Tag Archives: ProcureCon IT 2016

Buying Tech – Your Fast-Track Ticket to the Top!

I’d like to make a correction. Tech buyers aren’t just our next CPOs, they’re our next Board members.

No, I haven’t misspelt “BioTech” in the headline here – I genuinely mean buying technology.

I wrote last week on Procurious that IT procurement professionals are best-positioned to become the next generation of CPOs (Chief Procurement Officers) or CIOs (Chief Information Officers).

But then, I decided to upgrade this career trajectory to Board level.

Why? Because I’d heard first-hand how some of the world’s largest industrial companies are turning their businesses on their heads. They are changing their focus so it’s less on manufactured goods, but services they can provide to complement those goods.

Banking on Future Tech

At last week’s ProcureCon IT conference in Amsterdam, banks, car companies, engine makers and other industries all made their way to the stage to tell a similar story. You see, they’ve all finally come around to Michael Porter’s way of thinking. It’s all about delighting and owning the customer – or, more specifically, the customer data.

Even the most traditional sectors represented at the conference made it clear that they are banking their futures on technology. Of course they’ll still offer their core products, such as making cars or managing money.

However, their key competitive advantage will be in the customer experience they create through understanding their customers’ needs and habits. The data they capture when customers use their products and services is essential for this understanding.

So – to be successful into the future, these bricks-and-mortar businesses are going to have start adding some very different (and expensive) topics to their Board meeting agendas.

Decisions might include:

  • whether to store all their precious customer data in the cloud or in data centres,
  • how to protect their IP and their customers’ privacy from hackers,
  • how to comply with privacy legislation, and
  • which technology vendors to tie their futures to (or not!).

These issues have existed in business for a long time, but they now come with such significant expenditure and risk profiles that they will warrant serious Board contemplation and approval.

But who on the Board will have the experience and knowledge to provide useful and constructive insights for making these critical business decisions?

Become a Savvy Tech Buyer

Enter stage left – the technology procurement leader.

I’ve been reading and writing about seismic shifts in the world of Industry 4.0, but today the penny finally dropped. I now realise what a huge opportunity the next Industrial Revolution is for procurement.

It is indeed a brave new world. To my delight it has become very clear to me that the fastest career ticket you can buy yourself to the c-suite, is to become a commercially savvy technology buyer.

Whether you are in IT procurement or not, you should be focussing on developing these four key skills to secure your ticket to the top:

Big Data Analytics

There is going to be a lot of customer data collected over the coming years. The companies that can extract the best insights from that data, and adapt their products and services to meet customer needs, will secure their competitive advantage.

Executives with a proven track record in complex analytics will be a valuable addition to the c-suite.

Data Security

Cyber security is already one of the most concerning issues for CEOs. This will only be amplified in the future as more and more proprietary information is created.

The executive team will need leaders who know about global privacy laws, the pros and cons of the cloud versus traditional data centres, and how to outsmart the latest human or robotic hacking capability.

The Digital Landscape

Companies are already in dire need of directors and executives who understand the difference between the Ethernet and the Internet. (Hint: it’s like comparing a glass of water with the ocean).

A whole new universe of technology options are forming as the Internet of Things and Industry 4.0 explode. Boards desperately need digitally native, tech-savvy executives who can quickly analyse opportunities, understand the competitive landscape and engage first-mover start-ups in a commercially astute manner.

Busting the Big Guys

This isn’t a typical competency that you would normally see listed on a corporate job description. But from what I’ve heard over the past two days, every company is going to need a group of strong, strategic commercial leaders who can ensure the organisation doesn’t become captive to one of the big technology suppliers.

Without naming names, there are a handful of global players who dominate the infrastructure, hardware and software space.

Whilst IT procurement professionals genuinely want to engage the niche players, requirements around scale, scope and compliance inevitably lead to the large technology providers. These are somewhat symbiotic relationships, but (as we all know) there are huge inherent risks to any monopoly supply situation.

Gain Experience and Grow

So, if you’re ambitious, my career advice to you today is this:

Do all you can to get yourself into a role where you’ll learn these sought-after skills. A role in tech procurement would be perfect; procurement second-best (because every procurement professional learns essential commercial and negotiation skills).

