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“Step outside Procurement’s traditional comfort zone and corporate role. See Procurement as a revenue support function and hold your teams to deliver on their savings numbers. Always plan first, and act second. And never forget, Procurement’s number one job is to provide consultative guidance, both externally to suppliers, and equally internally to your stakeholders,” advises Ward Karson, Chief Operating Officer, Raindrop.

Raindrop is a service provider at the marcus evans Chief Procurement Officer Summit 2022.

What procurement digitization challenges are CPOs experiencing today? What would address those issues? 

Procurement leaders understand the urgency and importance of defining and executing their organization’s digital transformation. The top goals for digitization projects include process automation, reporting data quality, cost savings, and streamlined compliance. While many corporate functions are reducing their cost of acquiring goods and services by implementing new digital solutions, Procurement is generally not one of them. Procurement departments will have to grow more efficiently and create more value for the company. CPOs need to build new capabilities and create a digitally-enabled ecosystem.

Historically this has been achieved via numerous and various “best of breed” technology point solutions, which ultimately CPOs have realized leads to data leakage, spend leakage, and risk/compliance leakage. This last item is the procurement digitization challenge which keeps CPOs awake at night.

How should CPOs embark on the digital procurement journey? How can they ensure it’s successful?

The old saying, “measure twice, cut once” also pertains to CPOs ensuring they understand what issue they are trying to solve. In order for the technology itself to have the greatest chance of success, the CPO (and numerous other key internal stakeholders) must have a defined set of requirements they cumulatively seek to solve for. Of course, scope creep is a real thing, so ensure your scope is tightly understood and agreed upon. CPOs should keep in the forefront of their minds, that they may not necessarily need to ‘boil the ocean’, but rather can understand and address the holistic criteria and pain points, and solve one issue at a time, or as funds are available. For example, if a CPO only has funding to solve for ‘spend registration’ and Supplier Management platform, but will require a cohesive series of future modules to address Sourcing and Contracts several quarters out, then working with the desired technology partner to get creative in solving the CPO’s needs is a core aspect of their digital procurement journey.

What gaps are even some of the top CPOs not covering, that impact their competitive advantage?

This is going to be a radical idea, but one whose time has arrived. As a Procurement leader and practitioner for the past 30 years, I always felt the Procurement function should be measured similarly to how the Sales function is measured. Effectively the CPO sits on the opposite side of the supplier CSO’s desk, and vice versa. So I think we need to start looking at Procurement as a revenue function, and not as the external spend team that is all-too-frequently perceived as the department to ‘just help us buy things’ to get our jobs done. CPOs should take a serious look at creating a well-thought-out supplier and commodity strategic plan in collaboration with each of their internal executive stakeholder partners, and leverage Procurement as a revenue support function. 

On top of this, it should be understood that Procurement’s main function is not the actual sourcing of goods and services itself. Essentially, the sourcing event is the outcome of good consultative planning in partnership with stakeholders. The real question is, are CPOs holding their teams to design efficiencies into each functional group’s external spend for each forthcoming fiscal year. If this is happening properly, then each Procurement resource would ‘have a savings number’ to meet each fiscal year, just like a Sales Representative has to meet each quarter. And also like Sales, if the Procurement team member ‘hits their number’ each quarter or fiscal year, then they also receive a predetermined and agreed upon financial bonus. This would create a competitive advantage within and outside of the organization.

How can CPOs reduce operational costs and deliver quantifiable value back to the business?

The hunt for OpEx cost reduction is the ruler which all CPOs are measured by. If I’m spending a dollar today, how can you help me only spend eighty cents tomorrow? The answer to this question can be broad, so we will use one example here. There is no written rule that supplier contracts cannot be renegotiated during the active term. You do not have to wait toward the end of a three-year contract in order to engage the supplier and renegotiate it. Be bold – take active business out to market – even if you never plan on switching out the incumbent supplier. Just the activity of going out to market can lead to cost compression, as the supplier will investigate their own options to protect their revenue, even if it means taking a reduction. And never forget to ask your internal stakeholders if they have an upcoming purchase requirement which can be brought as net-new revenue to the supplier, so when you request financial concessions on the baseline business run rate, you can present offsetting new revenue opportunity for your supplier to fight for. If I’m a Sales Rep, I would know it is a whole lot easier to find USD 100,000 of revenue elsewhere, than it is to find USD 1 million of revenue elsewhere.

Raindrop was designed by Procurement professionals. What additional benefits does that bring on board?

Raindrop is designed by Procurement and Operations subject matter experts, with decades of hands-on leadership experience. This provides the critical ability to authentically speak with any CPO, CFO, CIO, or other client resources. Unlike some of our competitors, Raindrop is not a group of engineers trying to find a problem to solve in order to sell enterprise software via a host of industry-specific inexperienced rapid turnover Sales reps who have never worked as a Procurement practitioner before. 

Raindrop is not heavily burdened with the “technical debt” most of the legacy software providers are. This means, Raindrop is an ‘industry disrupter’ as we shake up an industry in desperate need of change. We leveraged our decades of hands-on real-life Procurement experience, and created the newest technology solution, incorporating Artificial Intelligence and Machine Learning, all in an easy-to-use and highly flexible platform. Leveraging and/or acquiring modern single-pane-of-glass Enterprise Spend Management technology would provide organizations rapid and rich access to actionable intelligence – technology their internal stakeholders and suppliers can easily navigate and therefore successfully capture spend.

So when a real Procurement practitioner uses Raindrop, they instantly see Raindrop was built with the same ‘lingua franca’ they speak. The Procurement industry is a very tight knit group of career practitioners in a rapidly shrinking world, and Raindrop’s authenticity and deep experience speaks volumes.