Five Ways the CPO Role Will Change

Over the last 20 years, the role of chief procurement officer has evolved significantly, shifting from tactical to strategic and finally gaining the attention of the Board. I was just reading an article in the Wall Street Journal by Bruce Nolop about the “Five Ways the CFO Role Will Change” and thought the categories and language were great to address from the CPO perspective as well. So what will the CPO position look like in 2025? Here are five predictions from a different C-suite role:

Strategic Partner: CPOs will become explicitly involved in developing bottom line AND top line strategies. CFOs are generally dealing with financial data after results are posted. In contrast the CPO can impact a company’s cost-making decisions mid-stride versus after the fact. As more of the business recognizes the perspective of the CPO, they will come to depend on that office for strategic realignment recommendations and will be more apt to partner with the CPO throughout the year. The importance of the office of the CPO will become more widely recognized by both the CEO and the CFO as the CFO comes to depend on the CPO for guidance.

Globalization: As companies expand globally, CPOs will also adopt a more global mindset and quite often will set up Centers of Excellence in order to source from the perspective of those countries. While the CFO works to establish a favorable tax framework, it will be critical for the CPO to be aware of the limitations such frameworks can put on receiving and distributing goods as well as the taxation laws on services. In addition cyber security will still be top of mind with the CPO as well as all types of risk that the company is exposed to with the maturation of big data and the “Internet of things.”

Communications: As a strategic leader, the CPO will be required to possess outstanding communication skills and an expert ability to sell their concepts and deliverables up, down and across the organization. The CPO will need to be a skilled financial analyst and be able to discuss the business imperative of initiatives with people of all levels across the company. The ability for the CPO to translate their strategic plans to show impact to shareholders and internal business units will be critical. The CPO will also need to digest, decipher and understand the business plans of the business units in order to deliver supply chain initiatives that support those plans, recognizing that a dollar isn’t a dollar and that Capital and O&M budgets need to be supported.

Compliance: Depending on the pendulum and where it swings in 2025, compliance will be or will have been a top priority. With the onset of new rules and regulations, it will be equally important for the CPO of the future to support corporate social responsibility (CSR) initiatives that can translate into eliminating slavery in their supply chain. The office of the CPO will support sustainability and can deal with second and third tier threats to cyber security. As a result, contracts may be dramatically different than those being negotiated today and the ability to monitor compliance to new standards to support these initiatives will be critical to the CPO.

Compensation: With the ever-evolving changes, the role of CPO, who will now be reporting directly to the CEO (rather than one or sometimes even two or three tiers below), will have a compensation package that reflects this change. Seven figure incomes consistent with where the CFO ranges are moving will be the norm in world-class organizations. With the depth and breadth of the CPO reach within the organization and the ability to drive long-term sustainable change, the income will follow.

For more on the “CPO of the Future,” join me at the IBM Empower event in San Diego May 11-13, 2015.