CPO Rising: Emergence, Convergence, and the New Normal
The new CPO Rising report for 2014 is here, and it’s chock full of insights from 270 procurement professionals that will be of interest to anyone involved in the procure-to-pay process.
We spoke about this year’s findings with report author Andrew Bartolini, Managing Partner and Chief Research Officer at Ardent Partners, and Publisher of CPORising.com, as well as Bryce Berg, VP of Corporate Administration at Molina Healthcare, in a recent webcast.
We also caught up with Andrew to chat about some of the points that stood out about this year’s findings and we’ll be sharing his comments in a series of interviews. Since the subtitle of this year’s report is “Convergence” we thought we’d start there.
Coupa: One of the main themes of your report this year is convergence. Not is only doing more with less the new normal, procurement is emerging as
the go-to department for executing a wider variety of initiatives, including things that have not been traditionally part of the procurement role. Can you talk more about what this convergence looks like?
Andrew: Procurement, whether by necessity or by design, is being pulled into more
business discussions, and that presents an opportunity to influence decisions and ultimately impact business results to a greater degree. That's happening in part as a reward for a job well done. This is an organization that in general, has performed well in recent years, consistently hitting its numbers. Now, for many CPOs, hitting the numbers is the baseline expectation. The question now is what can you do to exceed that going forward?
The other reason why procurement is getting given even greater responsibility is that there's no one else who can do it.
Coupa: Is this seen as a reward? How do people in procurement feel about getting all this piled on them?
Andrew: I think it cuts both ways. Getting more responsibilities is viewed by most people as positive. I think the challenge is that organizations do a bad job of presenting them as opportunities.
There are some procurement leaders who are stressed by these newer responsibilities and the primary stress point is talent. A majority of CPOs think that they are understaffed, but they have felt that way for a decade. Gaining new headcount will continue to be difficult, so you've got to take what you have and make it better.
Where organizations are being constrained in expanding their scope is that they don't feel that they have staff that's equipped to do the job well. There's a general operating principle that says if we can't do something new very well, we don't want to take it on. We'd rather perform well within the scope of what we're doing rather than step outside those bounds and expose weakness or do something that's sub-optimal. So that's where the pressure and the challenge is when the organization comes to procurement and says okay, we don't have anybody else, we're now looking at you to lead this.
Coupa: For those who do take on the challenges around convergence, what does this opportunity look like?
Andrew: In the broader context of convergence, things that are good business practices are also marketing opportunities, cost-savings opportunities, and good citizenship opportunities. There’s been a blurring of lines organizationally around responsibility, and becoming more collaborative.
It's also taking what you're doing and using it in several different ways. Almost like this conversation, right? I mean, so we're talking about a report, but now you're going to be able to use that for a blog, we're going to use it to promote a webinar. You're trying to find multiple uses for the quality things that you're doing.
Coupa: With regard to responsibility, in the report you call out that one in five AP departments now report to Procurement. Is that a sign of convergence? Is this the org chart of the future?
Andrew: I think about it less from an org chart standpoint than as something that just makes a lot of sense. It’s certainly easier from a process and systems management standpoint. We don't think that it's a necessity. There are some organizations, in financial services for example, who believe that AP and procurement should be distinct organizations from a controls standpoint.
Our point is not to quibble with that assessment, but to get organizations to think about the procure-to-pay or source-to-settle process as a singular process.
There are challenges when you have different organizations managing different parts of the process. Technology can enable a more collaborative process. It used to be that procurement would decide what systems it wanted, and it would go off and do what it wanted to do based on its own remit without thought of the second part of the P2P process. Organizations are now starting to think about that as a single transaction, and that's where we're starting to see real convergence.
Now organizations can think about how they want to transform, not just AP, or operational procurement--they can start to link these two together. Even if the timing isn't perfectly aligned, there should be contemplation of what the other side is going to do.
Technology plays a key part in that, but organizationally there has to be a view that says that "okay, there are two groups, maybe they're all reporting into one place or not, but this is a single process." When you start to look at things that way, the real or the perceived walls that keep groups apart begin to fall down.