CPO Strategy
Executive Insights

How a procurement transformation enables greater value for KPMG

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Historically speaking, procurement has often been seen as a mere cost centre and the part of the business where buying was done. In recent years however, procurement has taken a dramatic shift as more and more businesses around the world, from large scale global organisations to smaller and younger companies, have redefined their understanding of procurement and invested heavily into transforming it. Procurement can well and truly bring great value to an organisation, if the organisation recognises that procurement can be a trusted partner to the business. This certainly forms the foundation for KPMG’s procurement transformation, in which one of the UK’s leading providers of professional services, including audit, tax and advisory specialisms – delivering integrated solutions to its clients’ issues – is transforming its procurement processes in order to bring visibility, control and influence across an increasing proportion of spend to drive informed decision-making for the business. Spearheading this transformation journey is Chief Procurement Officer, Martin Lee.

With over 20 years in the sourcing and purchasing space and a key focus on procure to pay (P2P) implementation, Martin feels his experience and passion for procurement has prepared him well for this next evolution of procurement at KPMG. “I definitely think it’s one of the best jobs going, with an unparalleled involvement in helping an organisation to ensure trust and deliver value and growth,” he explains. “You touch everything from marketing, to the running of our buildings, through to the services we deliver to our clients. It’s such an impactful role. Gone are the days of buying; it’s about how you work with the business to impact how they invest and leverage themselves in the marketplace to get the right solution, at the right value and the right risk profile. With the right executive sponsorship and appetite, the platform for procurement is set, like never before, to be value creators.”

The broader evolution of procurement has certainly played its part in KPMG’s transformation strategy and so the CPO now has to communicate to each and every part of the business a little differently than it did in the past. More so, the demands, expectations and skill sets – and ultimately the very role of the CPO – has changed too and this is something that feeds into this transformation. “Historically, buying was quite simple. Now you’re trying to work people around, ‘what’s their business case?’ What are their change drivers?” he says. “It’s less about being a reactive service, but more proactive, working to understand what they’re actually trying to achieve and how you might bring the supply base and commercial models to that.” 

As CPO, Martin is tasked with looking at how procurement, as a trusted partner, can bring information to the table, to help people understand the art of the possible from the marketplace. This, he feels, is something that has developed increasingly in recent years. “Data is key to everything now and you need to be able to provide that data in a way that people can use and understand,” he says. “There is now an expectation of the ease of use as a business, all the way through from the people on the ground delivering services through to the executive board who want to know how they can actually consume data in a way that actually gives them an actual insight.”

In early 2019, KPMG set out a procurement strategy, one that would ultimately see procurement play a key role in seeing the company increase its UK business to £3bn by 2022. A key enabler of achieving this is through greater spend control, changing how KPMG buys goods and services across KPMG UK, and through a new procurement organisation and operating model, including the implementation of a new P2P tool. “As an organisation we really wanted to build upon an already successful strategic sourcing team,” explains Martin. “Over time we built a program to implement procurement technology, to create the opportunity to create control, visibility and influence our spend across our supply chain. Technology is at the heart of the change. It’s about creating efficiencies for how we transact, creating the visibility of our spend and our third-party engagement, allowing strategic sourcing decisions with our business stakeholders’ alignment to be more impactful, innovative while delivering greater value, at the same time enhancing the ownership of the solution through an effective controlled purchasing environment. 

A key part of the transformation saw KPMG partner with IBM to extend its sourcing capabilities. This has seen the building of a hybrid functional  across multiple locations, delivering strategic, tactical and a procurement operations model to enable KPMG to influence spend across the entire firm. “The relationship with IBM has allowed us to deliver a leveraged procurement model across multiple locations of onshore, near shore and offshore from an efficient cost model and from a skill sets and capability perspective that procurement in KPMG did not have at that stage,” says Martin. “And so, it has allowed us to grow our strategic sourcing together with their breadth and depth of market knowledge and commercial impact. That was a very positive thing from a strategic sourcing point of view.”

The challenge then for KPMG and IBM became one of identifying a way of moving towards a more transactional way of operating, particularly when it came to deploying procurement feeds from 15,000 users across the business which in turn expanded procurement’s interaction with the business significantly. For Martin, IBM was integral in this regard and a reflection of how the relationship between the two companies far exceeds a simple project delivery relationship. “The relationship is an opportunity to provide an agile operating model that we can adjust to how our business evolves. It gives us a way of getting to skill sets that we didn’t have and thanks to the many clients that they work with in a similar capacity. It creates a useful network,” says Martin. “I can tap into the knowledge and insights from this network and their own procurement capabilities to know whether it validates what we are doing, or to help stretch and challenge my team through insights that create the credibility to be able to help my business.”

