by Christopher J. Dwyer Research Director

The Value of CIO collaboration in complex category management

Nov 26, 20123 mins
IT Leadership

In the old days of purchasing and procurement, organisations often relied upon the instincts of Chief Procurement Officers (CPO) and their teams to support global supply management. Within the framework of modern times, and the multitude of new technologies and strategies available, it is this mix of both instinct and intelligence that is reshaping how organisations support greater spend management strategies.

The contemporary CPO (or procurement executive) can’t go about their journey alone; Aberdeen research over the years has pointed to this division’s consistent collaboration with key internal stakeholders, notably finance, treasury and supply chain management. However, with a newfound spin of intelligence circling around current procurement strategies, shouldn’t the CIO be right there at the table with this procurement clique?

The simple answer is, “Yes, absolutely.”

Sixty-three percent  of organisations that participated in the CPO’s Agenda for 2012…and Beyond research study (October 2012) stated that indirect and complex spending, including categories such as business travel (and T&E expenses), temporary / contract labour, meetings / events and printed materials / services, remain the top opportunity for cost savings and cost reductions. This mode of thinking has only emerged over the past decade as more and more procurement professionals realise that there are two sides to the typical procurement story: effectively manage spending on the materials that are components to an offered or manufactured product or service (known as “direct materials”) and apply rigorous efficiencies to the supporting attributes across the entire organisation (those aforementioned indirect and complex categories).

So, what does this have to do with the CIO? How does the CIO play a valuable role in how procurement manages its business? The CIO is often tasked with developing and managing strategic goals for the modern organisation; this lofty responsibility can be supported with data and information related to complex-spend management and benefit the entire organisation. We’re going to take a deep-dive look at two specific categories and how both analytics and collaboration between the CIO and CPO (and other key units) can drive true value to the greater organisation.

Aberdeen research has found that over 26 per cent of the average organisation’s total workforce is considered contract, contingent or temporary in some sense. That’s over one-in-four workers at the typical company that is working on a temporary basis, whether it’s independent contractors engaged directly by the organisation, temps from staffing agencies / vendors or professional services tied to an Statement-of-Work (SOW). And the fact remains that this contract workforce is going to rise to over 30 per cent within the next 18 months.

Research from the Aberdeen Group has found that amongst all else, the majority of organisations state the improvement of visibility into this complex spend category as a top priority (Figure 1).

Figure 1: Top Priorities for Contingent Workforce Management