Alright. Looks like we are getting started here. I'm sure people will begin trickling in. Dorinda, you know, thank you so much for being here.
It's it's great to be here. I know we've talked about this for a while, and I'm glad we're finally making it happen.
You know, and speaking of a while, you and I, we met at a conference a couple years ago. Randomly, if I recall correctly, randomly sat at the same table, and I think it was over lunch or something like, started chatting. And I I think I was talking about Tropic, and you mentioned, oh, you were a Tropic customer. Yep. At the time, you were vice president, of procurement at Achieve. But now you've started your own fractional procurement business, which is really cool, but means you probably get to work with several companies on their procurement journeys. But you're probably helping many of them get started.
Yes. Yes. Not not necessarily started as having to educate them about what procurement is, but starting to figure out how layering procurement into their company is the right thing to do. I find that I I'd have to meet them where they are in their journey. And, you know, usually, that's the beginning of a financial maturation process where they're like, well, we've got all this spend. We're not controlling it. But there's a lot of different entry points when, you know, I'm working with a company.
Do you do you ever get the response, you know, hey. We're we're too small for procurement or or, hey. We don't really wanna grow procurement or, hey. We're not even ready for procurement at all. Have you have you ever heard that before?
You know, I've heard versions of that. But, usually, by the time I'm in the conversation, they know they need some kind of procurement, and it's just figuring out what the right entry point is for their organization.
It could be they have a large category of spend they know they need to do an RFP for. They could say, we just we I had one CTO say, I just don't know what my engineers are spending money on, and I need somebody to come in and assess it. So, again, it's just really meeting the organization where they are in their their spending control needs.
So if you're talking about meeting them where they are, what are some of these, like, signs or or or flags to maybe help them kinda see that, hey. It's worth maybe it's worth investing here.
Yep. You know, a lot of, times, it's really about what are we spending our money on. We don't have control of, you know, maybe we don't have strong budgeting processes, and so we'll we'll come in and help them get a, you know, an idea of where their spend is going. There can be a lot of, interviewing that goes on to say, hey. What is your, you know, portfolio of suppliers that you use?
One CTO had fragmented engineering teams, and they all had their little version of what, you know, they wanted to do to manage the engineering function. They had their own, outsource engineering teams. And so we went in and looked at all of this fragmented spend and then found areas where we could bring it together. And that was part of a larger objective he had, which was he wanted to take this fragmented engineering organization and try to, you know, roll it into one more cohesive engineering org. So that was, you know, that was a project where we stepped in and just helped get visibility into what the spend was. You know, we'd got some data from AP to figure out where all the the spend was getting coded to that organization, and then we started looking at what were the suppliers affiliated with that spend.
I always tell people, like, visibility, that is the foundational layer every single time. Like, that is that is absolutely where you start. And sometimes, like, oh, wow. This is really cool.
And sometimes, like, holy crap. Like, there's a lot there that I didn't quite realize or I didn't quite know. I shared this with you yesterday, Dorinda, but, you know, there was a few years ago, I, you know, was was wrapping up a role. I'd been in a company for a long time and and kinda wanted something new, something different.
And and, you know, thought I had a really good resume. I shared this with you. I I was applying to places, and and I was kinda surprised I wasn't hearing back. Okay?
And so then I kinda took on a different approach. I I started meeting with CIOs, CFOs, other people who didn't and and whether they had an existing function or or didn't, and just kind of, like, digging in there. And interestingly enough, once again, my my my kind of strategy or move was under NDA to start talking about, like, hey. What does your visibility look like?
You know? What what kind of are you seeing? And then kinda showing them. Right? Showing them, you know, very quickly, you can you can pull that from I don't know how you do it, but you can pull it from, like, the ERP system or look at their credit card spend and, you know, very quickly show them, hey.
Here's some duplicate spends. Here's some shadow IT. Here's some, you know, let's look at unused licenses or, wow, this is a net zero payment term or, you know, you know, looks like, you know, how is the supplier chosen? And that was really interesting where it felt like these business leaders had these moments.
