1

6
Imperatives
for CPOs
intent on driving business performance improvement

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CPO
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3
Procurement
A
t Zycus, we believe that well equipped procurement and supply management or-
ganizations have the power to drive business performance on both the prot and
revenue lines. But procurement can only succeed as an explicit driver of business
performance by,
Thoroughly understanding the spending needs of the business,
Extracting the greatest possible value from global supply markets,
Building collaborative relationships with high-performing suppliers,
Minimizing supply risks,
Obtaining both collaboration and correct behaviors from the people who spend, and
Aligning every strategy and activity that procurement undertakes with such business per-
formance measures as cost of goods sold, working capital, cash ow, prot, shareholder
value, market leadership and innovation.
Becoming that well-equipped procurement and supply management organization means re-
cruiting the right talent into procurement, adopting proven best processes and using technol-
ogy strategically to: overcome human limitations for processing information; remove physical
obstacles to collaboration; ensure efciency and maximize return on investment in procure-
ment. To get to this vision, CPOs must focus on the six imperatives outlined in this paper.
at the heart of the high performing business
4
Visibility
W
hile the past decade has seen many companies make enormous progress in
establishing spend visibility, the coming decade will see companies taking more
holistic approaches to procurement visibility. The most competitive procurement
organizations will become capable of connecting information generated both
internally and externally from many sources, systems, locations, languages and formats to
create 360 visibility that supports a full range of strategic procurement activities (not just
spend management and strategic sourcing). Near-term objectives for procurement executives
are to:

Fill holes in their solution and information infrastructures,
Ensure that information can always ow easily from one solution to the next,
Ensure data is accurate, complete and structured so it can be broken down, recombined
and combined with external information, on the y, in meaningful ways,
Adopt global standards for structuring proprietary information so it can be paired with ex-
ternally generated information (market, supplier, legal and so forth), and
Begin imagineering the possibilities that such capabilities might yield for formulating in-
novative/competitive procurement, sourcing and supply-base management strategies.
5
Procurement/Financial
Performance Management
Spend
Analysis
Supplier
Performance
Management
e-Sourcing

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s Contract
Management
Global market
Intelligence
Global supplier
Intelligence
Global market
Intelligence
Global legal
Intelligence
6
Spend
Analysis
Supplier
Performance
Management
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n
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e-Sourcing
Financial
Performance
Management
p
l
a
n
t
Fail!
Contract
Management
CPO
7
Alignment &
Collaboration
T
he strategic imperative for procurement is to become the hub the function that
can capture knowledge and information effectively and efciently from many sourc-
es, transform and redistribute it where needed. So, for example,
Supplier performance data captured from operations might be used to predict and mini-
mize exposure to supply risk,
Information extracted from contracts might be used by nance to improve cash ow,
Forecasts and other qualitative input captured from sales might be used to generate intel-
ligence about future demand and sourcing requirements, and
Information about supplier innovation captured through sourcing RFIs and RFPs might
be passed along to R&D and used there to inform a companys long-term technology and
product-development roadmaps.
When procurement deploys solutions that enable knowledge capture and collaborative deci-
sion making, the possibilities for achieving competitive advantage and driving business per-
formance increase exponentially.
Templates
Utilization
tracking &
metrics
Automated/
semiautomated
processes
Workow
Audit
trails
Version
control
Presets
Project
management
tools and
dashboards
Permission
control
Congurable
decision
support
tools
Collaboration
support
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Compliance
D
riving business performance from procurement means convincing employees to
line up with and adopt preferred procurement processes, strategies, standards
and decisions. A recent in-depth Zycus study covering some 600 procurement
organizations worldwide nds compliance in general growing from a platform that
combines alignment of objectives, communication, collaboration and consistent technology
adoption.
Well-engineered procurement solutions drive compliance by empowering procurement execu-
tives to codify corporate objectives, standards, workows and strategies. So, for example, a
contract authoring tool with templates that incorporate preferred commercial terms and legal
protections creates a powerful platform for managing legal and nancial risk exposure. Con-
gurable lters in a spend analysis tool make it easy for procurement executives to promote
specic strategies. One year, for example, the analytics tools may promote supply-base ra-
tionalization while the next year they promote supply base globalization. Likewise, a decision
optimization tool for e-Sourcing might be weighted heavily in favor of suppliers who perform
best on the product quality metric, preventing sourcing professionals from overemphasizing
cost in a business enviroment that values product quality more highly. Of course, relying on
solutions to promote compliance assumes people can easily adopt and use the solutions.
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Adoption
P
rocurement needs technology both to standarize and accelerate processes and to
overcome human limitations for processing information in a highly complex, global
economy. But simply investing in technology is not enough. Successful procure-
ment organizations must also be capable of driving broad adoption and consistent
use of procurement technologies at all levels of business enterprises and supply networks.
And, while alignment and collaboration may go a long way to supporting adoption of procure-
ment disciplines, processes and technologies, a technologys usability seals the deal. Usable
procurement technology solutions will,
Be cognizant of how people prefer to work and the ways in which ubiquitous desktop appli-
cations have already trained them to think,
Mimic common user experiences (such as B2C e-commerce),
Minimize time and effort required of users to perform tasks,
Represent the easiest ways to perform tasks and obtain desirable results (such as closing
deals, obtaining needed goods or services quickly and gett ing paid),
Offer simple solutions to complex problems, enabling organizations to start from wherever
they are without undergoing massive training or knowledge acquisition, and
Be capable of growing with end users as they expand their abilities incrementally and seek
to push past their own boundaries.
11
fewer clicks
templates
presets
dashboards
1-screen views
autolls and
suggested
inputs
advanced
capabilities
easy download/upload
to/from desktop apps
User should
experience... ...while the
business
benets
from...
built-in best
practices
Wow...getting this work
done is so much easier
than it used to be! Finally
someone is paying atten-
tion and giving us tools
we can really use.
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Contribution
P
rocurements core performance focus - minimizing costs - can often feel at odds
with other business objectives. A companys nancial and senior executives may
become distracted from the cost line when revenues are growing fast. Meantime,
the people responsible for driving innovation or building a companys brand may
feel that too much focus on costs undermines creativity and style. People responsible for
operations, quality and customer satisfaction can be quick to blame procurement when prob-
lems originate in supply chains. Even when corporate and functional leaders back procure-
ment 100%, it can be still be exceedingly difcult to transform theoretical cost savings and
other procurement achievements into facts that show on a companys nancial statement.
Procurements imperative is to make sure the results of its work materialize either on the top
or bottom lines of the business in highly quantiable ways. Until very recently, this need had
been ill met from a procurement technology perspective, but the situation is changing rapidly.

