Originally Published in Spend Matters | September 29, 2015 | By Pierre Mitchell
Consero Group published the results of a CPO forum it held this summer and captured some data from the 47 participating CPOs. Consero is one of the many executive peer networking groups out there, and although this survey wasn’t exactly on the cutting edge – only 37% of the firms have spend under management over the 50% level, and the questions indicated Consero isn’t likely staffed by procurement experts – the survey seems to be a decent bellwether of the industry at large.
Here are the most interesting results, along with a little color commentary:
- 65% have increased budgets. Finally! Internal markets are getting a little more rational. 5-15X procurement ROI is pretty good and worth funding.
- 52% say they have resources they need. Consero positioned this as bad, but I think this is pretty good! Most CPOs I know are always struggling with finding and retaining the best people to meet the broader procurement imperative.
- Early stakeholder engagement is the top tactic for getting leadership support, but only 36% are pursuing this. Check out our graph on the ROI of early spend influence here.
- After cost savings, SRM and risk management were the next highest performance priorities. Talent management was highest capability priority. No surprises here.
- 33% will outsource more of their procurement operation over the next year. Seems low, but likely because outsource is a highly loaded term. Even contingent labor, cloud applications and information subscription services are a form of outsourcing.
- 20% of the 55% with sustainability programs have not achieved tangible cost reductions. The problem for these folks could be they’re not knowledgeable enough, but I think the more likely cause is that they are not getting credit for cost or spend avoidance. Which leads to next issue…
- 69% believe their performance metrics drive the wrong behavior within their organizations. This is not a shocker. We highlight the level of formal measurement of 12 procurement value streams by finance in our 2-part Ask the Expert series here and here. (It’s for Spend Matters PRO members only, but if you want a freebie, check out our list of 17 things that procurement can do to help finance help procurement help the enterprise.)
- Contract management and relationship management were the top 2 biggest capability gaps. I think contract management is the biggest gap because of this CPO group’s earliness in its transformations. More advanced firms have gotten better at working with legal to get their contracting house in order. In terms of relationship management, this is no surprise, because it encompasses both internal stakeholder relationship management as well as supply relationship management. Both are critical.
- Spend analytics and e-procurement are the top 2 technology related investment areas. The respondents cited spend visibility as the top procurement performance “metric.” Yes, spend visibility is a capability, not a performance metric, and these questions weren’t well designed. But a good insight was that…
- 84% of the CPOs are not satisfied with the level of insight extracted from their company’s data. This shouldn’t be surprising, because it highlights both problems with the analytics, the underlying master data and the processes and policies that are root causes of the data problems. For more on methodically improving your spend visibility, check out our 50 Shades of Pay series.
- 72% of CPOs said they have a better relationship with their suppliers than a year ago. Everyone wants to be a customer of choice these days, and that’s not a bad thing, as long as it’s a truly systematic change and not a program du jour to only do short-term collaborative cost savings projects. The word collaboration can be overused, but it does mean something.
- 89% of firms said that a personal relationship between the procurement team and suppliers had a medium or high impact on the success of the relationship. This is an important finding: You can still be tough on suppliers but also be fair and develop a relationship with them.
Well, that wraps it up. If you have any thoughts on the data, please chime in!