And then interestingly enough, kinda rounding up the story, the the job offers I got a couple job offers, and the ones I got were companies that didn't even think that they were gonna hire somebody because they either exist had an existing function or didn't have a function at all. And yet the visibility was like, oh my gosh. There is opportunity here. And, yeah, come come come work with us and and come help us, like, figure this out.
Does that does that resonate with you at all?
Yeah. I mean, the moment you get start to get that spend cube together and you're you see how much you spend with certain suppliers, there is just this realization that I had no idea this is, you know, what we were doing. And I think that surprises me the most when I go into organizations is how little visibility the organization has to their spend and their contract of, obligations.
And so there is just, like you said, a lot of moments when you start, you know, cracking that open and seeing what's there.
Yeah. And and sometimes I know we speak our own language.
SpendCube. Maybe maybe, like, help people understand. Is this, like, a magical device that we you know, maybe talk talk to me about SpendCube for a second. Yeah.
You can buy it on Amazon. No.
No. Basically, it's when you get your spend data. So that can come, you know, from your accounts payable systems, your credit card statements. It can also come from your look analyzing your employee expense reports too.
And you start to put all of that into one let's just call it a spreadsheet for now. You could do it put it into data analytics too. But you you pretty much get all of those suppliers into the same format, if you will. So then you can start, you know, running, different analysis on, you know, how much per, supplier, if you have categories in there, how much for software, how much of it is is addressable spend.
So if, you know, you have rent in there, that's not really addressable spend until you're at least negotiation time. So you kind of exclude that. So that's just the cube means that you can look at the data from multiple angles and start to do analysis that way.
K. Super, super helpful.
And and it's interesting. You know? Like, I I would always tell people that, you know, for me, hey. Let's look at where your spend is going, and then let's try to go match up those contracts, you know, and go find those contracts.
And it's funny because sometimes they might say something like, oh, well, not everything has a contract. Like, well, actually, it probably does. You know? I mean, you know, technically, you go to everything as a contract.
This is where are those contracts? And it becomes a little bit of a game at that point to go find those contracts. And then, you know, that's where you can you know, one of the metrics we actually started, you know, with was like, hey. How much how much visibility do we have?
You know? I I know there's the term spend under management. You know? I I don't know if there's other, you know, ways that you've described it, but, like so we'll take here's how much spend that we can see, but how much do we actually know the details for.
Right? Because sometimes just imagine your own credit card. Sometimes you at the end of the month, you'll hear your credit card sent. You're like, now what what is the name of that company, and why did I spend fifty bucks there?
Right? And it takes a little bit of investigative work. Same thing. Like, but then once you start to get those contracts, match it up, I like to have simple metadata that I can start tracking.
And then I could tell myself, okay. This is the percentage of spend that I can now start proactively manage. But because I have visibility, is is there a good is there a good metric that comes to mind for you for for, I don't know, visibility?
Well, to to your point, spend under management and addressable spend, those are pretty common areas that we look at. You know, as you're gaining control of these contracts, you can also look for your rogue spend going down. So rogue spend, I classify as surprises that come up. People used a credit card to buy something without getting, you know, buy in maybe from their management.
Something auto renews, and it wasn't intending to auto renew. So I think if you track those rogue spend events, then if reduction in those can also be something that gets managed as progress, with the function.
I like that, reduction of rogue spend events. What what what's your baseline for something like that?
Well, it it varies so much depending on how large the company is, but, you know, you just you have to start with in that analyzing what was unexpected spend this year. And maybe that's a number of events that's, maybe you have a person who's commonly spending roguely, and, you you know, you educate that person and then they their behavior changes. I think that's another key thing too is looking for behavioral changes in the organization.
Part of procurement is, you know, helping the or people in the organization understand that they are the stewards of the money in the company. Procurement may help with some structures and, you know, ways to standardize how we spend money. But, ultimately, it's also teaching, you know, people like this is you know, might seem like a, you know, funny money because it's got a lot of zeros on the end more than we do with that home. But, you know, just trying to make them understand that it's, you know, their responsibility and duty to be good stewards as well.
