Ardent recently completed its sixteenth annual CPO-themed market research study, “The State of Procurement & the CPO”, which is part of an ongoing dialogue that my team and I have had with Chief Procurement Officers (CPOs) and other procurement leaders for more than a decade. Over the next few weeks, we’ll be discussing the results from this year’s study in a series of articles on this site. If you’d like access to this report, make sure to register for our newsletter with a business email address.
The CPO’s Hurdles in 2021
In 2021, the state of the CPO is strong, bolstered by high-impact performance, expanding engagement, and a more direct impact on overall operations. That said, the average procurement department’s path to success is rarely easy and clear. In fact, the top hurdles for procurement departments in 2021, while generally lower in intensity than the pre-pandemic market, remain significant.
The CPOs who have placed “digital transformation” at the top of their 2021 agendas have done so to attack the top hurdles to their overall success. The most common challenge to the CPO’s ability to achieve their 18-month objectives are the struggles to align processes and systems within the organization (37%) – a value that is higher than in 2019. For procurement, a transformation does not occur in a vacuum – it occurs in parallel with other business units’ transformation projects. Thus, it is even more crucial for CPOs and their teams to communicate and collaborate early with their partners, particularly in accounts payable/finance, to ensure that digital transformation efforts complement each other, or at minimum, are compatible. It is easier to drive adoption of a new solution when it has been selected as part of a collaborative process that incorporates the views and requirements of all key stakeholders. Chief Procurement Officers and their teams should look to engage earlier, seek input earlier, and better prepare for technology deployment projects in order to overcome the lack of process and systems alignment.
Those participating in Ardent’s annual research study have shown a strong interest in adopting more process automation tools in 2021 to close existing gaps, improve operations, and address the problems created by a lack of technology, which is a serious challenge for 33% of the market. And, once again in 2021, budget constraints continue to hamper procurement’s efforts to achieve its multi-year objectives – yet only 33% of respondents rate it as the chief hurdle to success (down from 46% in 2018). At first glance, it appears to have gotten easier for CPOs to secure adequate funding for their teams to invest in new technologies or technology enhancements.
Finally, the CPO faces a series of ongoing people-related challenges – engaging them (29%), hiring them (27%), and finding the right ones (26%). Of course, it is the rare industry or enterprise that has an abundance of staff and is not pressed to meet its goals. In 2021, the competition for headcount and the right expertise has spawned a talent war that requires a new way to engage workers. The prevalence of digital staffing (i.e. online talent platforms, social networks, etc.) has allowed procurement leaders to better assess their current skill gaps, and, in an on-demand fashion, find and engage the best-aligned talent.
As the function becomes more focused on innovation, it will behoove procurement executives (and hiring managers that work directly with these leaders) to ensure that they are tapping into the world of non-employee labor…not only as a supplemental source of talent, but also as a value-added driver of expertise, skillsets, and fresh thinking. As the procurement function continues to move forward and expand its reach, talent remains the spark for transforming the impact of the unit. As such, new, agile talent sources, like independent contractors and freelancers available in new talent networks, must be tapped to bring specific expertise to core initiatives and help procurement’s full-time staff improve operations and performance.
If you are interested in learning more about the key procurement and CPO data collected in our annual research study, consider listening to Ardent’s brand new “Procurement Rising” podcast series. Click below to listen to new episodes. The podcast is also available on Apple, Spotify, Stitcher, Google, or wherever you get your podcasts.
