Tag Archives: procurement change

A CPO ’s “To-Do” List for the First 100 Days

100 days of being a CPO….What’s on your to-do list, where do you start and how do you develop your action plan to transform the procurement team? 

You’re hired!  After the jubilation of accepting a job wears off and you’re successfully on-boarded to your new company, you learn you have 100 days to develop a plan.  This plan that will begin a journey of procurement transformation that surpasses the expectations you shared during the new hire process.  The opportunity is ‘greenfield’: building out a procurement function where one didn’t previously exist or where the function never took hold for one reason or another.

You’ve been appointed CPO. You have 100 days to develop a plan.  What’s first? 

There are various approaches to transformation and the key is to find the right one for your project.  The approach I will share is based on my personal experiences building out the procurement function (source-to-settle) at a Fortune 50 company, at a hyper-growth entrepreneurial company, and (most recently) at an established, well-diversified healthcare company.

First course of business – assess the current state if you didn’t do so during the interview process.  Have a conversation with anyone willing to engage starting with your new team, executive leadership, and cross-functional stakeholders.  You need to understand your inherited brand firsthand – including the perspectives and opinions of your inherited procurement function.  These discussions are important on several fronts because they:

  • Baseline the present-day function and capture a snapshot of where you started your journey. This will be key as you look in the rearview mirror to see how far you’ve come;
  • Identify strengths, weaknesses, opportunities and threats across the categories of people, process, and technology;
  • Provide key insights on brand perceptions and the history behind them;
  • Help identify advocates, influencers, and distractors; and
  • Finally, provide insights to what ‘should’ be next and offer a semblance of preferred timing

I recommend partnering with a change management guru and a project manager to articulate the business requirements that will form your vision, set a definition of success, and develop a communication strategy and cadence.  Do not underestimate impact of change and the new behaviors that are required to effect better business outcomes.

At my current company, we took a slightly different approach to transformation based on our unique combination of vision, culture, and employee demographics.  Early on we reached out to Marketing to create a ‘drip campaign’ comprised of video vignettes, campus signage, and direct outreach. The whole effort centered on our mascot – Moolah, a big fury, purple creature that was accompanied by a tag line – ‘Spend It Like It’s Yours’ (loosely based on the acronym ‘SILIY’ – pronounced silly).

The objective was to have fun with the initiative, which is one of our values.  The result was celebrity status for Moolah and greater acceptance of the initiative.  Frankly, it was fun to see employees taking selfies of Moolah at all-hands-on-deck meetings.

Included below is a checklist based on my experiences to help develop your plan.  Again, model or pivot based on what you observe in front of you and the expectations of procurement.  There is no absolutely right answer.

Discovery

    1. The Initiative
      1. ‘Why’ is the initiative being undertaken and why now
      2. ‘Who’ – who is the advocate and what role to they play and their plans to stay active
      3. ‘What’ is the motivation, business reasons for the initiative
      4. ‘When’ – expected timing – launch for the initiative and drivers
      5. ‘Where’ what is the geographical, business reach for the initiative, i.e., domestic only, certain BUs only, etc.
      6. ‘WIFT/M’ – beneficiaries?
    2. Your company
      1. Culture
      2. Vision, Mission and Values
      3. Story – market, penetration, success, competitors, …
    3. Existing function and talent
      1. Who plays the role today within the business
      2. Partner with HR to run a title & role search across the company
      3. Ask the pre-existing talent to provide their CVs and interview them
    4. Needs of the organization from the perspective of the business
      1. Functions value
      2. Brand (good, indifferent and what needs to change)
      3. Successes and failures
    5. Identify partners and executive support to advocate for the initiative
    6. Subset – players
      1. Active vocal participants (supporters)
      2. Points of dissension (naysayers)
      3. Bandwagoneers – those on the sidelines waiting for results and uncommitted in the interim

Baseline

  1. Performance to date
  2. People
    1. Skills and gaps
    2. Investments to date
    3. HIPOs (High Potential Employees)
    4. Investments and jettisons
  3.  Process/Policy
    1. Does one exist?
    2. Are there accountabilities?
    3. Spend authority
    4. Document signing authority
  4.  Technology
    1. What do you have?
    2. To what extent is it implemented?
      1. Vanilla
      2. Customizations
      3. Partials
    3. What is next and why?
  5. Quantify behaviors
    1. Buying behaviors of customer
    2. Willingness for change
      1. BUs
      2. Function
      3. Other Shared Services Centers
      4. Legal
      5. Execs

Initiative governance structure

  1. Agree roles/oversight for initiative, for example:
    1. Steering Committee
    2. Advocates within the business
  2. Other key constituents
    1. HR
    2. Legal
    3. Information Security
    4. Finance
  3. Develop RACI

Change Management strategy, approach, methodology

  1. Campaign
    1. Partner with Marketing on drip campaign (pre-planned, gradually released communications)
      1. Tagline
      2. Mascot
      3. Video vignette
  2. Change management leader
    1. Messaging
    2. Signage
    3. Cadence
  3.  Access
    1. Execs
    2. BUs
    3. Leadership
    4. Management
    5. IC’s

