Digital communities and the technology underlying them have
changed the world. As consumers, we are more connected and enabled
to shop, share information, and make better decisions than ever
before. And these technologies are having a similar impact on
procurement. According to a recent survey of more than 200 global
finance executives, the use of business networks and the
technologies underlying them is helping to transform procurement
from a tactical function to a strategic contributor to company
success.
“Procurement has traditionally been recognized and rewarded
solely on the basis of its cost-cutting ability,” said Sam Knox,
Senior Vice President and Director of Research at CFO Publishing.
“But through the productive use of automated systems, the function
has been able to move beyond simply meeting savings targets to help
address larger, more-complex issues such as managing cash and
capital, managing risks to business performance, and expanding into
new markets or business lines.”
In December 2011, CFO Research Services launched Reaching New
Heights: The Dividends of Collaboration Between Finance and
Procurement, a survey of more than 200 senior finance executives at
companies throughout North America, Europe and Asia conducted with
support from Ariba. A follow up to CFOs’ Views on
Procurement-Information, Risk and Money, a similar effort conducted
in 2007, the survey sought to understand how CFOs’ views of
procurement have changed and determine whether the function is
playing a more strategic role in helping them achieve their goals.
Among the key findings:
Procurement is transforming to make a higher-value, strategic
contribution.
In the past, the dialogue between the finance and procurement
functions was largely transactional. Finance executives
traditionally viewed procurement’s job as simply acquiring goods
and services at the cheapest possible price and on the best terms.
But advances in technology, multi-disciplinary skills, and
macro-economic factors have dramatically changed this view.
When asked to characterize how procurement has evolved over the
last three years, nearly three-quarters of respondents say it has
become “more strategic-minded.”
Technology is fueling the transition
What’s behind the shift? “The global recession has put the
squeeze on margins—drawing finance’s attention to the impact that
procurement can have, beyond meeting savings targets,” Knox
explained.
Additionally, trends toward outsourcing and increasingly global
strategies have stretched supply chains, introducing a completely
new set of both opportunities and risk.
“Working collaboratively, and equipped with the appropriate
technology, procurement can help to tackle these issues and become
effective stewards in more strategic initiatives,” Knox said.
Among the areas in which the finance executives surveyed say
procurement can play an expanded strategic role:
- managing working capital
- managing risks to business
performance
- expanding into new markets or business
lines
Nearly half of the respondents whose companies participate in
business networks saw “great opportunity” for procurement to become
more involved in managing working capital, compared to 39 percent
of those whose companies don’t. In terms of expanding into new
markets or business lines, one-third of those polled whose
companies use networks see a “great opportunity” for procurement to
increase its contribution, while only about 17 percent of those
whose companies don’t participate in these networks felt the
same.
There’s still work to be done
While procurement has made great strides in transforming into a
more strategic capability, there is room for improvement. When
asked to choose the most important change that procurement can make
to increase its contributions to corporate goals, more than half of
all respondents selected “improve process efficiencies.” Another 40
percent chose “improve collaboration with supplier network,”
“increase automation,” and “improve discount and rebate capture
with suppliers.”
“The opportunity for procurement to contribute to the company’s
strategic agenda has never been greater,” said Tim Minahan, Chief
Marketing Officer of Ariba. “As the findings of this report
indicate, procurement should play an increasingly important role in
driving not only cost savings but also value creation for the
enterprise. But to do this, they must forge an even closer alliance
with finance and further automate key commerce processes—from
sourcing and order through invoice and working-capital
management—both within the enterprise and across their supply
chain.”
It’s a big vision. But, says Minahan, “With the help of commerce
networks to connect trading partners and streamline
inter-enterprise processes, it can be fulfilled.”
About Ariba, Inc.
Ariba, Inc. is the world’s business commerce network. Ariba
combines industry-leading cloud-based applications with the world's
largest web-based trading community to help companies discover and
collaborate with a global network of partners. Using the Ariba®
Network, businesses of all sizes can connect to their trading
partners anywhere, at any time from any application or device to
buy, sell and manage their cash more efficiently and effectively
than ever before. Companies around the world use the Ariba Network
to simplify inter-enterprise commerce and enhance the results that
they deliver. Join them at: www.ariba.com
Copyright © 1996 – 2012 Ariba, Inc.
Ariba, the Ariba logo, AribaLIVE, Ariba.com, Ariba.com Network,
Ariba Spend Management. Find it. Get it. Keep it. and PO-Flip are
registered trademarks of Ariba, Inc. Ariba Procure-to-Pay, Ariba
Buyer, Ariba eForms, Ariba PunchOut, Ariba Services Procurement,
Ariba Travel and Expense, Ariba Procure-to-Order, Ariba Procurement
Content, Ariba Sourcing, Ariba Savings and Pipeline Tracking, Ariba
Category Management, Ariba Category Playbooks, Ariba StartSourcing,
Ariba Spend Visibility, Ariba Analysis, Ariba Data Enrichment,
Ariba Contract Management, Ariba Contract Compliance, Ariba
Electronic Signatures, Ariba StartContracts, Ariba Invoice
Management, Ariba Payment Management, Ariba Working Capital
Management, Ariba Settlement, Ariba Supplier Information and
Performance Management, Ariba Supplier Information Management,
Ariba Discovery, Ariba Invoice Automation, Ariba PO Automation,
Ariba Express Content, Ariba Ready, and Ariba LIVE are trademarks
or service marks of Ariba, Inc. All other brand or product names
may be trademarks or registered trademarks of their respective
companies or organizations in the United States and/or other
countries.
Ariba Safe Harbor
Safe Harbor Statement under the Private Securities Litigation
Reform Act 1995: Information and announcements in this release
involve Ariba's expectations, beliefs, hopes, plans, intentions or
strategies regarding the future and are forward-looking statements
that involve risks and uncertainties. All forward-looking
statements included in this release are based upon information
available to Ariba as of the date of the release, and we assume no
obligation to update any such forward-looking statements. These
statements are not guarantees of future performance and actual
results could differ materially from our current expectations.
Factors that could cause or contribute to Ariba's operating and
financial results to differ materially from current expectations
include, but are not limited to: the impact of the credit crises on
Ariba’s results of operations and financial condition; delays in
development or shipment of new versions of Ariba's products and
services; lack of market acceptance of Ariba's existing or future
products or services; inability to continue to develop competitive
new products and services on a timely basis; introduction of new
products or services by major competitors; the impact of any
acquisitions, including difficulties with the integration process
or the realization of benefits of a transaction; the impact of our
disposition, including the potential disruption of our ongoing
business; the ability to attract and retain qualified employees;
long and unpredictable sales cycles and the deferrals of
anticipated orders; declining economic conditions, including the
impact of a recession; inability to control costs; changes in the
company's pricing or compensation policies; significant
fluctuations in our stock price; the outcome of and costs
associated with pending or potential future regulatory or legal
proceedings; the impact of our acquisitions and dispositions,
including the disruption or loss of customer, business partner,
supplier or employee relationships; and the level of costs and
expenses incurred by Ariba as a result of such transactions.
Factors and risks associated with its business, including a number
of the factors and risks described above, are discussed in Ariba's
Form 10-Q filed with the SEC on February 7, 2012.
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