Procurement is moving into a more strategic, consultative role, giving CPOs more influence in the C-Suite than ever. But procurement wouldn’t have gotten to this point without the help of technology. Armed with fully-automated, analytics-driven, and client-friendly sourcing tools, CPOs are able to capture even greater amounts of data much faster.
The immensity of this data is no secret, and the visibility it provides into buying patterns is clear. The hard part is knowing how to use this visibility to a strategic advantage—for one, in the localization services category. It’s great that your language service provider is generating huge amounts of data, but where does this information fit into business decisions?
Breaking down Big Data
Big Data holds the potential to solve virtually any business problem across the organization, whether it’s engaging customers or optimizing operations. In procurement, specifically, one of the most obvious applications of Big Data is in spend analysis. Solutions that consolidate spend data across a global enterprise are becoming a core area of technology investment, and with these, “the CPO can focus, not on data collection and compliance, but on analyzing data and understanding its business implications,” says Paula Shannon, SVP at Lionbridge—thus driving real innovation and change.
Spending patterns can provide a wealth of high-level insights to CPOs. For example, spend analysis data can reveal the keys to reducing costs, mitigating supply chain risks, improving business processes, managing supplier performance, and tackling complex spend categories like marketing and localization.
“In the marketing category, you often have separate, discrete activities,” says Shannon. “To rethink that category, you can decouple high-priced creative and strategic activities—leave those with the agencies—and bundle, or recouple, marketing operational or executional categories like web publishing or campaign management. This saves money, improves efficiencies, and reduces time to publish.”
In effect, Big Data can allow marketing and procurement to work together in determining the ROI of every investment. Once a creative category, marketing used to underestimate procurement’s ability to optimize budget allocation for localization. But now that marketing stakeholders are so data driven, the CPO and CMO can have a much stronger relationship.
“Every company reaches an enlightened moment when they know that for every Dollar, or Euro, or Yen they put into demand generation, they are going to drive ‘X’ amount of additional revenue,” Shannon says. “It’s no longer a guessing game; it’s a mathematical, formulaic approach, and the CPO can be part of that.”
Exploring the potential of technology
As CPOs seek greater strategic influence in their organizations, it’s crucial that they’re able to use data to demonstrate value to key business stakeholders. In order to better analyze data and support bottom line impact, procurement is looking to cut out repetitive or tactical processes; the main goal being to ramp up levels of automation and build partnerships with external technology providers and subject matter experts.
According to a 2017 ProcureCon report, CPOs are increasingly adopting procurement automation technologies and third-party service providers, giving them more room to drive efficiencies and apply Big Data and analytics insights to strategic engagements. 59 percent, for example, are utilizing spend analytics software to identify patterns of spending that can be optimized for ROI, and 18 percent are seeking better performance from third-party vendors.
“One challenge we see for global organizations is that there’s a behavioral change required to take full advantage of developing procurement styles,” says Shannon. “Focusing on the ROI of their efforts, as opposed to the cost savings, is surely the way forward.”
(The report provides several more insights into technological and professional advancements creating opportunities for CPOs. Download it here.)