If you’re not in procurement at all, the IT profession is another place where you’ll be able to gain the experience required to tick some of these boxes when it comes time to be interviewed for the c-suite – or hopefully, the Board!

See you at the top!

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Why Procurement Should Be All About the Cloud

The Cloud is the future for procurement. If that’s the case, why do we still have so many questions about it? 

the cloud

Procurious are at ProcureCon IT in Amsterdam this week. Stay up to date with the latest highlights on the Blog, and follow live on Twitter.

We sat in a very interesting, interactive panel discussion yesterday on anything and everything Cloud related. This is one of the most talked about topics in procurement, so it’s no surprise that it generated a lot of discussion at this week’s conference.

As Tania Seary noted, the cloud has a touch of the ‘Emperor’s New Clothes’ about it. Everyone’s talking about it, everyone is convinced that they need it, but not everyone knows exactly what it is or how to use it. It’s clear that procurement is being hindered by this lack of clear understanding.

We were particularly interested in hearing the views of the panel compared to the others we’ve heard this year. What we heard was a consistent message, aligned with other Cloud experts Procurious have spoken to.

In our Oracle webinar last month, our discussion touched on the array of options in technology available to procurement. Also discussed was the idea of how traditional offerings differed from those from smaller, more agile companies.

All About the Cloud?

The panel, chaired by Procurious founder, Tania Seary, included Christiaan Murphy, Global Software Category Manager at CGI, and Michael Delle, Regional Head for SI & IT Sourcing at Ericsson.

Both men are active in the procurement space, as well as active members of Procurious! Christiaan Murphy is responsible for CGI’s global software spend of around 500 million per year.

Michael Delle is part of Ericsson’s global organisation for category management for SI & IT. He has a unique perspective on the Cloud, familiar with it for internal use, but also as part of the reselling systems integration programme at Ericsson.

CGI is divided around procurement categories (telecoms, software, hardware), but this isn’t common to all organisations. Traditional structures could present some difficulties in management of the Cloud, particularly from the point of view of data centre.

Michael raised the point about a lack of shared Cloud best practice for processes such as contract management. When it comes to negotiating cloud contracts, are you paying a subscription or a monthly cost? Either way, you need to be sure of what service level you expect for your costs. It needs to suit you, your organisation and your customer expectations.

Hidden Costs of the Cloud

Another fascinating area of debate raised was that of the hidden costs of the Cloud. Many people have chosen to focus on the benefits it offers, but few have stopped to consider the unseen costs.

Michael, in particular, was keen to point out how surprised people were when they found this out.

The first was the difficulty of getting back out of the Cloud environment once you were in it or even simply switching to an alternate vendor. There is always difficulty in migrating away from what you are buying, but the Cloud adds an extra level of complexity to this, especially when it could take months to get your data out!

It’s important to have a recovery scenario for your data and a contingency plan in place in case the cloud fails.

The second cost relates to legacy solutions. Some organisations involved in the Cloud environment would still keep their legacy solutions on site.

This was a conscious decision in many cases, with concerns about Cloud migration driving this. However, it did lead to duplication of technology and, more importantly, cost.

Cloud Brokering

One final topic of interest surrounding this topic is Cloud brokering. For those of you who don’t know (and we were one of them), this is more simple than it sounds. As you might be able to guess, a Cloud broker is an intermediary between a Cloud seller and buyer.

The concept of brokering has grown in Cloud software, as companies are asked to provide a service for people who don’t know what they are doing. Often, these are mid-sized companies who could benefit from the Cloud, but can’t dedicate the resources to understanding it better.

The companies that are suffering in this area were larger organisations with solutions for managing data centres. Cloud software is trending towards very specific solutions, which can be open source, and not dependent on the larger providers.

These ‘point’ solutions are proving to be better than the larger, all-in ones. The Cloud is enabling the trend towards virtualisation, but are hurting the providers offering off-site management, as people don’t see it as a requirement any more. It’s possibly better to go with the ‘point’ solutions, and avoid the software lock-in.

