PROCUREMENT OPTIMIZATION BLOG

I have been reviewing “The CPO’s Agenda for 2012…and Beyond” since it was released by Aberdeen in October. Having monitored this valuable study for years, I was struck by the following highlights:

“Alignment of procurement strategy with organizational objectives” is still the top action oriented priority of CPOs, but the number citing this (53 percent) is up 12 percent over last year.

What’s the greatest challenge for CPOs? Not spend management. “People and staff management” issues were the top priority according to 41 percent of respondents.

What are the greatest people challenges that CPOs face? 49 percent said that “lack of staff with appropriate knowledge and skills” is the top challenge, up from only 18 percent last year. The second greatest people challenge? 39 percent cited “organizational reluctance to follow or adopt recommended processes.”

In order to better understand the significance of these findings, I think we need to remember that procurement is still at an early stage of evolution as a shared corporate service. Just as HR organizations have moved beyond recruiting and training to establish talent management as a strategic enabler for organizational success, procurement organizations are evolving beyond simply cutting costs to help business units achieve their strategic objectives.

The success of any shared corporate service organization in creating business value, whether it’s Procurement, HR, IT, Operations or Security, depends on its effectiveness at instigating, managing and facilitating change.

The 2012 CPO Agenda report confirms what has been documented by countless other studies on change management. You may have a winning strategy, well designed processes and word-class technology, but if you don’t engage the self interests of the people you seek to change, then your change management initiative is destined to fail.

According to a survey of 600 executives worldwide by the Economist Intelligence Unit, 51% of respondents cited winning over hearts and minds of employees as the greatest barrier to success in change management.

Arthur D. Little and McKinsey & Co, have studied hundreds of organizations that entered into change initiatives and have found that about two-thirds fail to produce the results expected. CEOs report that up to 75% of their organizational change efforts do not yield the promised results. (1)

How can your organization become a more effective change agent? A great place to start is at the first and often primary point of contact with stakeholders–your Procurement Service Desk. In our next blog entry, we’ll share insights gained from Shelby’s outsourced management of service desk operations for a Fortune 500 client.

Jim Kandilas, CPA
EVP, Principal
The Shelby Group
JKandilas@theshelbygroup.com

(1) Business Improvement Architects (www.bia.ca)