Basware Study: More CFOs Now Recognize Procurement's Impact on Profitability and Risk

Good news: Financial professionals are becoming more aware of procurement's impact on both profitability and risk, according to the annual The Cost of Control report, released last week by Basware.

The Cost of Control 2010 is the second annual global study of its kind by Basware, and it offers some fascinating insights into the opinions and priorities of 550 finance executives around the world.

For example, I was especially intrigued by how the CFOs' views of procurement has changed over the past year. Among those polled, nearly half (48 percent) now said that procurement has a positive effect on profitability and that's a considerable increase from the 29 percent who thought so back in 2009. I was also pleased to see that finance is becoming more aware of procurement's impact on risk. This year, 39 percent of respondents cite procurement as a financial risk exposure up from 28 percent last year.

The report says these findings indicate that lessons have been learned in the last 12 months, probably as finance departments were rocked by unprecedented turbulence within supply chains. I agree, and I think we are going to see the trend towards enhanced CFO-CPO collaboration continue as companies begin to realize that in today's volatile, ultra-competitive economy, success depends on a coordinated and collaborative response between finance and procurement.

Here are a few other key findings from the study:


Just 50 percent of finance executives participating in the study declare a high level of confidence in the performance of their department, and only 44 percent continue this level of confidence when considering the company's performance overall. The survey found that CFOs' poor visibility of key financial information is undermining confidence in their departmental and company performance and ultimately leaving doubts around profitability.



Successful collaboration between finance and procurement was most strongly linked to confidence in company performance, although 40 percent believe the relationship between finance and procurement could be improved.


58 percent of CFOs see improving profit margins as a strategic priority in 2010 up from 39 percent in 200. By contrast, cost saving has declined as a strategic priority, dropping five percentage points from 2009.



Automating purchase-to-pay processes from requisitioning to invoice handling and approval is gaining traction globally with 72 percent of companies either implementing or planning more invoicing automation in the next 12 months. 65 percent said they have or are planning for more purchasing automation.


You can download The Cost of Control report at www.basware.com/control. (Registration required.)