Sean Park, CPO of software organisation Splunk, talks us through transforming the procurement function into a powerhouse of efficiency…
Even prior to his current Chief Procurement Officer role with San Francisco-based software company Splunk, Sean Park enjoyed a varied and exciting career. He grew up in New York and during his education at Arizona State University, he partook in an exchange program to Germany. This spawned a love affair with Europe and travel in general, and after a stint at a Fortune 500 company learning about process discipline and standardisation, he and his future wife moved to Prague in the early 1990s. With the Berlin Wall recently falling, Prague offered plenty of great career opportunities for them both. Park found himself in sales and marketing, but he felt there was something missing from his business knowledge base, and so he began attending Rotterdam School of Management at Erasmus University to do his MBA.
Moving from Prague to Holland, Park spent some time with Philips Electronics and worked across the Netherlands and in Germany post-graduation. He then became responsible for regional business development for LATAM, and moved to São Paolo, Brazil. After the Brazilian currency crashed in 1999, he moved back to the US. Park became a consultant in Boston, focusing on media, telecom software and computing. At this point, he got involved with his first procurement project – to the extent that he quickly became nicknamed, ‘the procurement guy’.
After leaving the role in 2004, Park then created his own consulting brand to help biotech/pharma, retail, computing, and e-commerce clients develop and execute a range of procurement and sourcing transformations. That was followed by Acquis Consulting Group in 2015, before being head-hunted by Splunk in 2019 for the CPO role.
“It’s a global role with global responsibility for procurement, sourcing, T&E and accounts payable,” he explains. “The way we look at procurement and sourcing are different. Procurement is how you purchase something, and sourcing is the how and with whom you’re sourcing from.”
Maturing the function
Park’s acquired knowledge and skills had naturally led to this point, stepping into a business where the procurement function was, in his words, ‘designed to ignite growth’. A change was needed to scale, and Park was ready to help usher Splunk into a new era.
“Splunk reached an inflection point, which tends to be somewhere between £500m in revenue all the way up to £2bn in revenue,” he says. “That’s when most companies are starting to think more seriously about procurement and sourcing and what it can add in terms of value to stretch budget dollars, and to make sure risk and suppliers are being properly managed.”
Technology companies tend to be well-funded at the start, so the focus is speed, execution, and driving growth at any cost. But Splunk, as it brought Park in to join the team, knew it was time to take the next step in its growth journey. The decision was made to put in place a more centralised procurement and sourcing function as Splunk was rapidly growing and controls and guardrails could help scale the company. It was very much a natural evolution for the business – a pattern Park has watched occur before. This put him in an ideal position to help push the new vision forward.
“The first step was to undertake a baseline assessment of the function,” he says. “Questions included: what are the strategic objectives? How does that fit in with the corporate objectives, or those of the finance team? What are our processes and policies? How are we structured and resourced? Do we want a category management structure or a business unit focused team? We had many questions while we also looked at efficiency and effectiveness metrics and the systems environment. It quickly became clear that there were several ways to scale. And building scale is really a key ongoing objective.”
With the assessment completed, Splunk set about defining its objective and strategies and planned out a three-year road map. Primarily, it focused on years one and two, knowing how quickly things can change in a business like this and that it would soon be migrating to a new enterprise resource planning (ERP), which is a very different system to the ones it had used in the past. But Splunk had that three-year plan in mind and began putting into place a centralised image of the future, with a category management approach for the sourcing team and a more centralised one for T&E and procurement.
For Park and his team, that was the right way to go, because they’re now able to keep up with the pace of the business. “We built out the organisational resources and systems to a point that’s highly scalable, such that we don’t have to add more resources for every X dollars spent. Beneath that, we redesigned our metrics and what was important according to our strategic objectives, processes, policies, and so on. Then we were able to look at the systems and say, okay, the new ERP is coming in, but what are the boundary systems we need to surround that? This was all in the first year.”
A broad front
The key for Park’s team has been making sure the revamped function is highly integrated. Park credits this approach with much of the success Splunk has had with this procurement and sourcing transformation. He believes there are two ways to go about maturing a function like this: one is to do things serially, knocking down pins one or two at a time, very quickly. The other is to advance on what he calls a ‘broad front’, to ensure that you don’t end up focusing too much on one area while putting others at risk.
