Procurement Trend #24: Better Governance Model

Twenty-one dreary, and weary, trends still need to be discussed, so let’s keep the fire burning. The sooner we get through these, the sooner we can expose these charlatans once and for all.

So why do so many historians keep pegging this as a future trend, and keep poor LOLCat regressed in his past life? There are a number of reasons, but among the top three today are:

  • models may be few but most organizations don’t use the right one

    and even those organizations that have selected the right model don’t always apply it properly

  • compliance regulations make governance critical

    since SOX can put you in the Box with Fox!

  • investors want a return
    and they know a lack of governance won’t give them one

So What Does This Mean to You?

Governance Model

De-Centralized, Center-Led, Centralized, or Control Tower — which is right for your organization? The answer is all of them, depending on the situation.  For example, snow-clearing services should probably be de-centralized as it makes no sense to run them out of Houston, Texas or San Jose, California. IT Support should be center-led, as regional providers will probably give you the best price. Global contracts for your core product production should be centralized, as you need the volume for leverage and you need good supplier management. And it’s likely that a Control Tower model will be needed to manage the proper application of each model to each category it is suited to.

Fox in the Box

SOX can put your CEO and CFO in the box with fox if your company doesn’t make an acceptable effort to comply with the Sarbanes-Oxley Act of 2002. But this isn’t the only regulation that can get your company in hot-water. Labour regulations, environment regulations, etc. can all put your company at risk with unlimited (legal) liability in some cases. So companies have to make sure that the governance model takes into account compliance and supports the collection of all necessary data to insure that the organization doesn’t go foul of SOX or other regulations that could get it in hot, hot water.

Greedy Investors

They want a return and won’t be satisfied until they get one. And unless you can convince them that you have things well in hand, you’ll have a group of very clingy monkeys on your back, weighing you down. So you want to make sure that you have good, documented, governance procedures that will keep them happy and keep hundreds of pounds of monkeys off of your back.