Category Archives: Strategy

Less Than 1/3 of Organizations Have a CPO — How Will They Continue to Survive?

the doctor has yet to see a single study that said that more than 30% of (public) (listed) organizations have a CPO, and some have that number as low as 15%. He has to admit that he just DOES NOT get it. From a basic business point of view, if you go back to the first thing that they teach you in Business 101, it should be easy to see that it is one of the two most critical roles in an organization, and one of the four roles EVERY organization should have.

The first thing that they teach you is for a business to survive, it has to be profitable, and

Profit = Revenue – Expenses

This says that one of the two most important roles in an organization is the (acting) CRO, who is responsible for bringing the revenue in that is required for the business to operate. In a startup, the acting CRO could be the CEO who has to sell, sell, sell (or raise, raise, raise) until she has enough money to hire a CRO, but without revenue, there is no business.

This also says that the other most important role is the (acting) CPO, as the business will need products. Even a pure services business needs products to operate (equipment, software, office supplies, MRO, etc.), and those need to be obtained at a total cost that is less than the revenue available to pay for them. If the company is primarily a product company, then the majority of its spend will be on these products (and not products for operations or personnel), and the CPO is super critical. Now, in a primarily services company, this role may be fulfilled by the CEO (if the CEO is not sales oriented, but an ops or HR person), but will likely be fulfilled by the CFO or the HR Director/VP until the company is big enough, and spends enough on internal products, to hire a CPO.

Furthermore, this would imply that the third most important role is the CFO that ensures the money coming in and money going out are appropriately tracked and the budgets appropriately allocated and the financial reports and taxes appropriately filed with the government agencies. (But, if there are no funds flowing in and out, you don’t have a business, and, thus, don’t need a CFO.)

Finally, logic would dictate that the fourth most important role is the CEO that defines the strategy, direction, and enables each of these roles needs to be as successful as possible.

This also means that organizations that over-focus on the

  • CSO (Strategy): have their head in the clouds because strategy needs to be executed, and you don’t necessarily need a full time person in this role — a good exercise once every year to three (depending on your market) lead by a strategic expert could be enough
  • CMO (Marketing): are over valuing marketing because, while it’s important to get attention, you have convert leads into prospects into sales … and it’s the CRO that manages that entire process
  • C(R/C)O (Risk/Compliance): are putting the cart before the horses so they can’t leave the stables; while risk is critical, it has to be managed in a sales and procurement context
  • CTO (Technology): are not seeing the big picture; if you are a software organization, having a solid platform and infrastructure is critical, but if you are not selling the product, or you are not able to attract the talent you need to build the product (which may or may not be the CTO’s skillset), it’s suddenly less important

And, of course, this means that Head of Sales, R&D Director, VP Product, etc. also become secondary as sales is only part of the funnel, some R&D can be outsourced or acquired (since design can sometimes be one time), and without the ability to acquire the talent and goods you need, you can’t create the product.

But every organization has a CFO and CEO, the second most important positions. The majority have CMOs and CTOs, the third most important positions. And they all focus on Sales VPs, R&D, Products, etc. which are essential, but the fourth most important positions from a foundational and C-Suite perspective. But when it comes to CROs, less than 15% of organizations have them and when it comes to CPOS, less than 30% of organizations have them. It boggles the logical minds!

Now, the doctor knows he’s going to get a lot of flak for this for calling CMO, CTO, etc. third and fourth on the importance scale, because they are critical roles in many organizations, but if you go back to basics, logically they are not the most critical roles that must be filled.

There are NO Perils of Big Data in Procurement!

First of all, no organization has enough data, and those that come close don’t have big data.

Secondly, the more data you have, the better.

Third, if you think you have too much data, you’re not getting it!

So where’s this rant coming from? The rant-inducing headline du jour. The CIO Review recently published an article on The Perils of Big Data in Procurement which is complete non-sense, as there are no perils to having more data (because there’s never enough), unless it’s bad data (but the assumption in the article was that all the data was correct), just perils in terms of how that data is presented and accessed.

The perils in terms of how that data is presented and accessed can be significant, but that’s not due to having big data, that is due to poor system design — and that’s a different issue!

According to the article, buyers and procurement managers … have available a huge and unprecedented amount of data … [and] start to measure everything in order to manage it and that with this approach, several data lakes are created, feeding various dashboards, scorecards, reports, and metrics as procurement professionals try to understand spend analysis, price trends, market fluctuations, volume, cost savings, negotiation performance, and other essential factors. And this is true.

It goes on to say it is very easy for a person to be lost in the sea of numbers and details and miss the big picture entirely because you don’t know what is the crucial data that would give you critical insights. And if that wasn’t enough, it goes on to say it is the same as someone that enters the hospital with a broken leg but has everything else checked. WTF?

This is so dumb it makes you angry!

