News focus: What your CFO thinks of you

21 June 2009

25 June 2009 | Martha McKenzie-Minifie

Cost-cutting has moved up the agenda in the downturn, but CPOs still have a long way to go to win respect from CFOs.

Iain Rayner works in finance and, with a background in strategic sourcing, also understands procurement. If a survey of 550 finance directors and chief financial officers released this week is anything to go by, he occupies an unusual position.

The research, carried out for software company Basware, showed how closely finance and buying are linked in large firms.

This was backed up by two other pieces of research released in the past week. Findings from Emptoris suggest more than half of procurement departments work "hand-in-hand" with finance. And interim results from a Chartered Institute of Public Finance and Accountancy/Civica study indicate efficiency savings and value for money are top of the agenda for UK local government finance directors - and they are close to the hearts and minds of buyers.

Despite shared interests and close working relationships, the Basware research found finance and procurement still have trouble connecting - to the detriment of purchasing's reputation.

The report found more than one in three finance professionals believe procurement is still administrative. And just 17 per cent think the head of procurement has a place on the board.

Rayner, deputy finance director at financial consulting and services firm St James's Place, was previously strategic sourcing director at Prudential. He says there are excellent CPOs who are "very highly rated" in their organisations, but he too has reservations about procurement's role at board level. "It's not that CPOs per se shouldn't be on company boards, rather the quality of the average CPO isn't high enough to merit a place."

Their downfall, says Rayner, is working in silos.

"Too few build peer-to-peer working relationships with board members. Perhaps procurement people tend to be inward-looking and draw up agendas without consulting colleagues around the business."

Speakers at CIPS central London branch event this month echoed these sentiments and argued the profile of procurement must be raised to attract talent. A more active, instead of reactive, approach is also key.

Professor Adrian Done of Spain's University of Navarra IESE Business School is a supply chain expert who helped conduct the Basware research. He says part of the discord is the way purchasing success is measured internally. Most respondents (71 per cent) evaluate the function primarily on cost savings - "obvious and easy", says Done - and overlook supplier reliability.

He wasn't surprised by the shockingly low proportion who believe procurement heads should be at the board table. "Finance think they are masters of the universe. They don't understand their companies are part of a supply chain. The CFO is ranked higher than the CPO. We must fight harder to make that less subordinate and more mutually respectful."

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