The management of procurement is predominantly preoccupied with vetting vendors, negotiating and closing contracts, and ensuring that agreed-upon terms are followed to the letter. On the flipside, stakeholder engagement is concerned with the identification of all players with a stake in the success (or failure) of a project, including those outside of the organization who are inclined to combat the project vocally and politically, or those likely to put resources behind their obstructive efforts.
Getting internal stakeholders on board with procurement efforts can be exceedingly difficult. In a still-forming era where procurement leaders are expected to play an active role in multiple business functions, including fostering innovation, it is vital for procurement leaders to understand the business factors stakeholders value, particularly if they are going to ensure buy-in from their C-suite.
Effectively managing the relationship between procurement and the C-suite
How should procurement professionals go about managing their relationships with the C-suite’s? Assuming you don’t already have a line of communication leading directly to the CEO, our broad recommendation is to identify the logical interests of each officeholder, and then work backwards to diagnose and formulate the plans and behaviors you’ll need to follow in order to construct beneficial relationships with each of them.
The CIO and CTO
Two C-suite roles that procurement personnel are advised to manage their relationships with are the oft-confused roles of the chief information officer (CIO) and the chief technology officer (CTO). One source of the understandable confusion between these roles is rooted in both the titles themselves, along with some obvious similarities in focus between the positions.
After all, most modern organizations have information technology (IT) departments or divisions, so the two terms—“information” and “technology”—are frequently paired in office settings. Obviously, both roles have a technological focus to them, but the major point of distinction rests in what each position targets. CIOs tend to focus inwardly on the efficiency of internal processes, while the focus of CTOs is aimed at the end users, and how to use technology to improve the products and services offered by their companies.
As a result of this goal-oriented difference between the execution of each role, procurement leaders should frame their priorities in ways that mesh with the goals of each corporate officer. This should not be a daunting challenge by any stretch of the imagination, because modern procurement teams frequently have both the internal and external goals of their organizations in mind while performing their daily duties.
On the one hand, procurement’s efficiency crusade to implement technology that automates and expedites internal processes will appeal to CIOs who naturally campaign for technological efficiency solutions throughout their companies. On the other hand, procurement’s quest to maximize savings has the potential to align with the motivations of CTOs who are constantly looking for more savings that can be used to spark further innovation and maximize product potential.
At most companies, the procurement team reports directly to the CFO. In fact, in some companies, the CIO also reports to the CFO. In situations like these, the benefit to aligning procurement strategies with the technological blueprint devised by the CIO is magnified by the presence of a high-level ally who can champion your digital quest for efficiency as being financially beneficial to the entire organization. However, you should not presume that this reporting structure will naturally be in place, because in most cases it won’t be, so forging a harmonious relationship between procurement and your organization’s CFO is something you should establish.
As long as you speak the same financial language of your CFO, your procurement staff should have few problems being viewed favorably by your company’s financial leaders. Finance and procurement are naturally aligned in their goal of benefitting the bottom line by reducing costs while increasing profitability, while also reducing risks.
The ideal situation for a CFO is to be able to trust that everything is running smoothly on the procurement end of the business. As long as there are no interruptions in operations, and no unfortunate situations are created that require the CFO to issue private apologies to investors or public apologies to shareholders, the CFO will usually be satisfied with the way procurement is being managed. However, CFOs also love to hear about what new strategies are being implemented in pursuit of innovation and increased profitability. Consequently, CFOs can also be satisfied in a similar fashion to CTOs provided that procurement leaders have satisfactory answers prepared when asked what they are doing to help fund the next round of innovation and product development.
Profile your stakeholders outside the C-suite
For other stakeholders outside of the C-suite, one suggestion is for stakeholders to be identified, profiled, and arranged using a coding system that highlights the amount of time and attention you should devote to each of them. Using this identification method will help you to become familiarized with the mindset of each group of stakeholders and understand their priorities. Also, it will help you to engage with them on their own terms, without relying on the lingo of procurement. From there, you can interact with them in relation to their business objectives, rather than placing your goals at the forefront of the conversations.
