Top CPOs Spur Growth, Innovation

By Darryl K. Taft  |  Posted 2014-12-14 Print this article Print

An IBM study shows that Chief Procurement Officers (CPOs) are going beyond their typical role as spending watchdogs to become conduits for innovation.

A recent study from IBM finds that top Chief Procurement Officers (CPOs) are reshaping their roles in the C-suite to impact the growth of their companies well beyond cost controls to spurring innovation.

The results of the study show a marked evolution away from procurement’s traditional role as the gatekeeper to corporate spending and towards a higher level of strategic advising that brings an infusion of innovation to the enterprise.

Conducted by the IBM Institute of Business Value (IBV), the Chief Procurement Officer Study found that top procurement organizations are nearly twice as likely to introduce new innovations into the company and 1.5 times more likely to have influenced senior leadership to enter a new market than their lower performing counterparts.

These high-performing CPOs have expanded their focus beyond the nuts and bolts of procurement processes — such as serving as the key conduit for innovation from strategic partners and acting as champions of advanced data-driven analytics to help make more informed business decisions. The study is based on the feedback of more than 1,000 top procurement leaders from $1 billion companies across 41 countries, IBM said.

“The most advanced CPOs are proving that focusing on the nuts and bolts of procurement processes is not enough to bring real value to the business,” said Terrence Curley, director of Strategic Supply Management at IBM, in a statement. “True procurement leaders who see the bigger picture can use their unique vantage point in the organization to drive innovation, grow revenues and expand competitive advantage. The results of this study can serve as a road map for all CPOs to follow who want to provide a real impact on the future of their company.”

IBM said that while its last CPO study reflected the desire of procurement organizations to gain influence in the c-suite and the connection between procurement performance and enterprise value, this year’s study goes a step further by focusing on how top CPOs are going beyond cost control processes and into a higher level of strategic advising.

For instance, the study showed that high performing procurement organizations are deploying advanced data-driven tools to make more informed procurement decisions. The survey results show that 41 percent of top CPOs have integrated advanced analytics capabilities into their procurement organization compared to just 16 percent of lower performing CPOs. These top CPOs are also more focused on social collaboration, talent development and automating basic processes as a means to help advance the procurement function, IBM said.

Moreover, IBM said top procurement organizations are setting their sights beyond mastering the procurement basics and towards driving the vision of the enterprise at large. For example, the study found that top CPOs are nearly twice as likely to focus on driving revenue growth and competitive advantage than their lower performing counterparts.

In addition, IBM said that when it comes to working with partners, customers and suppliers, top procurement organizations go beyond the tactical aspects of transaction support. Big Blue’s CPO study showed that 92 percent of high performing procurement officers feel they can add value to external stakeholder relationships as opposed to 68 percent of underperformers. To that end, 52 percent of high performing CPOs have leveraged suppliers to co-develop new technologies for the business versus only 39 percent of lower performing CPOs.

 Top procurement organizations strive to engage with internal stakeholders as well as understand the needs of the end customers to gain a full picture of the business ecosystem, IBM said.


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