  1. If a person gets lost in the sea of details and numbers it’s because they don’t know what they should be looking for and how they should be looking for it, not because there’s too much data.
  2. If they don’t know what is crucial, it’s because they don’t know enough about the project they are doing to identify what’s critical and what’s not.
  3. What health practitioner is going to be so stupid as to not see a broken leg on a triage? Come on now! And what Procurement practitioner would check all but one dashboard randomly and then not check the last remaining dashboard? (And that’s what the article is implying with its ridiculous statement.)

In other words, the headline, and claim, is bullcr@p. Don’t blame a mountain of data for a lack of capability in your people, poor vendor technology choices (that bury you in useless dashboards), and your unwillingness to train your talent in modern technology and best practices so they can do their job properly.

And while the author is completely right in that you need to

  • understand what matters
  • start with a top-down view
  • have people who are good at interpreting the data

It still misses the point in that you need to, for any application you buy and any project you wish to undertake

  • define what’s relevant up front
  • find a solution that is configured/configurable to show that up front
  • make sure the data is easy to interpret, is accompanied with written guidance, and that your talent is trained on how to properly interpret the data and
  • if the goal is opportunity finding, the solution needs to identify and present the top opportunities across all of the analysis done, with deep supporting dashboards buried under the high level summary dashboard

More data is always better, especially if you want to use machine learning. In other words, it’s not the data, it’s the application, or the people, so don’t blame the data for your organization’s shortcomings.

The 39 Steps … err … The 39 Clues … err … The 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay

Figuring out where to start is not easy, and often never where the majority of vendors or consultants say you should start. They’ll have great reasons for their recommendations, which will typically be true, but they will be the subset of reasons that most benefits them (as it will sell their solution), and not necessarily the subset of reasons that most benefits you now. While you will likely need every module there is in the long run, you can often only start with one or two, and you need to focus on what’s the greatest ROI now to prove the investment and help you acquire funds to get more capability later, when you are ready for it. But figuring out how much you can handle, what the greatest needs are, and the necessary starting points aren’t easy, and that’s why SI dove into this topic, with arguments and explanations and module overviews, both broader and deeper than any analyst firm or blogger has done before. Enjoy!

Introductory Posts:
Part 1: Where Do You Start?
Part 2: Where Should You Start?
Part 3: You Start with …
Part 4: e-Procurement, and Here’s Why.

Part 5: Defining an e-Procurement Baseline
Part 6: There are Barriers to Selecting an e-Procurement Solution (and they are not what you think)
Part 7: Over 70 e-Procurement Companies to Check Out

Interlude 1
Part 8: What Comes Next?

Spend Analysis
Part 9: Time for Spend Analysis
Part 10: What Do You Need for A Spend Analysis Baseline, I
Part 11: What Do You Need for A Spend Analysis Baseline, II
Part 12: Over 40 Spend Analysis Vendors to Check Out

Interlude 2
Part 13: But I Can’t Touch the Sacred Cows!
(including Over 20 SaaS, 10 Legal, and 5 Marketing Spend Management / Analysis Companies to Check Out)
Part 14: Do Not Stop At Spend Analysis!

Supplier Management
Part 15: Supplier Management is a CORNED QUIP Mash
Part 16: Supplier Management A-Side
Part 17: Supplier Management B-Side
Part 18: Supplier Management C-Side
Part 19: Supplier Management D-Side
Part 20: Over 90 Supplier Management Companies to Check Out

Contract Management
Part 21: Time for Contract Management
Part 22: Contract Management is a NAG: Let’s Start with Negotiation
Part 23: Contract Management is a NAG: Let’s Continue with [Contract]Analytics
Part 24: Contract Management is a NAG: Let’s End with [Contract] Governance
Part 25: Over 80 Contract Management Vendors to Check Out

Part 26: Time for e-Sourcing
Part 27: Breaking Down the ORA of Sourcing Starting With RFX
Part 28: Breaking Down the ORA of Sourcing Continuing with e-Auctions
Part 29: Breaking Down the ORA of Sourcing Ending with [Strategic Sourcing Decision] Optimization
Part 30: Over 75 e-Sourcing Vendors to Check Out!

Invoice-to-Pay (I2P):
Part 31: Time for Invoice-to-Pay
Part 32: Breaking Down the Invoice-to-Pay Core
Part 33: Over 75 Invoice-to-Pay Companies to Check Out

Part 34: How Do I Orchestrate Everything?
Part 35: Do I Intake, Manage, or Orchestrate?
Part 36: Over 20 Intake, [Procurement] [Project] Management, and/or Orchestration Companies to Check Out
Part 37: Investigating Intake By Diving In to the Details
Part 38: Prettying Up the Project with Procurement Project Management
Part 39: Deobfuscating the Orchestration and Fitting it All Together

Procurement Trend #20. Increased Strategic Focus

Seventeen anti-trends still remain. And while somedays it might seem like this series will never end, we assure you it will and now that LOLCat has figured out that the best thing to do is just take a nap, dream of his grandfather’s adventures as an archaeologist cat uncovering lost tombs, and wait for the series that is regurgitating topics of his past lives, we can march on knowing that as long as other LOLCats do the same, the series will do no our poor LOLCats more harm. And in fact, when we lay bare each and every one of the futurists’ lies, you’ll be in a better position to learn the truth and seize upon the real trends that lie ahead and the opportunities they contain.