Yeah. It's always funny. I remember, you know, sometimes we we become a little bit, immune, you know, to some degree. It's like, oh, this is only twenty five thousand dollars.
You know? It's like, wait a second. Twenty five thousand dollars is still a lot of money. You know?
It it's always interesting. What about some other, you know, metrics as you're kind of, you know, helping companies, you know, wrap their from a fractional procurement perspective, but also from a full time? What are some of your, you know, favorite metrics to to track? Obviously, there's a lot of focus on savings and and especially in this market.
Yeah. That's that's important. Right? I mean, the ability to have a financial impact, on on the financial health of a company is important. But I I almost see that as, like I don't wanna say byproduct, but in some degree, it is a byproduct of other results I'm I'm kind of working on. But but yeah. So talk to me about, like, you know, some key metrics that you that you like to track.
Well, when you're first starting to implement a procurement discipline, savings is, you know, there's so much low hanging fruit. You can't not look at savings.
Okay. And then that that progress of savings declines over time because you get so much in the first, you know, one to three years.
I think another metric that's interesting, and it depends really on the maturity of the organization and if they use purchase orders. But, you know, how much spend is going through the purchase order process and what is you know, if if something's identified as a category that needs to go on a purchase order, how often is it actually going there?
If people are spending outside of whatever, you know, processes are set up, then you can measure that kind of spend as well where you're you're teaching people again to go through the correct, processes and channels to do spend.
Because, you know, when there's a purchase order, there's an approval process, a a preapproval process. When there's no PO, it's postapproval with an invoice, which means you've spent money and you you're now figuring out that you spent it. So I think, you know, that adherence to whatever processes are put in place are good too.
Something that's not as easy to measure, and I this was always so interesting to me, is when you're looking at these contracts, you have to find an owner of the contract. That way, you know that that contract is getting managed well. I had and I actually use this as a case study in leadership course that I teach.
We had a a situation once where somebody who was in charge of the it was like a web monitoring tool for the website, and that person left the company.
Well, the the account was in their name, and they used to, like, download the invoices and send them to AP, and then AP would pay them. And so when they left company, there was this gap where nobody was doing that anymore. And so we didn't know it, but for six months, invoices were coming into this person's inbox, not getting paid. And one day, the system just shut down.
And it took us like, we're we're scrambling to figure out who is, you know, our our account manager for the software side and then what had happened. And, you know, there's a lot of finger pointing, but what we realized was that you had to have you know, eventually, that stuff you wanna bring into IT to manage, ultimately.
But, you know, you have to really know who the owners of contracts are. So if they leave the company, then you can assign a new owner to that, and you have somebody who's responsible for it. So, you know, these are kind of things that people think procurement, oh, well, you know, we're order takers or we're just dogs for savings. But there's actually this, you know, strategic element that we bring to bear as well, whereas we're like, no. We have to make sure we have visibility into a lot of aspects of our spend, not just, you know, the checks we write, but, you know, making sure those contracts are well managed and, visible within the company.
Yeah. I've I've definitely heard the term order takers. I don't know that I've heard dogs for savings. That's a that's a new one for me.
But, you know, I I I definitely understand, you know, what what the the point of that is. And and, you know, one one point that came to mind for me as you were talking, you know, metric that measures how much of it is flowing through the the design process, I think, is awesome because outside of that is certainly rogue spend. But one misconception or occasional misconception I see is people think even procurement leaders think that if it flows through the process, we need to touch all of it. And and my belief is, like, procurement, should help the company design the process, define design the workflows, but some of it can flow through and and still be very well compliant without our involvement at all.
Our involvement was designing the process that it flowed through. But if we have to touch everything, a, that's not sustainable. B, sometimes all it does is kinda slow things down. We're not gonna add value.
But there are certain things that we absolutely should. Yeah. Is that is that what do you think? Am I am I am I offending you with that, kind of thinking?
No. No. No. No. I think it's actually, a a path is that when you first start to do it, you have to be a little bit more hands on and touching stuff until you figure out the lay of the land.