Business case to effectuate a different outcome

  1. Executive summary – overview of the initiative
  2. Detailed description of the initiative
  3. Why – what is it in for them/me – market analysis
  4. Organizational design
  5. Funding requirements
  6. ROI/IRR
  7. Anticipated outcomes
  8. Necessary executive support
  • Gain support for initiative
  • Execute
  • Reflect
  • Celebrate your successes

Appreciate that procurement transformation is a journey with a starting point that is unlikely to ever end.  You iterate, detour, and adapt to meet the needs of the organization.  Investment is required in the three buckets of people, process, and technology – and most importantly, the leadership team – to stay relevant.

You will encounter setbacks, and your ability to recover will test the team.  How they (and you) respond will determine the overall success of the initiative.  Most importantly – have fun if you are fortunate enough to have that as a key value at your company.

Greg Tennyson is the CPO at VSP Global.  This article was originally published on The Art of Procurement. 

Fight Or Flight? How To React To Change

Curl up in a ball, or seize the moment – what’s the best way to move forward in a period of uncertainty and change?

One thing we know, given the past 18 months, is that dramatic political change leads to economic uncertainty. With protectionist sentiment rising, trade remaining stagnant, the US economy led by a skittish and unpredictable President, a host of unknowns around the Brexit fallout, European elections, abandoned trade deals and other shocks, it’s hard to know how to plan ahead.

Elevated uncertainty can lead organisations to perform the enterprise-level equivalent of curling up into a ball. Projects and investment plans are deferred, fewer workers are hired, risk-aversion goes through the roof, short-termism triumphs over long-term growth and earnings take a hit as consumers decrease their spending.

Three high-profile panellists debated this issue at PIVOT: The 10th Asia-Pacific CPO Forum, offering delegates some very different answers to the question of how to react to change. A consensus was reached, however, around one point – the importance of agility.

Giles Breault, Founder of The Beyond Group, shared this gem: “If you believe that necessity is the mother of invention, I’d say uncertainty is the mother of agility.”

A willingness to adapt and adjust

Agility must be encouraged not only at the process level, but at the senior and strategic level too. This means having the ability, and willingness, to change plans at a moment’s notice. Breault told the audience: “When you’re living in an uncertain environment, you need to constantly plan, revisit and do course corrections. Similarly, you need to demand of your suppliers that they’re doing the same thing.”

Does this mean long-term business plans are now unrealistic? It depends entirely on your approach. Companies that “set and forget” three, five, or even ten-year plans, and then stick doggedly to the path, will quickly discover just how rapidly those plans become obsolete.

Increasingly, best-in-class executives are those that possess a degree of flexibility in how their mind works, have a degree of empathy with their people and the market, and can remain confident in the face of ambiguity.

KPMG Australia Chairman Peter Nash said that “there are still many CEOs today who revert to rigid process and a doctrine of control in reaction to issues faced by the business. They draw the decision-making up to themselves and push down their commands. I expect in the future we’ll see a more agile form of CEO emerging.”

Breault also comments on this outdated method of reacting to change, and ties it to redundant leadership skill-sets. “Many executives are finding themselves in an uncomfortable position as they realise that the skills which landed them in their roles aren’t the skills that will keep them there. The very things they congratulated themselves on achieving won’t keep them employed.

“For example, of the fifteen major corporations we’ve talked to, a total of zero had a specific program for digitalisation. These organisations have no plan how to move ahead, which is absolutely stunning.”

Take responsibility for staying informed

Peter Nash told panel facilitator Keith Bird (MD, The Faculty) that CPOs need to take responsibility for informing themselves about changes on the horizon. “Read about the issue, talk to people in your network and find out how it will impact your business by discovering how it’s impacting other businesses. It’s important to have a high degree of personal responsibility when it comes to keeping yourself informed.”

Embrace change

Nash says organisations should make time to examine how they get things done. “Are they tied to rigid processes or to certain types of thinking, or have they moulded their organisation into something more fluid? Do they test new ideas, adapt to disruption and engage with the community? Organisations that are more adaptive will be far more successful than others.”

Looming disruption or inevitable change doesn’t have to be scary. George Boubouras, Managing Director and CIO of Contango Asset Management, had this positive message to share with Forum delegates facing change: “Challenge yourself and prepare for the exciting time ahead! Embrace the disruption with enthusiasm and look at how you can contribute to it.” 

Navigating The Changing Rules Of The Game In A World of Uncertainty

Change, change, more change and a hefty helping of uncertainty pretty much sums up the current regulatory landscape. Seal Software explore why winning the game has become more of a battle in an ever changing world.

Nothing sums up the current state of regulatory affairs quite like the acronym, VUCA.