So why do the historians keep pegging increased strategic focus as a future trend? Besides asphyxiation as a result from breathing in too much of their own hot air, probably because:

  • Supply Management is still tactically focussed in many companies

    on purchase order creation, invoice processing, and other forms of paper document and contract management.

  • Supply Managers are too focussed on survival, not control

    Procurement in many companies is comparable to the Island of Misfit Toys where the toys are all wandering around aimlessly trying to figure out how to find what they need to get through another day, instead of taking control of the situation.

  • Reaction is the name of the game, but Planning is the key to winning

    but most Procurement departments spend their days reacting to requisitions, supplier mishaps, late deliveries, stock-outs, and other unplanned events.

So what does this mean?

Strategic Focus

Procurement has to acquire and implement automation management to reduce tactical focus from mundane processing to exception management to give it time to focus on more strategic sourcing tasks, category planning, process review and improvement, and other tasks that will allow it to not only find any savings it has not yet tapped but identify new sources of value to the organization.

Transition to Farming and Harvesting

When you’re just trying to survive, all of your efforts generally go into hunting and gathering to meet the day’s needs. But in order to get ahead, you have to start farming and harvesting. You have to work together and divide up the work in such a way that someone has time to focus on more long term tasks while others handle the emergency situations of the day. While Procurement cannot avoid doing what it takes to put out the fires to avoid burning to the ground, it has to regularly step back, step up, take a wider view, and come up with ways to advance its methodology and operations and implement those so it can progress towards a path of proactive strategy and not reactive data processing.

Forward Planning

Procurement has to not only look for ways to get better today, but for ways that will allow it to continue progressing in efficiency and capability and potential beyond next quarter and next year. True forward planning looks five years into the future, not five months. While it won’t be able to see that far right away, when it has truly matured as a strategic organization, it will be working on projects for the current the year, next year, and on preparing for projects that will happen three to five years in the future that take a lot of planing and preparation to get right, such as factory and warehouse relocation as a result of a supply chain redesign project.

Doing Procurement Right Regardless of Organizational Size

A few days ago, in our post on how You’ve Negotiated but you still might not be realizing savings on marketing print, we pointed out two great guests posts by Santosh Reddy of GEP on how just throwing a problem over the wall to an expert doesn’t necessarily save you money — it just guarantees that someone else, namely the Print Management Company (PMC), makes money on your behalf.

Today, we’re going to point out another guest post by a GEP consultant, Sanyam Khurana. In his recent post on Spend Matters on Procurement Lessons for Small Businesses and Large Multinational Corporations, he notes that some strategies work well regardless of organizational size. Thus, if you are a small business that wants to get bigger, you should take take these lessons to heart and work on these strategies.


If you’ve been paying attention, you know that Sourcing Innovation has been emphasizing the importance of the 3T’s to successful Supply Management — Talent, Technology, and Transition Management. Transition Management requires a lot of things, but above all else, flexibility as your organization needs to adapt to, and be in, a state of constant change, in order to navigate the ebbs and flows of today’s global economy.

Cost Optimization

Whether you’re buying 100 units or 100,000 units, you still have to make sure you’re paying the right price for the right product. Over paying by 10% is still overpaying by 10%, and with smaller budgets, and margins to work with, 10% is still a lot.

Supplier Rationalization

Whether you’re a 1 Million, 100 Million, or a 1 Billion dollar company, you still depend on your suppliers for your success. In Sanyam Khurana’s post, he gives the example of a bakery that requires raw material, namely flour, to produce its goods. If the suppliers don’t deliver, the bakery can’t bake its bread. Having the right suppliers that you can depend on through thick and thin is important regardless of organizational size.

Data Management

Not only does each of the above strategies require good data to be effective, but so do other organizational strategies. For example, you can’t optimize cost unless you know how much you are paying, how much you could be paying and the value you are getting. You can’t rationalize on the right suppliers unless you are keeping good performance metrics. And while you can always be flexible, there’s no point in being flexible unless you know the direction that you should be be flexibly moving in! Plus, in today’s economy, social media is often critical to marketing, sales, and advertising — and in order to focus on the right channels, you need data!

Data, data everywhere
And all the tables burst
Data, data everywhere
It can not get much worse!