That's I I I like that. Yeah.
Yeah. But then if you wanna be efficient and, you know, be speedy for the business, then you can't touch everything. And so you have to then create those thresholds. Like, we don't look at contracts under twenty five k or, you know, there's a lot of ways that you can look at that. But I I think at first, you have to take the control and understand what it is and then get alignment with upper leadership about what do we care about, what's material in our world. And then you can kind of back off and empower the, end user to, you know, do more of their deals with certain thresholds in place.
Yeah. And and one thing, yeah, I I like to look at it from multiple different angles. Like, spend threshold potentially could be one, you know, category potentially could be another, etcetera.
You made me think about of another story, as you were talking. And, you know you know, the the whole premise of, you know, our our conversation today is is around this idea of, like, you know, if you're doing if you're spending money, you're doing procurement. Right? Now are you doing it well?
Are you doing it poorly? Could you do it better? You know, that's that's where you know? But it's not it's not a issue of do you need procurement or not.
Like, you're you're you're doing procurement you're doing procurement already. Any company that's spending money is is certainly, doing procurement. Right? So I I love the the title you chose there.
But the the story is is about a year ago, not not quite. It's about ten months ago, and a recruiter reached out to me and said, hey. We have this opportunity, public company.
They've never had a dedicated procurement hire.
And on the one hand, like, my initial my initial, like, reaction was, like, wow. Like, really? Like and and this particular company had, you know, had some really good growth, and sometimes growth hides, covers up a lot. Does that make sense?
You know, you, I'm not saying you shouldn't have brought in a procurement function earlier, but, I can understand why maybe the focus was elsewhere. Maybe there just wasn't a need to. If you're bringing in, you know, a lot of money, like, certainly, you could be spending that more money wisely, but but maybe you don't feel the pain as much. Right?
But anyway, so, you know, I wasn't I wasn't, you know, I I have a job, and I'm gainfully employed, and I like my position. But, like, I said, hey. Well, let's let's talk about, like, who you're gonna hire because because, a, that's really important. But help me understand kinda why you are why you are exploring this now.
Okay? And what became readily apparent to me is all of a sudden growth had slowed down. Mhmm. And all of those pain points, the rogue spend, the duplicate of IT, like, everything you could possibly think of, like, missed contracts, you know, no purchase orders, you know, invoices not getting paid.
Like, it was it was certainly there to some degree.
And in my mind, the the vision that came to me was, like, this massive, you know, ship that has a lot of momentum, and now you need to, like, pivot that. And that's going to take a lot of effort. Now I I think this the right app you know, for the right person, this would be a phenomenal opportunity, but it made me think, like, how much more impactful would it have been if this company had started their journey, you know, years before? Does that make sense?
Like, now you have to undo so much. You have to you know, the change management aspect of it from, you know, tools, people, processes. It was kinda mind boggling. And, but also just the missed opportunity.
I don't know. Just just a a story I thought I I I certainly thought I would share. But wondering, like, from a change management perspective as you work with these companies, you know, what is that like, if you're talking to a leader like this, what is that push? Like, how do you help convince them that, hey. Earlier is probably a good thing.
You know, you just have to find examples that relate to their business. So I try to figure out what are the pain points that at least got us having the conversation. And then from there, I can, you know, kind of probe with some other areas that I know are likely pain points. You know, maybe they've had some auto renewals happen.
Yep. You know, you bring up a really good point, though, is when money is flowing in, people don't care. They're just like, I'm signing this. I'm signing this.
You get those golden teams. They're like, oh, I have, so and so's approval. I'm just you know, I signed this contract. I'm signing a three year agreement and whatever.
But when that revenue starts to go down and then there's this kind of panic about what contracts are we obligated to pay, what can we get out of, what can we reduce, that's where, you know, unfortunately, that's a really painful cycle that a company will go through. And I've I've been through that cycle with a few companies where, you know, the revenues just aren't coming in and, you know, they have to adjust the organization to still remain profitable.
