04 September 2019
Topics in this article
  • Cost Optimization
  • Technology

The mantra of tech companies is that modern businesses must have high-powered procurement technology to reduce costs, automate manual tasks, save time, generate insight and allow for more strategic work.

While true, the benefits are not the whole story. Chief procurement officers need to know what they are “digitally transforming” and why. The digital CPO must have a vision for how technology is going to improve procurement, why it will be good for customers and what to do next with all the data, insights and “time saved” by intelligent process automation.

Embracing technology itself won’t make your function best in class, but your function won’t become best in class without embracing technology. When done well, it is a critical enabler of the above benefits, but when done badly, it can cause reputational damage to a function all too often under fire.

It sounds obvious, but CPOs should be thinking about what “being more strategic” means alongside how and why they’re using digital to create their new brand of procurement.


What does realigning a business’ procurement function look like?

Since many CPOs still report to the chief financial officer, realignment can seem narrow and frequently positioned around the requisition-to-pay process, but today it can go much, much further. As CPOs sort their data and automate processes, they will need to organize their teams around this, considering how they manage service providers, ensure a great customer experience and bring data to life.

But digital transformation can also mean making procurement more of an asset across the whole business — elevating it beyond the “process and savings function” and into an advisory function. This means more strategic CPOs are searching for the digital opportunities that drive value for the company beyond procurement as a discipline. Succeding at this requires not only great market knowledge but also stakeholder trust.


The integrity of data is the driver for achieving benefits from the latest procurement technology. In digitally enabling your function, you are about to gather more data — really, a lot of data — and data tells stories. However, as you will know, conversations founded on data can end quickly if the integrity of that data is challenged. It is imperative you get your data right and employ team members who like data, understand the right questions to ask of the data and know what to do with the answers.

Will tech save time here? Of course it will. Once you’ve got it right you’ll save time around sorting, processing, analyzing, reporting, etc. But you’ll also need to invest time.

First: Be curious. Ask new questions and pose “what ifs” to make your function more efficient, effective and friendly, as well as deliver new ideas to your business.

Second: Look outside your business. You’ll gain by getting a different perspective that your business doesn’t yet have. If you are innovating or solving real business problems, you might just excite the CEO. That’s when procurement’s credentials as a strategic partner grow.


Businesses thrive by meeting the needs of their people. Having robust technology will help advance your cause, but it won’t build relationships. Being able to listen and act on what you hear is critical — as are behavioral traits like empathy, determination and energy.

The fact is that digitizing parts of your function does not guarantee that you will earn the right to play elsewhere. You will have to excite and gain the trust of your organization to do more exciting and “value-adding” things. This will require not only great delivery but also new types of skills and capabilities for new challenges. If you fail to invest in these, a byproduct of digital transformation could be the death of procurement.

You may need to ask some tough questions. Does my staff have the skills needed to help procurement grow? How many can be retrained? Will we have to downsize? Which people can tell our story and grow the business? Do we need a smarter workforce strategy?

“As we evolve, a clear distinction starts to emerge between the technology, skills and capabilities needed,” says Simon Geale, VP of client solutions at Proxima, in a recent article about the procurement consulting firm. “The more developed the function, the more it relies on knowledge and soft skills to succeed. And so a successful CPO will be looking at a broad range of capabilities.”

Ultimately, you will only attract the right people and get the best from supplier partners if you create the right environment for them to thrive. Strange as it may sound, when you start on digitizing the function, technology is only part of the puzzle.

In the next article in this series, we’ll delve into the issues more closely and look at how businesses can make the transition — designing and implementing a more focused, efficient and customer-focused operation.

This article originally appeared on Spend Matters.

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