Procurement is ready for disruption: Q&A with Chris Soriano, Head of IT Procurement at Epic Games
With the incredible success of Fortnite and the expansion that the video game industry saw through COVID, the company is growing tenfold in both people and ROI.
Starting in the finance world, Chris has over 20 years of procurement experience across industries including banking, insurance, travel, tech, and enterprise software.
What better way to tease out his expertise and philosophy than an exclusive Q&A on procurement innovation, team building, and more. Check it out below.
1. What is your philosophy on procurement?
If there's one philosophy that I've had since day one of my career in procurement, it’s getting to know the business as best as you possibly can.
Outside of that, to me, procurement is about listening and relationship building. Building great relationships with stakeholders is critical. The key is to understand what's going on in their business that you're supporting.
On a separate note, it’s important to think about what a calendar year looks like for a procurement department or leader. There are definitely peaks and valleys. Historically, I've seen a lot of activity in Q3 and Q4 and not as much in the first two quarters of a calendar year.
I always ask myself: How do we smooth those months out? How do we get a more in-depth analysis of all of the contracts we have and make adjustments to balance out the workload for the team? How do I get a company like Vendr to assist me with this?
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2. You mentioned procurement is ready for disruption. What do you think needs to change?
To me, procurement hasn't really changed a whole lot. Sales, on the other hand, has changed a ton.
Data is much more readily available to procurement professionals now. There used to be this giant “hush-hush” around pricing, where you had to rely on personal experience if you dealt with a supplier at a past company.
While still keeping the confidentiality of individual contracts, pricing data points are more accessible now. The question today is: How do you use those data points and what are the software tools out there that can ingest them?
For example, if you take a contract from any of your large software providers, it's the same one that they issue to hundreds, if not thousands of customers. I think there’s a better way to ingest some of these data points, especially for services like Vendr who can then help companies like Epic Games determine if we’re getting competitive pricing.
The speed at which you find out if you're getting competitive pricing will become faster and more automated. Data might be much more readily available, but it’s about how it can be interpreted in a consumable manner so that procurement professionals can use it efficiently. I think that’s something that will change quite a bit over the next few years.
3. What role does curiosity play in procurement and the world of SaaS?
Curiosity is something that I look for when I make new hires. I think about how naturally curious people are, not just about their role, but the people they support.
For example, sales tools are always being developed. Since I worked for a company that sold software, I ended up buying a lot of technology that supported salespeople to close deals and do their jobs more efficiently.
I'm always curious about how I’m being sold to and I think that the more curious you are about what sales practices are maybe at odds with procurement, it gives you the ability to be more thoughtful about your company’s procurement strategy overall.
4. When does it make sense to bring in procurement?
I wish I had a good answer. From my experience at two companies where I was the first procurement hire, they were both just under a thousand employees or so when I joined.
Being in Seattle, there's a really active startup community here. I've gotten to know a lot of finance leaders who are in the process of building out their teams. Many of them still haven't really thought about procurement until at least 500 employees.
Living under the finance umbrella, there are lots of other areas to build-out prior to procurement. I think that once a procurement person pays for themselves through a few deals, that’s when it’s the right time.
It’s also important to understand the kind of work this person is taking off of others’ plates. Maybe they aren’t saving a ton of money at first, but they’re freeing up the time of others in the business. There’s value in that as well.
Generally, I’ve seen companies bring in procurement between 500 to 1,000 employees. At the end of the day, it depends on the level of seniority of the hire. If you’re bringing on a senior leader, do you want them focused on contract negotiations, the strategy behind the steps involved in the buying process, delivering tech to the business, etc.?
5. How do you suggest companies build out procurement, from startup to Fortune 500?
The area where I have the most experience is building a procurement department from scratch. I’ve worked for two companies where I was the first procurement professional hired. I was able to see them grow from thousand-person companies all the way through acquisition by SAP.
The reality is, procurement exists from the very beginning of a company. It’s the founder who’s making the purchasing decisions at first and then maybe they bring on someone in finance to negotiate deals on their own. So, the idea of procurement has been there since day one. The question is: When do companies hire somebody whose job it is to run the procurement department?
There are a couple of ways to go about it. You can hire a more junior procurement person to fill a need and let them grow within the company. Or you can hire senior management and look for a more seasoned procurement professional to then build out their own team.
I've seen it done both ways. I believe that the first person, regardless of which path the company takes, is somebody who should be focused on understanding the business and building relationships first and foremost.
7. What has the last year been like moving fast enough to keep up with Epic Games’ massive growth?
It's something unlike anything I've ever experienced. Having been in enterprise software, there's nice predictability to growth. You target maybe 20 to 30% year-over-year. You know how many people you'll need to hire.
With the space that Epic Games is in and the amazing success that Fortnite has had, it’s completely different.
We were one of the companies that benefited from people being home during the pandemic, leading to this spike in growth. This experience has adjusted how I view procurement.
There's always a balance of speed of execution and making sure you have competitive deals.
Epic certainly cares a lot about competitive deals, but the speed of execution is sometimes just as, if not more important at times.
8. How has the influx in SaaS impacted procurement?
I think it's more than the past year. When I worked for Concur Technologies in 2016, they were very successful in moving from on-prem to a SaaS solution. I would say that’s almost every deal today.
The shift over the last few years has forced procurement professionals to become better analysts. Historically, the biggest challenge I run into is shelfware and buying more than we really need. Now, procurement teams need to outline business demand plans to make sure they’re buying based on what will actually be used.
Imagine you get a deal for 75% off of the list price. You know you’re getting the best per-unit price, but let's say you’re also purchasing double the amount of licenses you need. You won’t deploy them throughout the entire year of that contract, so, did you really get a good deal?
Overall, I would say that the biggest impact the rise in SaaS has had is that it’s forced us to become better data analysts in every negotiation.
9. What do you think the procurement industry will look like 5-10 years from now?
I think it's really about what Sales will look like 5-10 years from now.
Procurement is very much driven by how Sales evolves. Procurement didn't come up with SaaS, right? So, the question really is how quickly does Procurement adapt to what Sales is doing?
The procurement industry will be a mirror of what Sales is doing, but a couple of years behind.