Not too long ago, I had the opportunity to research the supply management challenges and strategies of more than 100 chief procurement officers (CPOs). The study uncovered what you would expect: CPOs planned to increase their strategic role in the organization by hiring (and retaining) better talent, capitalizing on supply opportunities in emerging markets, increasing the volume and types of spend under management, and, of course, increasing their teams use of technology.

Yet, to me, the most important finding was how CPOs from the top-performing companies planned to use technology. They recognized that the real value in technology would not come from making existing processes more efficient. Instead, creating a high-performance supply management organization will require technology that enables new processes and guided analytical scenarios that were previously considered impossible due to fragmented procedures, insufficient communications and data access, and inconsistent skills.

In a recent post over on his blog Software Safari, my former colleague and a leading technology strategist Brian Sommer sums this phenomenon up this way:

“Applications have been all about (accounting) transaction processing. So much so, that almost every screen in every application product out there is an input form waiting for someone to enter data. Yet, what businesses need are systems that advise their ever scarcer mid-management and other workers as to what they should input.”

While your first impulse may be to shoot off angry hate spam to Brian, take a moment to reflect. Most organizations — maybe even yours — are loaded with buyers that for decades have been processing purchase requests and responding to hot lists and parts shortages. The assumption that software-fueled efficiencies will suddenly turn transform these folks into strategic uber-buyers is wishful thinking, at best.

This point was corroborated earlier this year when a U.K. procurement director I was visiting told me: “Many of our [supply management] team have been doing purchasing a certain way for decades. They are uncomfortable with adopting new processes and systems.”

What Brian argues (and the CPOs I spoke with concurred) is that we have not yet begun to tap the true value potential supply management software (or, any enterprise business application, for that matter). “Systems today don’t help people make the decisions they struggle with before they enter data on a screen,” argues Brian. “That’s where the innovation is flat-out missing.”

With the necessary electronic transaction management, data mapping and cleansing, and process automation out of the way, the next-generation of software applications will begin to guide buyers — regardless of their skill set — toward the right sourcing and supplier management decisions. In his post, Brian offers a glimpse of possible decision-support guided purchasing scenarios that future purchasing systems should be able to support, such as:

• Whether we should even be sourcing from this country at all?
• What percentage of our spend should we allocate to this supplier, this country, this container port, this shipper, etc.? Why?
• What’s the probability of our currency sinking relative to that of the supplier? Should we hedge, forward buy, etc.?

This concept is not so far fetched. Some of these decisions are already supported through sourcing optimization. And third-party information services are beginning to deliver commodity, market, and supplier information within context of widely used sourcing and supplier management systems. (In fact, I foreshadowed the emergence of such “guided sourcing” methods in my predictions for the future of sourcing innovation last year.)

True innovation will come with technology that can inform buyers (and other executives) of the right business decisions. Supply management organizations (and solution providers) that can leverage technology to help any buyer make optimal decisions and actions will have the true competitive advantage of consistent top performance.