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Procurement/Financial
Performance Management
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We want to get
much faster at
discovering and bringing
high performing and
innovative suppliers
into our new
product intro
processes.
Our percent of spend
with high risk suppliers
has been creeping up in
the past month. Wed
better do something
about that and fast.
There has been a huge
amount of innovation
and restructuring in this
market. We can exploit
it, but need to rethink
the way we group
our spend categories.
Our rationalization
opportunity is essentially
exhausted. Time to start
focusing more on demand
management.
Weve got our
payment terms
standardized.
Now, its time
to start moving
some other
cash ow
levers.
Were going to
make big changes
in the way we write
contracts with our
critical suppliers
this year.
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15
Innovation
B
usiness enterprises are full of smart people with great ideas and its always the
unique ideas executed rapidly and well that yield competitive market leader-
ship. That is why procurement technology solutions, while incorporating proven
best practices, must also be engineered for exibility and ongoing innovation in
procurement strategies and approaches.
When its time, for example, to shift strategy from supply-base rationalization to globaliza-
tion, it should be easy to add a spend analysis lter that redirects discovery of performance
improvement opportunities in favor of the new strategy. Or, perhaps some bright sourcing
professional discovers a market opportunity that involves bundling spend in an unusual way.
It should be easy to see what a revised categorization of spend might look like without wait-
ing days, weeks or months for a companys core spend classication model to be rewritten
permanently.
The best procurement technology solutions will deliver best processes and practices without
any of the constraints or sameness that might stop a procurement team from surpassing
their competitors with the next big idea in strategic supply management.
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About Zycus
A
t Zycus we are 100% dedicated to positioning procurement at the heart of busi-
ness performance. For more than a decade we have been the worlds most trusted
leader in Spend Analysis. With our spirit of innovation and a passion to help pro-
curement create even greater business advantages, we have evolved our portfolio
to a full suite of Procurement Performance Solutions Spend Analysis, e-Sourcing, Contract
Management, Supplier Management, and Financial Savings Management that is nely tuned
to the strategic procurement imperatives and activities discussed in this paper.
Behind every Zycus solution stands an organization that possesses deep, detailed procure-
ment expertise and a sharp focus on being responsive to customers. We are a large 600+
and growing company with a physical presence in virtually every major region of the globe.
We see each customer as a partner in innovation and no client is too small to deserve our
attention. With more than 200 solution deployments among Global 1000 clients, we search
the world continually for procurement practices proven to drive competitive business perfor-
mance. We incorporate these practices into easy-to-use, exible solutions that give procure-
ment teams the power to get moving quickly from any point of departure and to continue
innovating and pushing business and procurement performance to new heights.
Introducing The Complete Zycus Procure Performance Solutions Suite

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iContract
iSupplier
iCost
iSave
iAnalyze
iMine
iPerform
iManage
iSource
Autoclass
iOptimize
LiveConnect
iAnalyze
iContract
Authoring
iContract
Repository
CPO
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