The very idea of change, particularly in an organisation the size of KPMG, can understandably be very fearful in many respects and so it’s important that the drivers (in this case the procurement team) work to help the business understand what that change means. Martin stresses that one of the biggest early learnings and advantages for his team was utilising the capabilities that existed across KPMG, encompassing Change, Communications, Programme Management and Systems Implementation. The team built out a change journey, engaging with business stakeholders to determine their P2P understanding and readiness. Early understanding of P2P was relatively immature and the team had to help them understand the impact, and the opportunity it provided. “I think we’ve realised that throughout that period, we’ve had to put more direct effort into certain groups to help them understand what the opportunity is and understand how they can adapt to that change,” he says. “Our role as leaders is to help support people, understand and appreciate what the opportunity for them is and where they can learn new skills or adapt to roles, or in fact take on new accountabilities in that process. It’s about making sure that people understand what we are trying to achieve and communicate the vision, so they could then understand, appreciate and get excited about it. Of course, throughout that process, you will find people that have to take time to learn about what that change means for them and their function.”

The main procurement transformation began in early 2019 and so, as Martin admits, KPMG is still at the very beginning of this journey. The first 12 months will be seen as laying down the foundations for future growth, with the implementing of the technology, and the new operating model focused around creating a platform and new ways of working. 2020, as Martin describes, is about “leveraging that platform to grow our visibility over the supply base, understanding how our business is going to work with us through those systems, and helping us unlock the opportunities the visibility creates”. 

The challenge for any transformational journey revolves around external factors. Business needs and demands, as well as market dynamics, will all heavily influence a transformation. The trick for an organisation is to be flexible and proactive enough to be able to evolve with the shifting landscapes, whatever they may be. “Throughout the journey we’ve had to make a few adjustments. Whether they were parts of our business that had changed how they operate, or in effect the relationships that we brought in, it was about learning what they were going to do differently to perhaps what we first thought,” says Martin. “One of the things you have to do is be very clear about what you’re trying to achieve. We had a very fixed governance model so that we could operate it with consistency with decisions and make sure that each of those changes was something that you considered and made a formal decision against, rather than just meandering through a journey.”
Ultimately, the key to successfully navigating a journey is understanding that changes will happen, whether they are foreseen or not. More importantly, is taking key learnings from these changes and using the knowledge or the data and insight and turning that into smarter and more informed decisions moving forward. This is something that Martin, despite being at the very start of this journey, has already begun to do. “We’ve built a team around us that are now owning and delivering both our technology, our processes and our operations. It works on an agile basis, so that if we learn that our approvals aren’t quite right, or we learn that our data isn’t in exactly the right place, we can make quick and easy changes to it,” he says. “Working across our business, we’ve also put in place change agents that enable us to work with key individuals across the business on a more regular ongoing basis to talk about feedback, to talk about new ideas, to talk about change that we’re bringing through and get them to communicate to us about how we can improve and change things.”

Looking at the first 12 months of this journey, Martin can already begin to look at key successes that have been achieved and start to plan out how to build on those for the coming years. KPMG has successfully rolled out the initial stage of the transformation on time and on budget. Both the hyper care team and the project team that worked with Martin throughout the journey have now completed their activities and moved on to their next project, leaving Martin in the wonderful position of knowing that his team has delivered and has the solutions and the operating model in place. “We’re now into the position where we’re thinking proactively rather than reactively,” he says. “We have other examples where we’ve been able to take business cases to our board to shift policy. That’s been a real game changer for us, and it’s been positively received by them.”

Over the course of the next year, KPMG will look to focus on its pipeline of procurement engagement and projects that will drive the business forward and make sure it has the right teams with the right people in place with the right skill sets and experience to succeed. For Martin, this is ultimately the one true key to success both today, and in the future. “This program would have achieved nothing without putting people in who are committed and who understand and are excited about it,” he says. “Without that, we would never have gotten to where we are. In reality, we’re now shifting up a gear and those people are evolving, alongside us, providing new people to further expand our capability to get to where we want to go.”

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