And, you know, of course, we know of layoffs. Those are, you know, common way to control, the money going, spend being spent. But the you know, that looking at contracts, what can we downsize? What can we cancel? Is this project gonna go forward?
I once had this, person who was just adamant that we were gonna sign a three year contract for this product he was working on and push push push sign a three year agreement.
And we ended up not we ended up canceling that product within the company within a year.
And we had said, we don't recommend you sign a three year because you don't know if this is a viable product yet. No. It's going to work. It's going to work.
And then we were in this obligation. We had to spend two hundred thousand more dollars on that, you know, software. We couldn't get out of it. And, you know, that was a really painful lesson of, you know, we gotta make sure that we're spending wisely and, you know, not overinvesting in things that haven't proven to be viable products yet.
So I, you know, I think, but I agree with you.
To me, it's really surprising to, you know, encounter an organization that does not have dedicated procurement. Now they might have decentralized procurement in different, you know, groups that just manage their own spend. But, you know, getting that centralized procurement function is usually a really good control point, when the company is trying to, you know, gain control of their financial, spend and controls.
Yeah. And you started off that, you know, example, which is great, by the way, of of doing something that resonates with them. Like, yes, like, that that example is really good. And I'm sure in fact, I was just on the phone with the finance leader yesterday, and we're having a very similar conversation. He's like, yeah. We we definitely had that. We definitely had those situations.
But I think in his mind, what was missing a little bit was, like, the impact that it potentially could have. I think he saw it more as, like, I don't know if a stick is the right word of, like, oh, like, here's what here's how everything bad could happen if you don't do it. Does that make sense? But I I I kinda said, okay. Let's put this in financial terms for you. So for example, that two hundred thousand dollars, let's say that you actually have five of those, you know, in any given year or, you know and so now you have a million dollars. Okay?
What would you do with an extra million dollars? Right? And then, like, what is the impact? And for this particular business, it was massive. Okay? So, for example, like, you you you change that calculation into, like, what's the impact on gross margin?
Right. Or you change that calculation into, hey. How many headcounts potentially could you hire or save or not reduce type of a thing? And what what would the impact be of those potentially roles?
Like, if you were to go hire five people, what impact could that have on the engineering, on the sales? And you and all of a sudden, it's like, oh my gosh. Like, it's not just about saving a hundred thousand dollars or a million dollars or whatever it is. It's like the the carrot in this is that it can help the business, obviously, be more profitable and help the business grow.
And and I could see, like, the wheels turn, and that's where it got to be really excited. But it was because, you know, yes, they feel the pain, but understand helping them understand, like, the prolific nature of it and then what the impact could be was a big unlock for, I think, this particular finance leader.
Yeah. It's real business value.
It's money. It can be applied to other things. It can be saved. It can, to your point, increase margin when you might desperately need margins to be high. Maybe you're going out for a round of financing, and you need to show strong margins.
But, yeah, that's that's really it. It's the the value that partnering with procurement can bring to the organization. It's it's not all these things add up, but, you know, processes and controls add up to be a, you know, cumulative, beneficial work, function for the company. But it's these you know, when you start to get into if we didn't lose that money, what could we have done with it?
And so let's make sure that we're making wise decisions. I call it intentional spending, you know, whereas we have rogue spending, but intentional spending is really what procurement is and bringing, you know, thoughtfulness to what money is being spent on, pushing back when we don't think it's the right thing even though we're not the ones to say this is what not what we should invest in or not. But here are some controls that you might consider putting into this contract. You know, maybe you have a a termination clause that you put in and that you can exit at each one year period.
You know, there's just a lot of tricks of the trade that I think procurement brings to the table to help build that value for the business.
Yeah.
I I I love that you say that one more time. Intentional spending. Is that is that the is that the is that the coin term? I I honestly don't know that I've heard that before, but I actually really like it and think I'm gonna start I don't know if I if you have it trademarked or anything, but I definitely think I'm gonna start to to use that word.
Send me some Venmo. No.
There's a there's a there's a there's a q and a, by the way.
