A look at CPO Rising 2017: Tools of the Trade
In Chapter One of CPO Rising 2017: Tools of the Trade, we looked at the current state of the CPO and procurement leaders, the shifting priorities they have and the strategies they’re using – or plan to use – to achieve them. This time, Chapter Two looks more broadly at the state of procurement as a whole – where it is, where it needs to be and what is standing in the way.
Since the first post started by referencing a standout statement in the report, we’ll do the same here: There should be no doubt in any CPO’s mind that there is a big difference between stability and inactivity.
Predictability can be a very attractive condition within which to operate, especially in times of challenging business or external factors. Comfort zones can be very hard places to break out of, whether they’re self-imposed or part of a wider corporate culture. Which leads to CPO Rising 2017: Tools of the Trade discussing The Procurement Mindset. Every organization is different, but the way people make decisions can be quite similar. The study of behavioral psychology reveals a simple truth about most decision making: the human mind does not always think rationally.
Don’t let procurement stasis turn to stagnation.
For procurement professionals, this may (or may not) come as a surprise, since the function is very logic based. There shouldn’t be much room for emotion in the requisition-to-payment stream, but there are biases and influences at work, albeit unwittingly. An example: people overwhelmingly are more averse to the potential of losing something than gaining something.
Wealth advisors and investment professionals run up against this all the time with their clients – a field known as behavioral finance. So it’s not just relegated to procurement. This risk aversion affects all kinds of decisions and actions in a company, and how challenges are met and dealt with. In particular, technology adoption.
Kelly Barner of Buyers Meeting Point and Palambridge Consulting did blog series last year touching on several areas of this topic called The Procurement Maturity Curve. That series covered savings, compliance and risk, and the growing mandate being faced by procurement teams. And like we mentioned last time, having to do more without adding headcount.
That’s where technology has to play a role; the alternative old-school approaches are a fast lane to obsolescence. Being able to scale processes and expertise is critical if procurement teams are to expand influence, effectiveness and impact. The following quote from CPO Rising 2017: Tools of the Trade, from a valued Determine customer, says it best:
A leader in the past looked to people, process, and technology when optimizing to meet the needs of the business. Today’s competitive environment and margin pressures require us to make the right investment in tools and then leverage same to optimize our people with simplified processes that drive value and the right business outcomes.”
– Greg Tennyson, CPO, VSP Global
The report illustrates four major hurdles as described by CPOs. Number three, Challenges in Aligning Processes and Systems, is something that the Determine Cloud Platform has solved for. By bringing together disparate workflows with Business Process Management and shared metadata creating a single source of data truth, it puts procurement leaders that much further ahead in achieving significant goals. In other words, it gives them the stability to expand their influence and value add.
As Chapter Two of the report sums up, with the ease-of-use available on technology like Determine’s, there’s no excuse for not implementing a procurement solution; it is, in every sense, a critical Tool of the Trade.
In Chapter Three: The State of Procurement, we look at procurement performance and benchmarks, and how best-in-class organizations stay that way.
Check out our on-demand webinar with Andrew Bartolini, Managing Partner and Chief Research Officer of Ardent Partners, and Greg Tennyson, CPO of VSP as we dissect CPO Rising 2017: Tools of the Trade in more detail.