office plays a critical role in the overall success of a company. This means CPOs should secure and maintain a strong partnership with IT, with the CIO understanding two important aspects of the value that can be delivered through it. The first is increased visibility and control over IT spend. Making better use of IT budgets and avoiding so-called “Shadow IT” with un-vetted suppliers helps to engage CIOs. In addition, procurement can shift from highly customized solutions to a true-SaaS model of implementation by configuration to reduce the Total Cost of Ownership (TCO) of systems that are used to manage spend and payments. This frees up IT resources to better serve all aspects of the business.
5. Companies can do good while doing well
Many leaders may share my concern that, just as the world is falling behind emissions thresholds for avoiding the worst of global climate change, investment budgets from both public and private sources may dry up due to the worsening global economy. A bright spot is that Business Spend Management can help companies achieve their Environmental, Social, and Governance (ESG) objectives and save money at the same time. By our calculations, just the ~2,500 companies in the Coupa community are on track to save their companies an incremental $18 billion this year — dollars that go straight to profitability. This profitability impact is greater than the Net Income of Fortune 500 #1 Wal-Mart. At the same time, the community will spend $43 billion with Diverse suppliers. If the revenue to these suppliers was a single company, that company would be bigger than Fortune 500 #86 Abbott Labs.
Rising to the challenge together
At the event, leaders across procurement, finance, IT, and supply chain discussed how they collaborated to push their companies forward through challenging times. These are professionals who are being recognized by their peers for the positive impact they've made — and continue to make every day. It quickly became clear how important these events are in building connections. It’s those connections that allow companies to share and uncover forward-thinking ideas. I hope you’ll join us in 2023 at our Inspire conference in Las Vegas and London to build connections of your own.
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