You know, I don't know if you saw it or not. But, you know, the companies, you know, they're under pressure, you know, they involve first. And then and then I don't know if it becomes, like, a catalyst for discovering that they they need to involve procurement. Like, maybe kinda share your view on that.
Yeah. I I think the what's I also love about fractional procurement is that you can come in and help them figure out what they need. And that's not necessarily hiring, you know, me as a full time person or, you know, any staff that we bring in to work on a project. It's really, helping the business understand what they need and helping them find a path to that. It could be that they just need one procurement person. They can have they can survive with a lone wolf team, you know, for a while, but they need somebody there to represent procurement. It could be that they're you know, they need maybe some technology sourcing.
They could need somebody to just really get in and understand the contracts. And then from once all the contracts are understood, then you decide what kind of an organization you need to support the spend. They may not even know what their spend is. I mean, that's that's usually a big indicator too, and you can use that, you know, however much you have in addressable spend can also be, you know, translated into how large of a team that you need to manage that spend.
Yeah. There's, I mean, there's so many ways, but, yeah, I think having, you know, consulting or advising at the beginning is a way for a company to begin to understand their procurement need without committing to building a team. You could build a team that's not the right team for your company. Right? Just, oh, I need a procurement person. Let me go hire that. So I I just think it gives a lot more informed decision making to first, you know, analyze what the needs of the company are and then start to, you know, craft what does that solution look like for them.
Yeah. I what a great answer. What a great answer. Because, you know, go back to that story where you had that public company who'd never invested before. Well, they were at probably at the point where they needed to hire, basically, a full team because it, you know, it just set but, like, it it you don't have to go from zero to sixty, honestly. Like, you don't have to go from having no one to even having a full time person.
I I really I I love fractional procurement for that reason because they can get someone with your experience, with their with your skill level, and and you're not dedicated to that full time. Like, part of the reason I joined Tropic is, you know, number one, we we do exactly what you're talking about, increasing visibility, you know, from a tool, getting it all in there, organizing the data, putting a a AI on top of it. Right? And then we have some services that we can complement, which can help companies. So you you know, everyone every company's journey is gonna start the same, but this idea that you have you know, if companies are going from having absolutely nothing to hiring a person, there's probably a big step there that potentially or a couple steps that could potentially could be there. So that way, it doesn't go from spending zero dollars to spending potentially five hundred thousand dollars on a person or two people and a tool, etcetera.
Really, really love what you're doing, Dorinda, and really good answer there.
And and I don't think the answer is necessarily a big four consultancy either because, like so, look. You know, I I know we're coming up on on time, Dorinda. This has been really, really phenomenal. I guess, like, if if we're just kinda closing this out, we've talked a lot today.
It's been great.
But what are what are what's a what's a good takeaway you have for for our listeners?
Yeah. So, I mean, if if a listener is at the point where they're like, I think I need procurement, but I don't know what I need.
Of course, I have to talk to you. But, also, you know, the first thing to do is get that visibility into your spend. Go to your AP department.
Just ask them to pull all the spend reports they can and start working on developing that spend cube to get visibility into the spend. I'd say that is the most critical first step that you can take.
The next step would be to find the contracts associated with that spend and make sure you have a manager of that contract. But once you, you know, you you figure out the spend and you understand your contractual obligations, then I think you can, you know, start to put together a plan forward, figuring out what is the highest priority thing to address.
But, yeah, that that's my biggest recommendation. Step one is get get that spend visibility happening.
And the visibility is the foundation. If you're flying blind, it's gonna be really tough. It in procurement too. You know?
Absolutely.
Dorinda, this has been awesome. You know? If if you don't know Dorinda, you absolutely should connect with her. She is I I remember our conversation two years ago was, you know, very insightful for me, and we still touch base, you know, from time to time, which which is which is phenomenal. Love what you're doing, you know, in the space, you know, helping companies kinda continue to, you know, see the true value that brings, and and just thank you for sharing your thoughts today.
Thanks for having me, Michael. This is a lot of fun, and it was a great conversation to have.
K. Thanks, everyone.
Bye.
Bye.
