Category Archives: Process Transformation

Now that Per Angusta is going away …

… we’re finally getting a new Procurement Management Platform! And that’s a great thing!

Hopefully that last line caught your attention enough to read on (since Per Angusta isn’t actually going away, just its name) because the reason it’s a great thing is that Per Angusta, which finally completed it’s integration with SpendHQ, is soon to be one with SpendHQ. This will provide the procurement space with one of the first, true, Procurement Management Platforms, which, as per yesterday’s post, is something the space is desperately needing. (We doubt it will be the last such platform this year, but it’s certainly the first.)


1) It will be spend data driven, not just pull and push spend data around.

2) It will support all of the necessary intake requests and output reporting.

3) It is built to support procurement-centric workflows or projects.

4) It is built to integrate with any application an organization needs to support a certain process, sub-process, or data-centric capability through easy multi-endpoint integration with push-pulls at either end.

… which solves the four big problems created by Source-to-Pay suites as pointed out in yesterday’s post that asked where the Procurement Management Platform was.

And how they did it is very slick. Not only did they follow the levels of integration appropriately (where they started by re-creating the Per Angusta UX using SpendHQ look-and-feel, while they were working on data model integration on the back-end [which is a difficult task that many companies don’t actually achieve]) to get to the point where they are now working on full integration, but they built the solution to support third-party solution integration at key process points, not just separate integration tabs / menus, and this allows all of the embedded applications to be extensions of each other, not a pool of disconnected apps you have to glue together with Excel.

In other words, every solution that is integrated is inserted at key points of the process flow where it makes sense to do so … for example:

* sourcing partners are brought up when an opportunity is being created and sourcing is selected as the mechanism
* data partners are displayed in a supplier overview / risk report so that an analyst can punch in to the source system for deeper analysis, metric breakdowns
* partner spend solutions are integrated at key parts of category drill downs if an analyst wants to push out a subset of data for what-if or experimental (AI) analyses without messing up the categorization or mappings of the source system
* key data from CLM systems can be pulled into the core to drive the application, and when contracting opportunities arise, data can easily be pushed out and pulled in at key points


And on top of all of this, there’s a solid, modern, competitive spend analysis platform built into the solution that is both a leader in data usability and in multi-data source integration, which is a key requirement for spend analysis, and Procurement success, as a whole, because, unless you can get a complete picture across all of your spend (related) data, you can’t truly make informed decisions and determine which opportunities are worth pursuing and likely to deliver the best organizational results over all.

The only thing that’s missing is the message.

* SpendHQ is all about “Spend Intelligence: Clear & Simple” (which is not a unique message or capability)
* Per Angusta is all about “Powering Up Procurement” and “Procurement Performance Management” (which is not a unique message or capability either)
… but neither comes close to capturing what the integration truly is, or can do, or how they’re one of the handful of players that will be creating the new foundations for Procurement offerings going forward (as Suite 4.0 is not just a suite, it’s a platform).

I hope they get it right, as we don’t want SpendHQ to go away too …

Where’s the Procurement Management Platform?

Where’s the Procurement Management Platform?

When we started out in the very, very, very late nineties, it was all about Procurement and/or Strategic Sourcing, which, in the beginning was all about RFPs and on-line auctions. The focus was on taking many organizations from fax and spreadsheets to integrated bids and on-line analysis and reporting (even if utterly simplistic).

Then, in the early naughts, we had the introduction of spend analysis, CLM, S(R)M, and invoice management and by mid-decade vendors were building mini-suites for upstream (Source-to-Contract) and downstream (Procure-to-Pay, which included Catalog Management, etc.) Sourcing and Procurement. By the time the teens came upon us, the big suite vendors were taken steps to merge upstream and downstream and you had the mega S2P suites start appearing in the early to mid-teams, some through over a decade of development and others through acquisition (mania). They third generation of these products/suites were heralded as the one platform solution (which ERP vendors like SAP and Oracle were hailing themselves as back in the eighties), but …

1) Even though the mega-trend in the 2010s of the Source-to-Pay mega-suite was supposed to be the end of decades of advancement in S2P, we soon found out that even a suite that had the six-core applications of Sourcing, SRM, CLM, Spend Analytics, Procurement, and Invoice to Pay didn’t meet all of an organization’s needs as they needed supplier networks to engage with suppliers, data providers for discovery and diversity, CSR & GHG data providers for risk, custom sourcing tools for complex/niche categories, etc. etc. etc.

2) Most of these platforms had little to no project management, process management, or opportunity management

3) Most assumed that serving procurement meant serving buyers and that was it … but you have to serve reports and oversight up to management and pull purchasing needs in from across the organization. I.e. no (out-of-the-box) management / Finance reporting and projections or intake management (facilitating the need for further Excel usage, and not less)

4) Even those with great spend analysis didn’t always revolve around the spend, and when you think about how business measures its metrics, spend should be the foundation.

And, in summary, they didn’t, and still don’t, deliver an organization everything it needs to be successful (which is why the BoB vs Suite debate rages on today), because Procurement is not an island (even though it was once staffed like the Island of Misfit Toys), and instead is the front-end interface to the supply chain, which, for some companies can include 10,000 companies when you trace all of the product requirements down 3, 4, 5+ levels to the raw material source. (But that’s another topic for another day.)