What do you make of the discussion points in this panel? Do you agree? Why not create your own discussion, or contact Michael and Christiaan on Procurious to find out more?

Look After Your Data – Keep It Secret, Keep It Safe

Concerned about data protection? How can IT procurement ensure data security and reduce cyber risk for your organisation?

data secret safe

Procurious is at ProcureCon IT in Amsterdam this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

Day Two of ProcureCon IT is well underway and we’ve been privy to another morning of thought provoking discussion.

Procurious founder Tania Seary picked the brains of Kaushik Yathindra, Manager, Procurement Analytics, HSBC and Florian Schroeder, Head of IS Commodity & Contract Management, Bombardier Transportation to learn more about how to implement data security, the end of Safe Harbour, and the effects of Internet of Things (IoT). 

Where to Start?

Why is data security so important? As Florian Schroeder pointed out, you wouldn’t leave your most valuable possessions at the front door, you’d hide them away somewhere secretive. We should consider our data in the same way and not leave it exposed to hackers.

Data security is one of the fastest growing areas of IT spend. An estimated $1 trillion is going to be spent globally between 2017 and 2021. But how do you make sure your money is well spent, and your information secure?

Whilst data protection is a huge concern for organisations, it can be difficult to know where to start, particularly given the multiple types of data security on offer. Here are a few points to consider: 

  • To ensure the security of both yours and your suppliers’ data, it’s first important to understand the roles of everyone concerned. How will your procurement, legal, compliance and IT teams collaborate to ensure that contracts fulfil the level of service required in your organisation?
  • Consider data security in all of your organisation’s decision making whether it be Sales, Accounting or IT.
  • Take what you need and nothing more. There’s no point in collecting useless or excess information. The more you have, the more that can get stolen. Likewise, only store information as long as your organisation has a need for it. And when you do dispose of it, do it securely!
  • Ensure your service providers have adequate security measures in place. And don’t just take their word for it – get it in writing!
  • Use complex passwords. Make sure they’re stored securely, and keep the most sensitive information secure throughout its lifecycle by encrypting data when it is transferred.

As both panelists reminded us, you can never ensure 100 per cent security while there are hackers looking for it!

The End of Safe Harbour

Changing privacy regulations can make choosing where to store your data a complex process, particularly for global organisations.

In the EU, for example, privacy laws forbid any citizen’s data to be moved outside of the EU unless transferred somewhere with adequate privacy protections.

Safe Harbour was an agreement between the EU and the US in which the US government promised to protect the information of EU citizens if transferred to the US by American businesses.

This has been an extremely convenient agreement for companies such as Facebook. These companies were, up until now, able to store all of their EU data in US centres.

Last month, however, the European court of justice ruled the agreement invalid. This will mean a lot of paperwork and red tape for US businesses trying to move information out of the EU.

Perhaps the future is in establishing EU-based centres to handle data for EU citizens? Google, Facebook and Apple are already leading the way on this.

And it’s not just the end of Safe Harbour that will shake up Data Protection policies. The General Data Protection Regulation (GDPR) framework was formally adopted by European parliament in April this year to be implemented by May 2018.

If the UK has completed Brexit negotiations by this stage, they will face pressure to adhere to the GDPR framework in order to continue trade within the single market.

Digitisation and the Rise of the Internet of Things

Kaushik explained how banks are moving towards complete digitisation in order to accommodate the next generation of customer who expect to be able to do everything online. Whilst this is great in terms of customer convenience, it presents additional data security challenges.

The worldwide Internet of Things market is predicted to grow to $1.7 trillion by 2020. More than half of major new business processes and systems will incorporate some IoT elements. It won’t be long until every aspect of our daily lives is connected. We’ll have smart bridges, smart cars, smart houses, smart vending machines…we could go on!

Of course, with great tech developments comes greater data protection challenges. The Internet of things adds a significant threat layer in which physical devices can now be hacked, have their information stolen, and even be remotely controlled.

