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Are you hindering or helping your business?

September 29, 2015

Several months ago, I was talking with a friend who is CEO of a mid-size software company – let’s call it Company X. She had been working with the marketing group at a large corporation and they were excited by the functionality that her product offered. The IT organization were also supportive because of its ease of integration and use. Both could see significant financial benefits when compared to competitive offerings.

The problem was that Procurement had already started a bid process and Company X was late to the game. Their sales team – despite the internal support from Marketing and IT – had failed to gain Procurement support for either including them in the bid, or putting the process on hold. In frustration, my friend decided that she would personally call the responsible Procurement manager. After several minutes of conversation, she felt compelled to ask: “Which matters more to you – getting value and the best solution for your company, or complying with the process?” Without hesitation, the reply was: “Complying with the process”.

It is attitudes like this – and the blind adherence to rules – that helps account for the findings published recently by the Chartered Institute of Purchasing that ‘Three quarters of IT chiefs believe Procurement hinders rather than helps”. Perhaps indicating the depth of the problem, the article fails to question why such attitudes prevail and what Procurement should do differently. Instead, it focuses on the risk that this non-compliant behavior is creating – in other words, the problem is entirely with the executives and their attitude.

To me, the interesting point is that the remaining 22% of those IT chiefs presumably think that Procurement brings them value. So what are those 22% doing differently? I bet it is not that the IT chiefs are mindlessly subservient; it is more likely that they have procurement staff who are better integrated with their function and support the demanding business goals that are today imposed on IT executives. They are active in aligning business value and needs with market capabilities; they achieve compliance because people want to engage them.

I feel that talented procurement professionals are being badly let down by those who call for ‘licensed practitioners’ to be imposed on the business. It undermines their skills and contribution to imply that the only way Procurement can gain status is through diktat. It overlooks the fact that business functions are servants to the business, not its master. They are responsible for offering the services and support that merit inclusion and involvement in decision-making.

Within every business, processes are essential to ensure underlying controls and efficiency. But they represent a platform – and a key aspect of professionalism is to exercise judgment in their application. We must understand not only the rules, but also their implications and impacts in specific situations. The mark of true professionalism is therefore to know when it is appropriate to deviate from the rules (or to challenge and change them) and how to manage the consequences.

Today’s focus on business value means that we must all be ready to question what we are doing and how we do it. If three quarters of your clients feel you are hindering their work, I suggest it is time to rethink what you are doing – not to turn around and blame them for avoiding you.

2 Comments
  1. Martin Lonstrup permalink

    Would probably allow myself having working with procurement for +10 years that the example in the first two sections is very simplified. You could turn it around, if the Marketing department have asked Procurement to run a competitive tender process for new software based on technical, commercial requirements and defined selection criteria and that process was already in progress at the time – unless the portfolio of software providers bidding on the tender are considered to be unqualified – and Marketing suddenly decide that they want to include this additional software provider, depending on how far the tendering process is progressed you need to respect the original bidders, having complied with the process and within your requirements and commercial range – and strongly consider if acceptable to include yet a new bidder just because someone in the department like the software. Probably a bit simplified article but believe it consist of multiple aspects not represented here.

    • Martin
      Thanks for your comment.

      The example is not simplified at all – it reflects what happened. I don’t doubt that there were factors that needed to be considered in making a judgment. The issue in this case is that either that judgment was not made, or that the issues were not explained.

      I have no doubt that many Procurement groups and practitioners do an excellent job. However, as a support function, it is critical that others understand and support that role. A perception that Procurement is all about control and compliance with the rules is not healthy for the function’s future. The same is true for groups like contract management, legal, audit etc. If you sense that people are trying to work around you or that they find you ‘a hindrance’, it is time to reflect on how you are communicating and whether your service provision needs to be improved.

      Incidentally, in the case I mentioned, an alternative provider was selected. It was the cheapest solution. Within 9 months it was evident that it would not meet requirements and the agreement was terminated in favor of a contract with the ‘excluded’ provider.

      Whether you blame Marketing or Procurement for this situation, it indicated a costly and inefficient process – and that really is my point. As professionals, we must always be observing opportunities for improvement and not allow ourselves to be bound up in a belief that control and compliance are themselves the goal.

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