The eSourcing 2.0 campaign is underway and over the next few months we’ll be taking the campaign to the streets. I’ve already been invited by several procurement leaders to speak to their teams at their annual/quarterly gatherings and I welcome the opportunity to schedule one or two more of these “town-hall” meetings during the “Primary Season.” Remember though, eSourcing 2.0 is a grassroots movement that relies on the support and word-of-mouth of this community. It’s campaign about us, about continuing to transform procurement and taking up the unfinished business of improving our sourcing processes and building a more perfect procurement department. 🙂
CPO Shop Talk
As I noted earlier, CPO Shop Talk is not intended to be the final word on a given topic. Ideally, I hope these posts can serve as a quick way to share issues that procurement leaders are currently focused on and draw out (in the comments section) insights and views from our collective experiences to help them. This Shop Talk captures discussions and activities at the stellar Ariba LIVE event held in Orlando last week
Send in the (Ariba) Cloud
Ariba executives, Bob Calderoni, Kevin Costello, and Tim Minahan, individually and collectively began ARIBALive by asking a few questions like “Why is personal commerce so easy?” and “Why is business commerce so hard?” The entire company then spent the remaining days discussing how to improve business commerce and the solutions which it feels will do this on its newly named and newly enhanced platform called the “Ariba Commerce Cloud.” Ariba argues that business commerce has been hindered by solutions (like ERP) that are designed to work solely within the walls of the enterprise and that improvements will be driven by a combination of (a) technology that automates and improves processes for all trading partners (b) a community of prospective partners that are easy to find and ready to transact and (c) value added services that are available on-demand. The offerings within the Ariba Commerce Cloud are designed to deliver on these three fronts and help trading partners buy, sell and manage cash better.
P2P Launch – Supplier Enablement AND User Adoption (Buy)
I’ve often described supplier enablement as the “Achilles heel” of many eProcurement deployments, because this an area where a new eProcurement initiative can really bog down and worse, if poorly done, can mute adoption as requisitioners who try a system and fail to find what they need are much less likely to return. Anyway, I bumped into the P2P lead at a young, but fast-growing, hi-tech company that I had previously met by phone during the early stages of their solution selection process and discovered that their supplier enablement process had gone smoothly, aided (1) by the very high concentration of enterprise spend with a small number of suppliers and (2) the assistance and support of Ariba’s supplier enablement team. The problem for this tech company lay in the basic lack of understanding that the non-procurement business professionals had regarding a proper requisition to purchase order process. It was an interesting reminder that many of procurement’s co-workers do not share its understanding of the unique source-to-settle business processes and that while it is important to offer upfront training on process automation applications/tools for business stakeholders, including a grounding in the business process itself can be vitally important.
Working Capital Optimization (Manage Cash)
During and now in the aftermath of the credit crisis, cash management has become increasingly important for enterprises of all sizes. More and more CPOs are getting involved operationally and sharing their experiences. Chris Osen, Vice President of Supply Management at Meadwestvaco did so earlier in the year on these pages and Dr. Heinz Schaffer, the Chief Procurement Officer at AXA did so early on the main stage at Ariba LIVE. Schaffer began with a discussion of the journey that AXA’s procurement department has been on the past eight years. After developing a level of sophistication in the overall management of the sourcing and procurement operations, Schaffer found that the enterprise still had a huge process gap when it came to managing cash and that this gap was costly. While the business was generally supportive of procurement, when it came to accounts payable, there was no business alignment and no ownership of the cash management process. (This is not a unique situation. Most AP departments lag their procurement counterparts in maturity by several years. But as with Chris, Schaffer and an increasing number of Chief Procurement Officers have found, huge value is created when the last leg of the source-to-settle process is integrated and aligned.) Dr. Schaffer’s procurement team ended up with ownership of AP and after the first year of its ownership, improved invoice processing efficiencies by roughly 50%. Schaffer also presented the financial case where ‘value’ within AXA was best measured by Return on Capital (which is basically defined as cash profit divided by capital) and that procurement could drive value that could be clearly calculated if it decreased costs and/or decreased capital. He then showed that AXA’s working capital could be positively impacted by more than €5B by extending current DPO (Days Payable Outstanding) by 9 days. Ariba has a video archive of all main stage presentations from Ariba LIVE here.
Sell – At the event, I gave a presentation focused on sell-side contract management, which I discussed here.
