What began as the 32 top CPO tools, strategies and ideas now stands as an elite list of 8.
The CPO Rising Tournament 2012 seeks to answer one simple question by running a tournament to decide the winner.
“What is the best CPO tool or strategy in 2012?”
The Possible Answers:
Our “Elite 8″ CPO Tools, who face off today in four separate battles to determine the CPO’s Final Four.
(1) Strategic Sourcing vs. (3) Implemented Savings
Texans and wise party guests knows that you better “dance with the one that brung ya.” This, of course, means to continue doing (and using) what has worked in the past. And, since this CPO Rising Tournament is commonly called the “Big Dance,” we like the analogy.
Professionally, many Chief Procurement Officers made their early career marks by differentiating themselves and excelling in Strategic Sourcing. Organizationally, many Chief Procurement Officers made their first big impressions on the enterprise by driving a series of successful Strategic Sourcing initiatives. Yes, Strategic Sourcing projects can be large, but they can also be small or compact. In 2012, Strategic Sourcing is about applying a combination of skills, knowledge, and technology to drive value through the sourcing process.
One common result from Strategic Sourcing is Savings. Implemented Savings is the savings that is actually realized by the enterprise (different from identified savings or budgeted savings)
When discussing savings, I often paraphrase Winston Churchill: “Savings is the worst measure of procurement performance, except for all the others.”
But, we could easily apply another Churchill maxim to savings: “Savings is a riddle, wrapped in a mystery, inside an enigma.“
CPOs have a love/hate relationship with Savings. CPOs love Strategic Sourcing.
Strategic Sourcing dances on!
(1) Spend Under Management vs. (2) eProcurement
A battle of two no-nonsense tools. In the early part of the last decade, eProcurement was the engine that drove many successful procurement “transformations.” Implementing an eProcurement system was a big project and it served as a validation of the procurement function as a group that was worthy of a big IT project. When you make a big investment, you expect to make a big impact. Some of the procurement transformations succeeded because of eProcurement, and some despite it. eProcurement may have generated big returns or it may have stalled after 18 months, but, it has always been important.
CPOs who have placed a high percentage Spend Under Management, tend to do many other things well – they save more, have higher compliance, greater efficiencies, etc. When the percentage of Spend Under Management is high, good things happen.
This one comes down to the wire: eProcurement in 2012 is now poised to turn a new corner and become the consumer-like solution we all want it to be. Yeah, but…. Spend Under Management’s Got Game.
(1) Executive Engagement vs. (3) Spend Analysis
Oh, how I wanted Spend Analysis to make it to The CPO’s Final Four. But then I remembered this Helen Keller quote
“Blindness separates us from things, but deafness separates us from people.”
Blindness (i.e. a lack of spend visibility) makes it impossible to optimize performance over any given period of time.
But, deafness (i.e. a lack of executive engagement) makes it impossible to align with the business, makes it impossible for procurement to matter.
Executive Engagement beats Spend Analysis (this year, anyway).
(1) eSourcing vs. (7) Contract Compliance
Our only match with a true “Cinderella story” offers the mighty eSourcing (“Phi Slamma Jamma”) against the pesky Contract Compliance (“Cardiac Kids”).
As longtime readers of this site will note, eSourcing 2.0 is a driving principle here on CPO Rising. We continue to believe that Every negotiation that results in an executed contract should use an eSourcing solution. The problem is that most CPOs either don’t believe in eSourcing 2.0 or are unable to follow it.
When it’s used, eSourcing is a powerful driver of value. There is perhaps none better…. when it is used. But eSourcing’s problem in this match up is that it has a market adoption rate of ~50%. If half of CPOs are not using it, it cannot rightly earn a berth in the CPO’s Final Four this year.
When we began, I expected eSourcing would become our tournament champion…. but, that sports fans, is why they play the game.
Contract Compliance in the market today is 63% – another figure that is not overwhelmingly great. But, a Contract Compliance initiative is something so simplistic and chock-full o’ value that even the most immature and unsophisticated procurement team can run one.
eSourcing had the better athletes, eSourcing was the better team, but in the most memorable game, yet, of this fine tournament (ending with a fantastic buzzer beater reminiscent of this 1983 classic or this silver screen gem), Contract Compliance pulls off a miracle and is the last team to join: