Within an organisation, procurement is responsible for the buying of goods and services in the best possible conditions whilst also ensuring cost optimisation and savings; whereas IT is responsible for automating processes by ensuring the best technology infrastructure is in place, both hardware and software.
Even by reading this sentence out loud you can spot the obvious crossovers that should happen between the two. For processes in an organisation to work properly, procurement should be educated in terms of the technology infrastructure it requires to achieve the above-mentioned objectives and to understand which is the procurement technology most suited to its needs. At the same time, IT should be able to understand procurement processes so that it can make the best technical recommendations.
Moreover, we think that both the CPO and CIO need to be involved in long-term strategic planning, which means understanding IT and Procurement processes but also the business strategy. This way they can make recommendations that are in favour of a long-term strategic plan.
Gone are the days when these 2 departments were influencing different areas of the same organisation. Due to a huge growth in the amount of technology used by most organisations, there is more and more overlap between the areas the CPO and CIO need to be involved in. We live in a time where technology ensures the well-functioning and productivity of most businesses, whether we’re talking about ERPs, CRMs and eProcurement systems or automated production lines and logistics automation.
Technology spend occupies a huge percentage of a company’s total spend, within most organisations. This means that even the nature of how things are evolving in the business world today requires a better collaboration between the CPO and CIO.
Two sides to a story
There are 2 ways in which organisations have to look at the relation between procurement and IT.
- The CPO needs to seek advice from and align with the CIO in order to create greater business efficiencies and drive their digital transformation initiatives forward. No matter how much experience they carry with them, procurement will now have the same technical knowledge as IT.
- The CIO should seek advice from the CPO regarding the direction in which the IT organisation is heading. Procurement can be an important asset when it comes to acquisitions in the IT area.
How can the relationship be improved?
There are 2 important aspects organisations need to consider in order to build a strategic relationship between these 2 departments.
- Make both departments, procurement and IT, “equal” in terms of decision-making power.
- Have a clear definition of the roles for both the CPO and CIO
Basically, procurement and IT need to support each other’s goals, as well as promote greater efficiency for the organisation at large. To achieve this, they have to create a strong, consultative alliance, between their 2 leaders.
We believe, it all comes down to an organisation’s business strategy. The business strategy can, and should, establish a few objectives to help build a more collaborative relationship between the CPO and the CIO:
- Roles : as we mentioned above, both the CPO and the CIO should have clearly defined roles within the organisation which should integrate into the strategic planning process.
- Strategic planning : organisations should create an environment that ensures strategic planning and organisational procedures become established practices
- Authority : increasing the role both procurement and IT hold within the organisation’s decision-making process should enable a deeper thought process for both and encourage them to make an effort collaborating with each other
A good business strategy should be clear in communicating one aspect: within the organisation everyone is working towards achieving the same objective and every department brings its own contribution to this. So, cooperation is key.
To summarise all of the above, when talking about the relationship between the CPO and the CIO, collaboration is vital for progress on both sides: it helps IT in making strategic decisions with their acquisitions and it helps procurement on its journey to digital transformation by being more efficient.
With an honest collaboration, the CPO and CIO can bring together threads from across many departments, identifying ways to improve the everyday functionality of other units, not just their own, so it should be a relationship that the whole organisation encourages.
Have a look at our procurement trends for 2022 for more information on this topic.