There are a number of ways that organisations can manage data security relating to the Internet of Things. These include:

  • Encrypting sensitive data as close to where it’s generated as possible, rendering it useless to attackers in the event of a breach.
  • Only sharing information on a need-to-know basis.
  • Applying end-to-end encryption to ensure that sensitive information captured by IoT devices is protected throughout its lifecycle.
  • Procurement teams can help move the market towards a world where security becomes a part of IoT products.

In the words of Gandalf, when it comes to protecting data, keep it secret keep it safe.

Carving Out a Niche in the Supply Market

Large organisations are no longer a closed shop for small, niche suppliers. In fact, they are now being actively sought out for their skills.

carving a niche

Procurious is at ProcureCon IT in Amsterdam this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

The procurement profession has started to come to the conclusion that bigger isn’t always necessarily better. This is particularly the case when it comes to suppliers. Larger suppliers may be able to offer lower costs, and greater security but when it comes to agility and innovation,  niche suppliers are the ones for the job.

Traditionally, these smaller suppliers have been bunched into the ‘tail spend’ classification. However, procurement has realised that by allowing the tail to wag the dog, as it were, opportunities are being missed. Niche vendors have creative and unique methods of communicating and innovating that procurement should be tapping into.

Identifying and managing niche vendors was the topic of a very informative panel discussion at ProcureCon IT this afternoon. Chaired by Procurious founder, Tania Seary, the panel also included:

  • Soren Mølby Henriksen – Head of Procurement Innovation, Danske Bank
  • Claire Tapping, Head of Sourcing & Commercial – IT and Business Process Outsourcing, Rolls Royce
  • Samantha McCarthy, Global Procurement Manager IT, Reckitt Benckiser

Niche Suppliers a “Source of Innovation”

The question for procurement often isn’t finding smaller suppliers, but how to engage them. Traditional procurement processes are set up for larger suppliers, and it’s a much too onerous process for suppliers without similar resources.

But, as the panellists pointed out, large organisations are now turning an increasing amount of attention towards niche suppliers and adapting their contracts accordingly to be less risk averse.

Soren Mølby-Henriksen  noted that, within five years, banks won’t exist. The future of banking is digital, and it might take niche vendors to help this evolution.

Danske Bank recently stepped into the start-up market to source innovative suppliers. Mølby-Henriksen discussed why start-ups were such a big focus for Danske Bank’s procurement team. The set up in the procurement team is to address specific “pain points”. The bank has brought together a variety of suppliers, including start-ups, to conduct a dialogue on solving these issues.

Once solutions are found, they are documented, and then matured to see how they can be implemented. Although the process is relatively new, it’s found some solid support amongst Danske Bank’s suppliers.

Another positive for the procurement team is that it’s also helped to reduce negotiation time, as many discussions are happening up front.

Engagement a Mindset Shift

While Danske Bank appears to have found a way to engage niche suppliers, it’s still an issue for many organisations.

Claire Tapping discussed how there can be some initial pushback when it comes to engaging smaller companies over concerns that it might be too risky to do so.

But she believes it is often proven easier to negotiate with niche vendors who aren’t restricted by a hierarchy of governance and teams of lawyers trying to mitigate risks. Another benefit of niche vendors is that they have a smaller focus. As such, they tend to do what they do to a higher standard than a larger organisation.

Leveraging competencies, while keeping suppliers engaged can also be a challenging proposition.

The panellists agreed that the impact of disruptors, such as blockchain and bitcoin, on the Financial sector was driving a need for change. But, this change involved a serious mindset shift for many of the financial organisations.

Procurement needed to shift it’s business angle to fully understand what they were doing before they entered the market. The vendor space in IT and technology is a completely different beast, where suppliers might not work with you if your business isn’t trendy enough.

Agility & Responsiveness Key

The final tips for engaging niche suppliers was the key role that agility and responsiveness played for procurement. Claire Tapping highlighted the issues procurement faces in keeping pace with business changes.

Relationships and engagement with the suppliers would rely on procurement becoming a “customer of choice” for the smaller suppliers. Without staying more agile, procurement could face a situation where the supplier is brought in by the business. If this happened, procurement is left playing catch up, and its value is diminished.

