5 indispensable steps to create good CPO–CFO relations

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Date Posted: 16/04/2018 Category:
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5 indispensable steps to create good CPO–CFO relations

Date Posted: 16/04/2018 Category:

An expert in procurement and spend analytics has set out five crucial steps that Chief Procurement Officers can take to ease all-too-common tensions between themselves and their Chief Finance Officers.

Writing in Spend Matters, procurement analytics expert Matti Sillanpää describes the relationship between CPOs and CFOs, based on his extensive experience of meeting both types of professional, as varying between “complicated” and “hate-hate”.

Beneath the tension, however, is a form of respect. According to Sillanpää, CFOs tend to view CPOs as important, even when they disagree. Furthermore, the disagreements are usually about money. As Sillanpää puts it: “You promise savings, but your CFO only sees costs. You talk about adding value and your CFO finds the P&L showing increased spending.”

Yet much of the heat in the disagreement arises from mutual lack of trust and poor communication. Sillanpää’s five-pronged remedy is as follows:

  1. Clarify that reliable data and hard facts guide your actions as a CPO. Be sure that your spend analytics are clear, and that the resulting data is accurate and trustworthy.

  2. Be transparent about the data you share. Allow the CFO to study your savings and spending reports, and maybe even create a dashboard that he or she can access.

  3. Take a wider perspective. Don’t focus on savings programmes from a CPO perspective only – demonstrate how they improve the bottom line.

  4. Translate procurement terminology into finance terminology. Speaking in the same language your CFO uses in Profit and Loss accounts helps pour calming oil on turbulent waters. Ensure your timelines are in accord with financial planning cycles.

  5. Communicate frequently and personally. Don’t hide behind PowerPoint – be open, share your ideas, plans and concerns in person.

These five steps taken together are designed to build solid relationships and maintain excellent communication. They are but some of the ways that common ground can be built, and they facilitate the emergence of a shared perspective in place of an antagonistic one.

Ed Cross

Ed founded Odesma in 2014 with the explicit intent of creating a new kind of procurement consultancy founded entirely on cloud principles. Deploying best-of-breed subject matter experts alongside the best on demand technology to deliver rapid and effective change for customers.

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