September 2018 |

Networked Procurement functions will be Kite shaped.

We can predict that now…because all the service functions will be.

What do we mean by kite shaped?

Well, we used to have traditional triangular hierarchies. There were lots of juniors and progressively fewer people as we moved up the ranks towards the apex. But, two things are happening to change this shape.

First the base will shrink. Technology is reducing the need for lower level staff. Low level transactional activity will be automated, particularly in larger functions. If contract discovery and initial assessment can be done by artificial intelligence, then RFPs can be appraised similarly. Likewise, price discovery can be facilitated through price comparison engines – it is happening already across more and more spheres of life.

Second, the shoulders near the apex will grow because things that are hard to automate will become more important. What we call Network Partners – a supercharged version of the procurement business partner – will be needed more and more to help businesses launch offerings which require networks of suppliers and stakeholders to combine in super smart ways that break convention. These are the people who will bring competitive advantage to help with a takeover, or change of corporate direction. Technology will support and enable them, not usurp them.

Similar to procurement: finance, HR and IT will all follow suit. They have to reinvent business partnering and adapt to technology. We believe that the finance function of the future will be 80% smaller than today. Procurement, however, will not have to shrink by the same amount, as most functions today do not cover all of the activities that need to be covered. An expanded remit to cover these (e.g. commercial vendor management) will provide a countervailing force to the natural trend.

As a CPO you may want to think about five things:

  1. Where are the opportunities for business growth and how can your team mobilize suppliers to get them?
  2. What are you doing / do you plan to do in the technology layer to automate your activities and to enable stakeholders to self-service in a way which retains commercial discipline?
  3. What are the characteristics of a successful Network Partner in your business?
  4. Where are you going to find the Network Partners of the future?
  5. How are you going to create conditions for Network Partners to flourish (and how can they help you do the same)?

The implications are big. Procurement has the opportunity to lead the way and get a head start on the rest of the business because it is smaller. It can be the first kite function and thereby shape the journey of the rest. All the big functions are going to be competing for the same influencing skills and commercial insights, with their own particular flavors on top. We believe this will make recruitment harder; eventually it means a bigger pond in which to fish outside of Procurement personnel, but more fishers! So go first and get the best fish!

And it is more critical than ever when business needs to be faster, smarter and more agile. Bring on the kite.

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