V – Volatility 

U – Uncertainty 

C – Complexity 

A – Ambiguity 

The concept was introduced by the U.S. military towards the end of the Cold War and has since been used in reference to any conditions or situations that are, namely, volatile, uncertain, complex or ambiguous.

In a post-Brexit, ever-changing world, keeping up and complying with new regulations can be a constant struggle…

Change, change and more change…

Nothing could be more true about the regulatory landscape. This has become ever more apparent over the last year following the Brexit vote. Brexit is triggering the need to review and change currency and exchange rates, governing law and logistics terms within numerous contracts. Revisions to trade rules could also lead organisations to consider the impact on their business relationships. Proactive organisations are already starting their Brexit preparedness initiatives, and are realising it starts with a clear understanding of how these elements and many others are defined inside contracts.

The battle to understand new regulations

Of course, it’s not just Brexit. Changes in regulations in the financial services industry mean it’s a continuous battle to understand the new regulations, then implement them in the most efficient way possible by the stated deadlines to avoid penalties, fines, or worse.

The one global constant is the ever-growing strain this puts on financial institutions to keep up and comply. They must figure out how to comply with new rules and deal with potential reviews, and audits without adding disproportionate cost and disruption to the organisation.

Many regulations impact the way organisations make commitments or conduct transactions with their partners or customers. New and changing regulations require companies to find relevant contracts, review the affected language and identify excess cost, liabilities, risk and exposure that directly impact financial services organisations.

Only then can business decisions be made to revise or novate the contract, renegotiate commercial terms or terminate to avoid non-compliance. This has to be done for all affected contracts, which could be in the tens of thousands or more for some organisations.

Global regulatory bodies

Global regulatory bodies are enforcing mandates to better control the solvency and recovery actions of banks and lending intuitions in the case of future economic downturns. Several key mandates stem from the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed in 2010 to reduce the potential for a recurrence of the recessionary economic conditions experienced in 2008 and 2009. The consistent theme across stress testing, “living wills”, vendor risk, and overall recovery and resolution mandates is that large financial institutions must have a clear understanding of their contractual relationships and obligations as a foundational element of compliance initiatives.

When organisations manage their contracts for regulatory compliance, they also get insights into the data to support critical business decisions and reporting. This may result in contract novation and repapering or restructuring, depending on the mandate, as well as allowing an organisation to meet changing regulatory mandates, in the best way possible. Managing risks & liabilities during changing regulatory & business conditions

The key to coping with change is agility

It’s critical for financial services organisations to remain agile. They need to have the ability to extract the appropriate data within an overwhelming amount of contracts quickly and without significant business disruption to manage risk, reduce liabilities and compete effectively during times of change.

Previously, when mandates changed, organisations would have to perform manual reviews as a part of their compliance initiatives, resulting in months or years of contract analysis and high costs. However, organisations can now reduce the burden of the contractual review aspect of their compliance initiatives. By using automated contract discovery, data extraction, review and analysis, up to 80% of their time can be saved, providing significant savings. This is critical when organisations are facing tight compliance deadlines and have to review and make strategic decisions on hundreds of thousands of contracts.

Using artificial intelligence and powered by an advanced machine learning framework, the automated solution can extract specific terms and provisions needed for regulatory compliance across all contracts. The framework can be taught by users to look for specific provisions and clauses.

What impact will IRFS16 have?

Let’s look at IRFS16, the new regulations for how leases are accounted for in financial statements. For IRFS16 compliance, all lease agreements need to be located and the impact of the change in regulation needs to be determined. Knowing which of your contracts are effectively leases can be challenging, and an automated contract discovery, data extraction, and data analysis solution will locate all contracts and centralise them in a repository.

The system can extract, gather and validate lease terms from the contracts by identifying which have lease provisions or language. This level of reporting helps business users understand the current environment and develop an optimal remediation plan.

This is just one example which demonstrates how financial services organisations can compete effectively in times of change. Complying with new regulations no longer needs to be such an arduous task.

Using an automated contract review and analysis solution can ensure compliance with global regulatory mandates and help manage the overall risk against defined targets. It can dramatically shorten the time and reduce the cost of contract reviews, as well as help model and analyse the business impact before any changes are made. This results in better decisions on the best ways to achieve compliance.

For more information on how Seal can help address regulatory compliance initiatives, please visit our website.

This article was guest-written by Seal Software, a leading provider of contract discovery. Seal Software uses artificial intelligence and natural language processing to help companies efficiently uncover what’s in their contracts.

Big Ideas Summit 2016: Big Idea #10 – Procurement as a Change Catalyst

Dirk Van De Putte argues that procurement should embrace its role as a change catalyst in organisations, helping to break down organisational silos.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Procurement – A Change Catalyst

Global CPO, Dirk Van De Putte’s Big Idea discussed how procurement could act as a catalyst for change in organisations, due to its unique position at the crossroads of internal and external stakeholders.

Dirk gave his thoughts on how to successfully achieve this, with procurement breaking down organisational silos, as well as building a diverse function.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 16,000 like-minded procurement professionals from across the world.