For procurement in financial services, niche suppliers open up a whole host of possibilities. As Tapping reminded us today, many organisations bring in the smaller vendors because they don’t know what they want!  Once the suppliers are on board, there’s more new thinking in order to ensure great engagement.

How this plays out will be interesting to see, as procurement in other industries will need to do likewise, probably in the very near future.

Here’s Why IT Procurement Leaders Are CPOs of the Future

The fourth industrial revolution is here. Change-resistant CPOs who see it as a threat will inevitably see themselves consigned to the scrap-heap.

The CPO of the Future, on the other hand, will seize every opportunity Industry 4.0 presents. And the profession is looking to IT procurement experts for leadership.

CPOs of the future

The procurement function is at a digital tipping point. To quote James Gregson’s analysis of Deloitte’s 2016 Global CPO Survey, “digital disruption will either reinvigorate or replace procurement’s value proposition”. In other words, if you’re not disrupting, you’re being disrupted.

Industry 4.0 marks the convergence of physical and digital manufacturing capabilities, where increasing automation and computerisation allow us to create smart workplaces.

From office printers that automatically order their own ink cartridges, to fully-robotised factories, the scale of change has been compared to the industrial revolutions of the 18th and 19th centuries.

Procurement, far from allowing itself to be left behind, must ride the wave of technological advancement to stay ahead. We’ve even seen the emergence of a new term – Procurement 4.0 – to encapsulate the changes that Industry 4.0 is making in the supply chain.

The vocabulary of CPOs is changing, too. The usual chatter around traditional practices such as sourcing, contracts and requisition-to-pay is fading away to make room for cutting-edge concepts like cognitive analytics, crowd sourcing, digital reporting, artificial intelligence and machine learning.

If you’re already in IT Procurement, then let me be the first to congratulate you! IT Buyers are going to be the CPOs of the future. Here are five reasons why.

  1. You already control an important chunk of the strategic spend

Global IT spending, according to Gartner, is expected to reach $3.5 trillion in 2017. As the future of business lies in the Cloud and with digital technology, it’s easy to predict that those professionals who are buying this future are best-positioned to lead the profession.

Arguably, no category of spend touches all areas of the business as much as IT. It’s a highly-specialised, big-ticket category where the buyer regularly deals with tier-one vendors.

Salary ranges, according to The Source General Manager Tony Megally, reflect the high-level impact of IT buying roles. “Generally, IT procurement managers’ salaries are 15 per cent higher than other specialisations. They are, without doubt, one of the best-paid categories in the profession.”

  1. Soon everything we buy will include an element of technology

Direct or indirect, goods or services, in the new world of Industry 4.0 just about everything we buy will have some element of technology. IT Buyers have the opportunity to add some runs to their career scorecard by seeking out innovative technology that solves previously “unsolvable” problems.

Take for example the decades-old safety concern around the fatigue levels of operators of heavy machinery. Mining truck drivers now have wearable technology (essentially baseball caps) that regularly conduct electroencephalogram (EEG) tests on the wearer.

The SmartCap knows when you’re approaching a micro-sleep even before you do. It then sounds an alarm in the truck cabin that alerts the wearer. The alarm can be routed to a remote monitor, who will stop the truck and remove fatigued driver from duty.

For the IT procurement manager, it’s important to understand the technology to manage it commercially. Which companies currently produce these caps? The earliest adopters are in the mining sector – what other sectors could benefit from this product?

What will it mean for safety standards across every industry where operator fatigue is a concern? Could your organisation be accused of negligence if you’re slow to implement this technology?

  1. You know how to drive change

Introducing new technology to an organisation is a major change process. More than anyone, IT procurement buyers are very aware of this fact, many having fought and overcome end-user resistance to new processes or systems.

Here at the threshold of Industry 4.0, the experience gained by battle-scarred IT change-management veterans will be invaluable as the pace of transformational change continues to accelerate.

  1. You’re an innovation scout

IT Procurement professionals have witnessed a huge amount of change in their search for the ultimate technology solutions over the past 20 years.

