Category Archives: Market Intelligence

Future of Procurement 2014 (Consolidated Links)

If Software Has to Embed Games To Make You Want To Use It …

Then the software isn’t worth using in the first place!

When Pierre mentioned a YouTube video of a “first-person shooter” (FPS) game for SAP PO (Purchase Order) approvers to blow away those pesky POs in his recent piece on Gamification in Procurement [Looking Beyond the Technology] (Plus content on Spend Matters), I thought he was being satirical! But he was being factual. And it’s pathetic that this concept exists.

While I agree that gamification has potential as a learning tool, the fact that you have to consider putting games inside your software to get people to use it says, no, screams something — YOUR SOFTWARE SUCKS and no one should be using it in the first place when there are dozens of other options.

In other words, when Pierre said that this is where gamification really runs the risk of going off the rails and resembling the proverbial hammer looking for the nail I not only have to agree, but take it one step further and emphatically state that this is where gamification goes completely off the rails.

Supply Management technology should help you get your job done efficiently and effectively. If it’s done right, and accomplishes this goal, you will want to use it because you’re overworked, underpaid, and will do whatever it takes to get the job done and get home before it’s time to go to bed and start the cycle all over again. Because, while you like games, you’d rather go home and play a tabletop Euro-game with your family where you not only get to challenge your problem solving skills and teach the next generation the basics of supply and demand and resource management, but actually enjoy some time with your family.

So, while Pierre is right in that games, properly applied, can be powerful learning tools (and why SI ran a whole series on the Board Gamer’s Guide to Supply Management), they are educational and modelling tools that need to be used appropriately — not misused to mask crappy software. So, when it comes to games, apply the theory (and, yes, game theory is great), and leave the FPS to the war-gamers.

Why Are We Going to Spend Thirty Posts Exposing Past Procurement “Trends”?

Is it because the doctor is just plain tired of 2nd rate analysts and consultants selling last century’s solutions instead of accepting that we are in the 14th year of the 21st century?

Is it because without a solid understanding of where Procurement comes from, where it is, and where it needs to be, you’ll never get to where you need to go?

Or is it because without this understanding, you’ll never select the right technology and continue to be among those organizations that select those procurement tools that collectively cost organizations in North America 1.5 Billion per year and waste more than 32 Million man-hours because the Procurement system fails to increase their productivity (and, in some cases, because the system is not aligned with organizational processes and needs, actually decreases productivity and hinders savings identification and realization)?

It’s a combination of all three.

Modern Supply Management tools are supposed to save the organization money, not cost it money, but as The Topline Strategy group discovered (as summarized in this article over on S&DC Exec (“only one quarter of procurement professionals believe their procurement system makes them much more productive”) and MarketWatch (“survey finds inefficient procurement systems cost north american businesses 15 billion annually”), only 28% (or one-quarter) of sourcing an procurement professionals believe that their procurement systems make them productive.

This is an abysmal statistic in an industry that spent over 1.4 Billion on Enterprise Software in 2013, software that is supposed to increase efficiency and, in the case of Supply Management, identify savings and add value to the process.

Why is the situation so bad?

The article gives a few hints, including:

  • convoluted user interfaces,
  • lack of critical features,
  • poor integration or implementation (with enterprise systems & IT infrastructure), and
  • lack of regular, often necessary, updates

But, in many cases, the real reason is lack of fit and key functionality.

UI, proper implementation, good integration, and regular updates are important, but the system has to fit the workflow and support organizational processes. Sometimes the organization’s processes will need to be updated, but there is a difference between updating to a more appropriate process, and changing to a completely different process unsuitable to the organization’s business just to force fit a square system into a round architectural hole.

And there’s no way you can select the right fit if you don’t know what the right process should be for your organization. And you can’t know the right process until you know what that process has to support, why, and how the process will need to evolve over time.

And that is fundamentally why we have to spend thirty posts diving into past procurement “trends” so you understand what the real requirements are and what is just hot air coming out of the mouth of another slick talking speaker (or vanishing ink from their specially made pens). It will take time, especially since we will have to take a few breaks to maintain our sanity, but we have to do it.

Don’t you agree, LOLCat?

Can U Wake Me When Its Over.

Yes, LOLCat, we’ll wake you when itz over. We don’t want to drive you to drink too! (Futurists have already driven this LOLCat to drink!)

An Analysis of eSourcing’s Fast Growth and Predictions for 2015 & Beyond


Today’s guest post is by Jill Ivancich, COO of MM4, Xchanging’s procurement technology solution. Xchanging is a business process, procurement and technology services provider. To learn more, visit www.mm4.com or www.xchanging.com.

In a recent Market Overview report by Forrester Research, Vice President and Principal Analyst Andrew Bartels reported that the ePurchasing software market will see 10% growth in 2014. Additionally, Forrester and Bartels predict double-digit growth for Software-as-a-Service (SaaS)-based eProcurement solutions, under which eSourcing falls. This is a promising outlook for a market that saw global revenue growth of just 5.9% in 2012, according to research reports.

Big Demand, Right Now

The report compelled me to consider what’s fueling the demand now for eSourcing. Factors like its ability to provide risk reduction, transparency and expedited savings have been big drivers for growth based on my recent experience and customer feedback, along with the intelligence it provides. The continued need to drive savings is causing companies to review their entire sourcing process and bring the best in class tools to help execute. We’ve seen eSourcing become a trusted tool for the everyday buyer — one that combines components like company intelligence, market insights, and user and supplier support. These assets ensure that clients have the intelligence needed to drive real results quickly.

