"Selling" Procurement

Everybody is in sales, even procurement leaders. Perhaps you're trying to convince your business partners who have been using the same supplier for years that it's time put the business out to bid. Perhaps you are seeking funds for an investment in procurement technology. Most of us have become frustrated at one point or another about our inability to "sell" our ideas that we know can bring value. My business partner Gregg Brandyberry and I hear procurement professionals make the following statement over and over -- "We're not understood; the CFO doesn't understand our contributions." As professionals, we know the value we can deliver, but how do we get key stakeholders to say "This plan makes sense, we approve funding for it, let's get started?"

There are certainly many aspects to "getting to yes." Gregg and I worked with Ken Roy and Max Leisten of SciQuest to develop a three-step process to help procurement professionals gain approval and funding for their projects.

1. Measure where you are today on key procurement performance indicators (KPI's) vs. best-in-class organizations, so you can quantify the financial opportunity

   For example, let's say you're trying to make a case for implementing an eProcurement platform to increase on-contract spend and bottom-line contributions. One crucial KPI to measure and track is the percentage of transactions going through the preferred buying process (Preferred Supplier Compliance KPI).

   Understanding how your performance compares to your industry peer group is the first and most important step to determining the potential value of an investment (that you need to convey to financial-minded executives).

2. Collaboratively design your organization's procurement vision with your business partners and "users" across the source-to-settle process

   Engaging Finance, your customers in the business units you serve, and subject matter experts is critical because you are much more likely to gain buy-in when the people whose support you need have shaped the plan, and they see it as promoting their business objectives. A collaborative approach to developing a comprehensive process, systems and human capital procurement vision also increases the likelihood of developing realistic and achievable goals (which in turn drives buy-in and success).

3. Develop a strategic procurement roadmap of actionable initiatives that will deliver bottom-line & ROI impact while satisfying procurement's stakeholders.

   Your procurement roadmap includes a business case for your immediate eProcurement investment (including funding required, approach/technology to be used, how long until results will be delivered, promised savings, and return on the investment) as well as future projects that will build upon your most impactful initiative and transform your procurement organization to best-in-class.

In the above example of Preferred Supplier Compliance, this three-step process will yield your current performance (let's say 20%), a vision across your organization of what's achievable (75%) and a business case for closing the gap from 20% to your target performance of 60% through the proposed initiative / investment. Your procurement roadmap will include the additional project(s) for getting you from 60% to 75% (prioritized lower because of a smaller ROI to your organization).

Since we adopted this approach, Gregg and I have been very successful in getting funding for procurement technology. It wasn't always this easy. For example, when we made a proposal for an eProcurement investment to promote compliance in an R&D business unit of a Fortune 150 company, Finance and the head of R&D initially rejected it because they found the business case to be vague, and key stakeholders were unsure of the impact it would have on their operations. When we subsequently quantified the financial benefit, designed the new process with stakeholders from R&D through Accounts Payable, and presented a credible benefits delivery plan, the project was approved. Our initiative led to $50 million in incremental savings and built a foundation for continued strategic and collaborative procurement planning across the organization.

If you'd like to learn more about this methodology and how we applied it to gain stakeholder approval, click here to view a webinar Gregg and I jointly hosted last week with SciQuest.

- Jason Magidson