Daily Archives: June 23, 2010

Is There a Hole in CPO Agenda’s Synergy Strategy Bucket?

A recent article on CPO Agenda that asked if there is a hole in your synergy strategy bucket made some very good points about how Procurement can often help to identify the right IT strategy and synergies to make a merger or acquisition a success.

However, what it failed to mention is that in addition to contract analysis and risk assessment, market research, negotiation management, and should-cost analysis, procurement can also serve as the mediator who helps the organization identify the IT needs and the most appropriate strategies. Furthermore, until the desired go-forward strategies are identified, contract analysis and negotiation management are irrelevant — who cares about license rights, location of use, competitive intelligence, or contract consolidation if you’re no longer going to use the system.

Furthermore, trying to determine the right IT solutions to keep based on license agreement analysis is worse than putting the cart before the horse. If you can get the horse angry enough, maybe he’ll kick at the cart until it moves forward. But if you keep the wrong IT solution, your employees won’t even kick at it … they’ll find every means possible to go around and bypass it completely.

Procurement can play a crucial role here as well. As the one unit that has to continually negotiate with all organizational units with respect to purchases, it can lead the analysis team that reaches out to every organizational unit to understand not only what software they are currently using, but what their needs actually are and work with IT to come up with a strategy that addresses the anticipated needs of the merged organization. Furthermore, as the central mediator and (hopefully) technology-savvy market analysts (who should be using modern e-Sourcing and e-Procurement systems) who talk to both IT departments and external entities, they have a better chance of figuring out when an objection is due to platform limitations (hardware, software, etc.) or simply a resource limitation (the support techs don’t know the software or don’t think it’s the right solution). In the end, the biggest negotiation will likely be with the organizational units that want to merge, and not the vendors, who will probably be more responsive to demands in exchange for a bigger customer and more dollars in their pocket in the long run.

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Speaking Like a CFO, Part I

Today’s guest post is from Robert A. Rudzki, President of Greybeard Advisors LLC, who has (co-) authored a number of acclaimed business books, including Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise, On-Demand Supply Management, and the supply management best seller Straight to the Bottom Line.

In my experience, those procurement and SCM (Supply Chain Management) departments who invest the time and effort to develop and master the skill and perspective of “speaking like a CFO” are the departments heading to the top of the profession. On the other hand, those departments who don’t – or won’t – master this skill seem to be perpetually stuck on the tactical hamster wheel.

I’ve touched on this subject during numerous conference presentations, but it’s important enough that I will risk repeating myself in order to reinforce a few key themes:

  1. You need to adopt and speak the language of the executive suite (the “financial language” of the CFO) in order to be effective in your communications with senior management.
  2. Develop a vision with BOLD objectives that tie directly to senior management’s interests and objectives (EPS, ROIC, cash flow, risk management, etc.).
  3. Lay out your transformation plan and detailed roadmap (note: this starts with a comprehensive “current state assessment”, compares the current state to best practices, and then uses the gap analysis as input to a well-constructed transformation roadmap).
  4. View technology as an enabler of your transformation plan and stretch objectives, not an end to itself.
  5. Build your business case (what you expect to deliver, in exchange for resources and budget).
  6. Be willing to make a commitment (of new $ results) in order to gain top management’s commitment and support.
  7. Finally, lead and make it happen.

You can find out more about this subject by downloading the following free white-papers on the Greybeard Advisors website:

Thanks, Bob!

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