Obviously, if you are going to speak about the business objectives of the stakeholders who typically operate outside of your procurement realm, this also means you must develop knowledge about that stakeholder and what value creation looks like for that individual. This is of critical importance if the stakeholder in question happens to operate a department within your own organization, and can hinder your efforts by framing your activities as being in opposition to theirs. If this is the case, you will need to gain a mutual understanding of what a positive outcome will look like to your organization from the standpoints of all stakeholders within it.
Work alongside your natural allies
As a result of the ongoing (and likely never ceasing) digital revolution within businesses in general, executives with an abundance of technological expertise and oversight wield immense leverage over the organizations they serve. In many companies, the responsibility for strategization and implementation along digital lines is collected within the role of the Chief Information Officer (CIO). Fortunately for procurement leaders, many CIOs respect the capacity of procurement to generate competitive advantages through increasing savings, and are also aware of the myriad tech- or software-based solutions capable of maximizing those savings.
Clearly, getting the buy-in of the CIO can often be the most critical step for attaining the internal blessing needed for your procurement plan to be stamped as approved. Therefore, layering your procurement strategies with other solutions that address common concerns of CIOs before laying those strategies on the table will enhance the likelihood of their approval. This includes scenarios like suggesting the addition of unified source-to-pay platforms that provide CIOs with the easy integration and transparency they long for, or cloud-based solutions that permit CIOs to demonstrate the top-down advantages of their overall tech strategies. Regardless of the specific tactic you take, your procurement strategy is naturally more likely to be favorably received if enacting it will simultaneously support the agendas of the powers that be.
Compared with CIOs, most CFOs tend to be driven by agendas that are less predisposed to proving innovative prowess, and lean more in the direction of keeping their organizations on a predictable path to meeting or exceeding performance goals while keeping their budgets within acceptable limits. Understandably, these financially-minded executives want to know to a reasonable certainty that their supply chains are operating smoothly, and the likelihood of any sort of profit-killing interruption is miniscule. Easily, the swiftest way to turn a CFO against a procurement team is to make that CFO’s life difficult by forcing them to answer questions about revenue losses and failures to match financial forecasts. However, contributing to the fiscal functionality of your organization is also the simplest path earning the CFO’s trust.
Justifiably, CFOs routinely depend upon a wide range of key performance indicators (KPIs) in order to track the progress of the companies they are responsible for guiding. Therefore, whenever possible, pitch the KPIs to your CFO that you think are the most representative measures of procurement efficiency within your organization, and are forms of measurement that you can live with. Otherwise, KPIs may be selected for you and your team that are unreliable measurements of achievement, and which will result in your team chasing incorrect indicators of success that will ultimately benefit neither the team, nor the business as a whole.
Fortunately, the role of the CFO is becoming increasingly digitalized, so taking the initiative to pitch effective solutions like automation, which optimizes several procurement functions, is an action that should be appreciated by most CFOs as a decision that services their ongoing agenda of increasing the technological footprints of their organizations.
It’s all about knowing your audience
Getting stakeholders on the same page as you in terms of planned procurement projects is all about knowing the backgrounds, priorities and objectives of those you hope to influence for the benefit of your team. Remember, “stakeholders” technically include those who are interested in your activities because they hope to see you fail, and these people will probably be both internal and external to your organization. Only on the rarest of occasions will you be able to sway all stakeholders into becoming your allies, so it is best to identify the stakeholders that are critical to your success as early as possible, and focus your efforts on learning the catalysts that will turn them into allies and not adversaries.
In addition, as long as your procurement team is looking to push the boundaries of digital innovation while maintaining its focus on conserving resources and providing efficient services, it is likely to earn itself key allies amongst the C-suite cohort. As long as you are able to think through the procurement process from the standpoint of each individual in the C-suite, you should have few difficulties when it comes to managing your relationships with them.