The bigger picture is this: the world of procurement has reached a peak in complexity. Exchange rates have never been more volatile, sourcing destinations are experiencing huge shifts as production and services move away from China and India to new and frontier markets, environmental disasters are massively impacting supply, and trading conditions and regulations are constantly changing. In response, some of the biggest companies in the world are turning to cloud-native, next-gen eSourcing solutions to empower procurement teams to know not just how to source, but also what to source, when to source and from whom to source.

What’s Needed for Increased Adoption

The Hackett Group reports that organizations that leverage the most out of technology see 27% overall better performance within their procurement operations. And that’s exactly where more procurement teams will be investing in the coming years. But right now, we’re seeing interest levels in eSourcing peaking, not necessarily adoption. There’s still progress to be made before we reach critical mass, and that will require addressing the specific pain-points of CPOs and procurement teams, and the ability to transform business as usual with an impactful suite of diverse tools that are intuitive and easy to implement.

For eSourcing adoption to continue on its current growth trajectory, addressing the issue of support and knowledge is imperative. Supplier risk will be critical, especially as new, low-cost markets to source from are being considered more heavily. Integration of third-party information sources, so customer’s workflow and intelligence levels are optimized, will also be key.

To address the challenge of market volatility, cost modeling modules will become more important as part of eSourcing solutions. Identifying key metrics that influence the company, such as exchange rates from current or potential trade regions and commodity prices for key inputs, will be increasingly critical. Focusing on trends and forecasts rather than spot data, which often has little or no direct value in eSourcing, can help to address this challenge.

In terms of competition within the market, looking ahead, acquisitions will lead. However, the acquired won’t necessarily be gobbled up. The technology companies with the right infrastructure in place can still thrive, and my business, MM4, is one example.

Closing Remarks

New technology and service innovation has drastically expanded the applicability of eSourcing, and it will continue to do so for several years to come. As leveraging technology effectively remains a goal for procurement teams, eSourcing will arm CPOs with the intelligence needed to drive real cost reduction, make smarter buying decisions and have deeper visibility into realized savings. Solutions that support the entire sourcing lifecycle will continue to grow in demand, become more refined and play an increasingly large role in driving sourcing success for businesses of all sizes.

Thanks, Jill.

The “Future” of Procurement: Shiny New Shoes, Part II

Twelve (12) days and thirty-two (32) “future” trends later and we are finally ready to unveil the third, and final, trend that is a real, true, “future” trend that will impact your business in the years to come. And this trend is even more unexpected than its predecessors as not only does it not originate within Supply Management, but it doesn’t even originate within business operations. It’s coming from out of left-field but it’s landing dead-center within your organization. So, without further ado, the final, and one of the three (3) true future trends, is the

1. Equal Rights Supply Chains

You’re probably thinking — what do equal rights have to do with supply chains? Isn’t this the LGBT Political Agenda? What do politics have to do with supply chains?

Well, everything. You see, politics have everything to do with supply chains. Even though supply chains depend on finance and information, people still have to do the work, make sure the money changes hands, and the information flows where it is supposed to. People who are only at their most productive when they are happy and content, not unhappy and discontent. And until this minority, and the people who strongly support them, get what they want, they are not going to be as happy, content, and productive as they could be, even if they try to separate politics from work as this is an issue that affects their self-esteem and well-being. As a result, the issue is going to persist in and out of your supply chain until it is addressed.

And it is going to be addressed. And when it is, it’s going to affect your supply chain in a big way. Specifically, it’s going to hit your pocket book. First of all, when equal rights laws finally pass, and more of them will, there’s going to be more healthcare and related costs because all partners, regardless of sex or religion, will have the right to be covered so the percentage of family plans is going to increase. Secondly, if you are operating in any region where these laws have passed and you don’t institute the policy across your supply chain, you’re going to risk boycotts and significant negative media within the region where the laws have passed, and the boycotts and negative media will hurt your organization’s brand and its sales. As a result, your organization probably won’t be able to restrict these benefits to specific locales, but will have to offer them throughout the locales in the same country, or region, where it operates. This means that in many locales, “labour arbitrage”, which should already be a thing of the past, will be a thing of the past. Third, and most significant, if your organization doesn’t treat this issue as a priority, current and forthcoming policies on minority consideration in government bodies could put your organization at a disadvantage in contract awards or limit the public funds that are available to your organization. This means that if your organization depends on public contracts or public funds in any way, this could someday soon be the difference between continued success and really hard times. Fourth, some big companies have already included LGBT business in their list of recognized minorities and their diversity objectives. So if your organization doesn’t also recognize the same minorities and have the same diversity objectives, that’s a black mark against your organization even before you submit the response to the RFP. In other words, if your organization is not at the forefront of the issue, it might just end up getting swept away by it.

We did it! We did it! We did it! Yeah! Hooray! Woo! We did it!

Finally, we will admit that if you dig around, you’ll likely find a few more “future” trends that were discussed in the last year*, but the majority of these that you find that it appears we skipped were trends that were, in all actuality, similar to or subtrends of trends that were already covered, or, in some cases, had absolutely nothing to do with (modern) Supply Management (and shouldn’t even be repeated as they will just confuse the issue even more). If you think the doctor missed a “future” trend that is not similar to, or a subtrend of, one of the trends discussed in this series (that was in a paper, article, SlideShare, etc. written in the last twelve months) that is related to modern Supply Management, leave a comment. If you’re right, we’ll do a “notable omissions post”.

* the doctor specifically restricted his searches to the last 12 months when researching this series.