Why Procurement and Finance are Natural Allies

Welcome back to series 3 of the Procuretech Podcast!

We bring you the hottest startups, thought leadership and conversation from visionary industry experts, and definitely no stiff corporate content.

We’re switching things up a bit for the new series.

We’ll now be releasing episodes twice weekly, and expanding our scope on guests. In the past we’d typically speak to startup founders, CEOs or CMOs of procurement tech companies. But we’re now going to be talking to industry leaders and influencers in this space too. We’ll bring you their thoughts, opinions and projections around digital transformation of procurement.

So without any more delay, let’s jump into this episode’s conversation with a guest from the finance community: Chris Argent, of GenerationCFO.

Procurement and Finance: Natural Allies? – Chris Argent from GenerationCFO

Finance and procurement are often sparring partners, but it doesn’t need to be that way. Chris and I recently met a P2P transformation conference in London, where the message was that procurement and finance are really natural allies.

Chris’s 20+ year journey in finance

Chris’s journey began as a financial controller and finance director in small to medium sized organisations. There was a key moment when he stumbled across a fraud that had been committed due to poor systems and poor technology. This inspired Chris to enter the finance transformation arena.

There, he was lucky enough to work with some big players including John Lewis, Amazon and Vodafone. This opened his eyes to shared services and procurement technology. Chris became more tech savvy, and saw the future of what we now know as digital procurement on the horizon. But this was maybe 15 or 20 years ago, and the people around him didn’t understand all this new technology.

This need to educate people was the birth of GenerationCFO. It all began as a LinkedIn group. And now, some 19 years later, GenerationCFO has a reach of about 100,000 people who all gather regularly to talk about these transformation issues.

This community is predominantly UK-focused, but there are members all over the world – from Europe to the US and Asia.

An experienced perspective on finance transformation

Chris shares some observations from his long-standing career in this space. What have the main trends been over his time in the industry? And where do procurement tech and FinTech crossover?

There’s always been an acknowledgement that technology could be used for the better. In a way, this sprang the shared service environment. Back then, you’d get conversations about the cost of labour: “We can save 20% if we move everything to India”, and so on. But that’s not the case any more. The savings in that area are negligible. What we need to do now is to understand technology and optimise on that.

Technology is important, especially with things like ESG now coming down the track, and the need for increased responsibility and transparency. A siloed approach doesn’t work any more. Procurement teams are thinking about solving business problems, CFO’s feel responsible for managing ESG risks. There’s loads of crossover there – procurement can’t ignore finance and finance can’t ignore procurement.

What are the challenges in communication between procurement and finance?

Procurement professionals often struggle to get finance to recognise their wider value. There will always be ‘invisible’ work being done by procurement, below the surface of the value iceberg. And hopefully technology can lead us to a more centralised, collaborative form of project management, where everyone’s contributions can be factored in.

And it’s not just technology – Chris suggests that there are three key factors when it comes to transforming collaboration and project management.

The first is technology, which definitely shines a light on all the invisible work that gets done.

The second is people: People need to communicate, and people need to be open to communication. If you don’t have a finance business partner to talk to, then you need one. You need to ask your CFO or finance directory for that person. It’s their responsibility to represent you, and without that representation it’s very hard to communicate properly. A collaboration-first, business partnering approach is critical to solving the problem here.

The third, and this a weird thing to say, but the third is a pandemic.

The last pandemic changed the mindset overnight of: How we view our processes, how we view our roles within the business, what’s really important. All of a sudden, we got a lot of airtime within the business. It was no longer about sales and revenue and growth, it was about survival. That survival mindset really opened businesses up to examining their processes.

Technology and People

Technology is going to change the way we do business, it’s going to change the way we maintain high performance within our teams. But Chris also thinks that the people element shouldn’t be underestimated. Having worked in change programs, technology and people are equally important.

But the the learning journey, and the time to value is on the technology side. We’re seeing this in procurement, and Chris is having exactly the same conversation on the accounting and finance side, where generation Z (or even generation A, whatever the next one is) – they don’t think of technology in the way we do.

People are, in general, still very change resistant. And this can be a big problem when rolling out these platforms. The obvious stinker is if you choose a really clunky piece of software that both suppliers and stakeholders hate using. And there’s a big famous name that I think we can all think of that is notoriously not very user friendly.

But you can get any technology successfully adopted with the right change management process.

We need to be creating a community of people who are coming together around these transformations, these changes, and making tiny changes, incremental changes. People on the ground within companies who are trying to adopt this technology need to be improving a little every day, so they become their own internal consultants. So their internal intrapreneurs as they call them, rather than entrepreneurs.

We don’t have enough visionaries in procurement. And we have too many technocrats. And that is hamstringing our profession.

An international perspective

Chris’s access to a global network of finance professionals gives him a unique vantage point. Does he see much difference geographically, in terms of maturity of digitization?

The UK is steeped in professional history. And you know, procurement is quite a new profession compared to accounting, that’s been going 200 odd years. So we’ve got 200 years of historic mindset that we’re trying to change. It’s a conservative way of approaching these things.

Europe is somewhere more committee based, but they are quicker to move.

In the US it’s very much “let’s do this! Let’s make a change!”. There are shorter decision cycles on buying some of this technology. Maybe it’s just because of the number of people in the US who aren’t necessarily qualified in those senior positions. They’re democratising a lot of the conversation. They’re using social media and channels, they want to be seen, to get their message out there. There’s a lot less of that going on in the EU and the UK.

In the US, if you have a tech/ social media savvy CFO they’re called Rockstar CFOs? They’re called out as these amazing people.

If you did this in the UK the board might want to sack you for misconduct, especially if you’re a rock star! You wouldn’t want a CFO coming into work on coke after two bottles of whiskey.

Well, if Elon Musk can do it, why not?

Wrapping up and final thoughts

Reflecting on our time at P2P Transformation in June, Chris and I both agree that there’s huge value to getting out of your echo chamber and talking to other professionals. Communication is a huge part of what we do, and there’s little to be gained from navel gazing. Otherwise you’ll never understand where the other side of the table is coming from.

As well as his website GenerationCFO, Chris is a self-confessed LinkedIn junkie and a YouTube content creator.

If you want to get in touch with him, you’ll find all the links you need below.