This edition of Chief Procurement Officer Shop Talk is part two of the Q&A portion of a webinar that I delivered on July 7th for Zycus – an archive of the webinar is now available at this site (free, registration).
Q1: Can you discuss recent trends in solution selection for supply management technology?
Answer: One recent trend over the past few years in supply management solution selection has been for enterprises to look for a technology to support a larger part of the overall business process. This means that enterprises have been increasingly looking to license/subscribe (and then deploy and use) a suite of solutions than a series of point solutions. On the strategic sourcing side, this is a well-established trend; for example, looking at eSourcing and Contracts applications within the same RFP. It is a less established trend when you look at P2P, based in part on the history of how the solutions were developed, and by whom, but also because P2P generally cuts across two departments and budgets. Whether or not an enterprise has the budget (and plan) to automate more than one sub-process area within the larger source-to-settle process at one time, it should be thinking about how the different sub-processes are (or should be) linked together and what that means for its future solution framework.
Q2: In your experience, how much leverage does the procurement department have in regards to acquiring external solutions?
Answer: The solution provider landscape is competitive so a properly structured RFP with the right solution providers can create a beneficial negotiating environment. There are also many other strategies that can be used during the RFP process to lower your overall investment, and thereby your total cost of ownership, but they are specific to the enterprise’s requirements.
Q3: For organizations where the CEO hasn’t discovered the supply management function, what can supply managers do to get the CEO’s attention?
Answer: The case study examples presented in the webinar were designed for this purpose – to show examples of actual CEOs or CFOs that are (and should be) focusing more of their energy and resources on supply management. Sharing these examples and the ones presented in articles on CPO Rising (like the series on procurement leverage which concluded with this article) directly and indirectly with CEOs and CFOs will show them that their peers are (and should be) thinking about supply management. This peer pressure can be effective since no CEO wants to be thought of as a laggard. When executives understand the relative value and opportunities that exist within supply management compared to other functions, investment and focus should increase. If your executive leaders haven’t discovered ‘supply management’ yet and you’d like to discuss your situation and the different ways to approach them, I’m happy to hop on a quick call or respond to your email inquiry and discuss strategies that have worked for other groups.
Q4: How do you build the business case for spend management tools?
Answer: The ROI (return on investment) on spend management tools are very high when compared to other enterprise software solutions (HR, Finance, etc.). The keys to building a business case are being able to (1) understand and define the business value that the solutions will deliver (2) make a solid estimation on the timing of when that value will be generated and realized by the enterprise and (3) articulate the business case and gain the necessary buy-in and support from key executives and business influencers. A seemingly easy process but one that can be quite complex in practice.