“We could have designed a strategic objective that said, for example, we want to have 80% of our spend under management in year one,” Park explains. “Well, if we didn’t have the resources and systems to actually fulfil that work, we would have fallen on our faces. You only get one chance to make a first impression in a transformation, and that would not have been the right impression to make.” By advancing things on a broad front, the approach is more integrated and controlled – exactly what Splunk needed. “While transforming in an integrated fashion takes more work up-front and initially progress is slower, you hit a point where it all starts to click and then progress and results start stacking up exponentially,” Park says.
The benefits of this evolution are already clear to see, from Park’s perspective. “We’re definitely managing supplier risk much more effectively in a more uniform and efficient way,” he explains. “For example, we’ve piloted a supplier relationship management (SRM) function and received extremely positive feedback from suppliers, the business, and internally within our own function. And one of the biggest things we’ve done is on the ESG front, putting in place a full-time resource to manage our supplier ESG program. That’s been huge.”
Splunk and ESG
ESG (environmental, social, and governance) is extremely important to Splunk. As a forward-thinking business, it’s always considering the ways it impacts the world, which is also important to its key stakeholders.
Park has worked tirelessly to help ensure procurement removes barriers between the sales team and customers with dedicated supplier ESG programs to help the company to both win and retain new business, as well as supporting our customers and their own commitments to their customers. This way, Splunk is a part of the global, company-led evolution in ESG for the private sector. Splunk’s ESG priorities include social impact, ethical and inclusive growth, data responsibility, compliance, training and governance and environmental sustainability. These have been tremendously successful, because ESG isn’t merely lip service for Splunk. “It’s heartfelt. It’s deeply ingrained in the organisation, and I find that invigorating,” says Park.
The power of partnerships
Splunk’s work involves many collaborations with different types of partners; it’s a major part of how it remains ahead of its game, and how its procurement transformation has gone so swimmingly. Many of these collaborations have been with consultancy agencies, which have done a great job of assisting Splunk in its evolution.
“A recent initiative includes implementing a new Contract Lifecycle Management (CLM) system,” Park explains. “That’s something we’re about to launch and we’re really excited about. We already use this scalable, enterprise grade CLM system on the sales and revenue sides of our business–and now we are extending it to the buying side. We’ve had great results, and we’re looking forward to more.”
Splunk has also worked to enhance its efficiency and data accuracy efforts. “That’s been in the form of automations, ML and bots. Our consultancy partner has helped us navigate essential automation and do away with unnecessary manual processes.”
Throughout its transformation journey Splunk worked with consultancy partners to examine spend analysis, supplier onboarding processes and policies, supplier ESG strategy, travel/expenses implementation, and operations. For example, its ESG program also shares Splunk’s ratings with potential customers, which helps support its ESG promises. Additional strategic focus extended to its contingent labour services as Splunk implemented a tool and processes and leveraged supplier networks to ensure efficiency. “Our partnerships have truly helped us define what we want and helped forge a solid plan for the future – a future which looks increasingly bright,” said Park.
This kind of evolution is never truly over. It will continue to change and shift, especially for a fast-paced business like Splunk, but the company is looking ahead with a determination that it can achieve its best and, more importantly, maintain that and thrive. “We are getting positive feedback from our internal stakeholders and having a material impact on the bottom (and top!) line while learning and advancing together as an integrated team.”
“The things we’re doing to really mature the functions now are to focus on process excellence and internal customer service/satisfaction in the form of internal SLAs, which we will launch early this year. We also want to integrate boundary systems with our core systems, to automate processes and workflows. They’re loosely integrated now, but we have a lot of optimisations to do.”
Another major focus is supplier ESG metrics – something that we’ve established is in the lifeblood of Splunk-and its SRM program.
“By the end of next year, we also want to have our SRM program fully implemented and working with our business stakeholders. We piloted it recently and it’s been very successful. Now it’s time to take it to the entire organisation and we’ll do that in three waves according to risk level. Finally, our plan is to build out our international capabilities. We really want to begin serving our international partners more directly, keeping them up to speed with the rest of the company to serve their interests as best we can. Looking at benchmarks, we are climbing the ranks quickly and surpassing the metrics of our peers and competitors. The road ahead is really exciting as we scale, and we can’t wait to keep improving on an integrated, broad front.”