Take, for example, the evolution of the laptop. These have developed from bulky, suitcase-like machines in the 1980s, to sleek thin-screened notebooks in the early 2000s. However, the devices were effectively (and dramatically) made obsolete in 2010 when Apple released its first-generation iPad.

As technology increasingly becomes the product, we must keep options open to take advantage of the frenetic pace of change. This means shorter contracts, built-in optionality, and smaller, more agile suppliers who will drive innovation.

CPOs of the future will essentially be “innovation scouts”, with a major focus on finding, and profiting from, the next big thing in IT.

Organisations are also increasingly looking to supplier innovation to boost top-line revenue. This means the skill-set required to source from technology providers is fast becoming invaluable.

  1. You understand cyber security

88 per cent of U.S. CEOs are somewhat or extremely concerned about cyber threats. These CEOs are looking for technology savvy leaders across their business to protect them from cyber breaches.

Again, IT Procurement managers are ideally positioned to become experts in the cybersecurity challenges associated with the coming IoT wave, which will bring a rapid expansion of potential entry points for malicious software.

Whether you’re a problem-solver, change-management veteran, innovation scout, cyber-security expert, or all of the above, IT Buyers are already in possession of the ideal skill-set that will be needed by Procurement 4.0’s CPOs of the Future.

Procurious is at ProcureCon IT in Amsterdam this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

Is Your Technology Serving Up Greater Procurement Performance?

To what extent is your organisation using technology to improve the performance of procurement?

serving up procurement technology

Procurement’s adoption of technology has been surging in recent years, and it’s showing no signs of slowing down.

But what is the best way to transform the processes and performance of your Procurement organisation, while facing up to the need to restrict budgets and generally tighten up on spending?

Next week, Procurement professionals from all over Europe will gather in Amsterdam at ProcureCon IT Europe to discuss exactly that, as well as a host of other transformational topics.

In advance of the event, we asked 100 IT Procurement executives from some of the world’s largest organisations what they are doing to drive performance using technology. Here’s a preview of the results.

Procurement on Cloud 9

ProcureCon IT technology improvement

Technology is serving up Procurement teams with a wealth of tools with which to enhance their ability to add value to their business.  From social media to the cloud, automation and the Internet of Things, the list is growing ever longer.

Our research identified the cloud as one of the biggest areas of adoption today. Almost half of surveyed procurement organisations are already heavily invested, and a further 30 per cent are currently experimenting.

However, Procurement organisations will have to learn on their feet to get the most out of this new technology. Poorly implemented systems can end up being little more than expensive white elephants.

In addition, procurement professionals need to evaluate how to best implement transformational systems and processes, while reducing costs. One solution is to avoid hiring permanent new staff with the requisite skills, but instead to find strategic external technology partners who can manage the supply chain cloud on their behalf.

Adapting to these kinds of tectonic shifts in the procurement landscape is done best by the nimble. And to the victor will go the spoils.

The Future’s Bright, The Future’s Digital

Cloud technology is just one element of the digital transformation of procurement. Another important area of investment and focus for procurement teams is harnessing the power of big data.

More than 35 per cent of respondents to our survey are already heavily invested in big data, and more than half are currently experimenting. Going hand-in-hand with big data is spend analytics, another huge investment area for procurement organisations according to our research.

However, big data means different things to different people. Procurement’s approach needs to be moderated by a focus on desired outcomes.

Without a set of clear objectives, the insights offered by analytics will be limited and difficult to put into action. Once you have decided your goal, you’ll be better placed to select the ranges of data which are most appropriate.

Join Us at ProcureCon IT

ProcureCon IT is all about finding practical solutions to the challenges which IT procurement pros face on a daily basis. It’s the only truly peer-led conference of its kind in Europe.

Not only will you meet hundreds of people who are successfully taking their IT procurement technology strategy to the next level, but it’s also a superb opportunity to meet with some of the most innovative solution providers in the market place today.

To get industry-leading insight on the issues mentioned here, as well as lots more, join us on the 5th and 6th of December at the Mövenpick Hotel Amsterdam for ProcureCon IT.

Take a look at the full event agenda and download the research on procurement technology here.