Ardent Partners recently published our annual CPO Rising report (entitled CPO Rising 2014: Convergence) and of all the reports we publish this year, the focus of this report is exactly geared towards our regular readers (CPOs and those who aspire to the role). The report presents a comprehensive, industry-wide view into what is happening in the world of procurement and captures the experience, performance, perspective, and intentions of 273 Chief Procurement Officers and other procurement executives. As we do every year, we interview many Chief Procurement Officers (24 procurement leaders in total) to add context to this research effort. The report is available (with registration) from several sponsor sites including here, here, here, here, here, or here.
Chief Procurement Officers’ Top Challenges in 2014
In 2014, a good number of procurement departments lack the process automation tools that would allow them to deliver greater value to the enterprise. Indeed, 29% of Chief Procurement Officers identified their technology gaps as a top challenge for this year. While it’s not the biggest challenge CPOs face, it’s a perennial challenge and goes hand in hand with some of procurement’s other challenges – namely, budget constraints and staff/talent constraints.
At its core, enterprise technology is meant to drive efficiencies, effectiveness, and visibility making tasks more manageable, while enabling an organization to scale. Technology can also help us connect the dots to see patterns that we would have otherwise missed, arrive at conclusions faster, or confirm what other sources tell us. Technology is meant to make our lives easier, faster, sharper, and make us better able to solve complex problems. So when companies or procurement teams fail to leverage technology, they’re missing out on all the time, effort, frustration, and opportunity costs that it could have saved them.
The CPO’s Top Challenges in 2014
Despite procurement’s influence and reach across the enterprise, it often falls lower on the budget priority list and has to work harder to gain a bigger share of the budgetary pie – a topic we wrote about very recently on CPO Rising. If CPOs don’t press their teams’ case to executive management and if their teams are unable to present a compelling business case for a technology solution that demonstrates a clear return on investment (ROI), procurement’s technology needs will remain unfulfilled. This is a major reason why CPOs have resigned themselves to do better with same – while the supply management solutions market has been reasonably this year, the effort required for procurement teams to gain budget approval has increased significantly.
Lacking an effective ally or voice in the organization isn’t procurement’s only tech challenge; lacking staff with the right skills or training is another big one. Indeed, staff/talent constraints was the highest-rated challenge for CPOs in 2014, and it may be widening the tech gap within a subset of procurement departments. Additionally, if CPOs know that their staffs do not have the necessary skills or training to drive robust systems like eProcurement, Spend Analysis, or eSourcing, or if they suffered through failed deployments in the past, they may be less likely to make the business case. This would be unfortunate since technology can be a force multiplier for organizations, allowing smaller procurement staffs to take on more work and ultimately deliver more value.
The good news is that there is a competitive landscape for supply management technology solutions with more cost-effective and user-friendly solutions available to enterprise procurement teams than at any previous time. Zycus is one provider who has stressed ‘ease of use’ as it has expanded its solution set from spend analysis to a full source-to-pay suite. GEP is another provider who has quietly developed a broad and robust suite with impressive mobile capabilities. Innovation continues in this market, so those that are working on information that is 3 or 4 years old would be wise to revisit this market.
Investments in supply management solutions in 2014 may not set the corporate board room on fire, but they remain one of the best technology investments an enterprise can make. Procurement departments that continue to struggle with largely manual processes limit their upside potential and constrain the group from expanding its influence on business decision and results.
RELATED ARTICLES
CPO Rising 2014: Convergence – Top Challenges in 2014 (I)
CPO Rising 2014: Convergence – Top Challenges in 2014 (II)
CPO Rising 2014: Convergence – Top Challenges in 2014 (III)
Chief Procurement Officers in 2014: Doing Better with Same
Skills for the Modern Procurement Pro – Leveraging Technology to Drive Business Value