Getting back to the topic at hand, if you had a proper Procurement Management Platform, which was designed to support data-centric end-point integrations for specific processes and organizational needs, then

1) it would be quite easy to augment and add in custom applications for niche processes or data collections for niche process and reporting management as needed

2) it would be built around sourcing and procurement centric project management and contain the extensible workflow capability required to add customized process and opportunity management as needed

3) it would allow for the creation or integration of intake applications and interfaces to gather needs and report on decisions and progress and to synthesize all relevant data for roll-up views and KPIs that finance and management needs on a regular basis

4) it could be built to use the organizational spend as the foundational data source …

and Procurement could build up, maintain, and evolve the solution it really needs to be successful over time — which is something it can’t do today because buyers can’t code low level APIs, app stores don’t ensure app connectivity, and today’s “networks” merely support data exchange and not overall process management.

So where do you get this when no single provider on the market has (historically) had this? Good question … and one that we’ll hopefully answer in the year ahead.

It’s Time for the Return of Purchasing Consortiums …

… but not the kind you think!

In the good ol’ days, before everyone had access to cheap and easy e-Auctions (when inflation was low, delivery guaranteed, and supply outstripped demand) or on-demand RFX sourcing platforms, the answer to better “purchasing” was consortiums that pooled demand and negotiated lower costs (hopefully lower landed costs, but you took what you could get). Except in a few industries (like healthcare, where product requirements are highly regulated, or utilities, where manufacturing requirements are exact), these have all but disappeared with the rapid rise in modern sourcing, procurement, and source-to-pay platforms over the past two decades.

While this may have appeared to be for the best, as you lost control over who you bought from, a third party controlled the relationship (and you couldn’t always go direct to get problems resolved), and you had to pay them a pretty golden penny for their problems, the pandemic has shown us that this is maybe not the case. Even though you want to control you purchasing as a buyer for your organization, you need reliable supply … and the pandemic has demonstrated (what many of us new, and blogged, about a decade ago; search the archives) that when you are outsourcing halfway around the world, reliability is a myth.

You need nearshore supply that you can easily get by truck and, preferably, train for large shipments (as modern trains can be more environmentally friendly from a GHG perspective), but every since McKinsey and the Big X (5/6/8/whatever) analyst companies that followed told you to go China, not only did you put most of your home-grown manufacturing plants out of business (which, I’m sad to say, wasn’t always as big of a loss as whiny politicians would have you think and definitely didn’t nail the coffin shut, but that’s another post), but you also put many near-shore manufacturing plants in Mexico (and other Central, Latin, and South American locations) out of business (which did!).

They needed to be resurrected the day pandemic restrictions started relaxing, and every day the need for their reactivation (and modernization) / replacement gets worse!

But unless you are a Fortune 100, you don’t have the spend on your own to convince anyone to even think about restarting a factory somewhere closer, more reliable, and safer. (And even then, the risk equation is not any better than continuing to outsource to China and hoping for the best!)

That’s why we need a return of the Purchasing Consortium, but with a new mandate to not only pool and guarantee enough demand to keep a new(ly) (revived/modernized) manufacturing operation sustainable and profitable but, in the absence of anyone in the target location willing to take the startup risk, manage a multi-shareholder investment on behalf of the Global 3000 parties that need such an operation and can afford to invest in one!

It’s a win-win regardless of whether or not anyone is willing to buy the operation once started. Either someone steps in and takes it off of the consortiums hands, giving the initial investors a return on their investment in addition to guaranteed supply, or the investors, who maintain control, can keep purchasing costs down (and the potential for profits up).

The question is, besides companies like Apple and Microsoft that can afford to build their own chip plants near shore (because what else are they going to do with the Billions they have in the bank?), who else is going to step up and bring it back to where it should be.


(Now, before you go bashing the grumpy old analyst for China bashing, this post is not about China bashing [although that’s a great rant topic], it’s about the insanity of going halfway around the world for something you can get [close to] home. If you’re selling in Asia, you should damn well be manufacturing in Asia, as it would be insane to manufacture something in Mexico and ship it to China if it’s easy to manufacture in China!)

Invoices are still costing you money!

Six Years Ago we pointed out that:

  • You’re probably overpaying your suppliers by 1%
  • There’s a 2 in 3 chance you’re being defrauded of 2% of your revenue
  • Up to 75% of your AP overhead is completely wasted
  • At least 1 in 10 invoices are erroneous
  • One Million Invoices requires at least 100 standard 4-drawer filing cabinets

But things aren’t much better.

  • PRGX and other leading recovery firms still recover 0.3% of total spend on average which means the over-payment average is still the same using the rule of thirds (1/3 not recoverable because contracts expired, 1/3 goes to the audit firm in fee based recover, 1/3 goes to you)
  • PwCs recent Public Procurement:: Costs We Pay for Corruption, average loss to fraud is 3.5%, with a UK average of 4.76% … and while private companies might think they are better off, the cyber crime economy keeps reaching record highs (and is 1.5 Trillion in the US alone) and private fraud losses in the UK almost equal public fraud losses according to a CIPS study
  • Based upon recent data from the 2019 Payables Friction Index, a good portion of your AP overhead is completely wasted
  • The number of erroneous invoices hasn’t decreased

Furthermore, according to the 2019 Payables Friction Index, in collaboration with Corcentric, PYMNTS surveyed 2,570 firms on AP processes and found the following:

  • Paper Still Dominates
    • 81% of firms still use paper checks to pay invoices
    • 45% of firms still use cash
  • e-Cash is still in the minority
    With the exception of ACH, that has finally penetrated more than half at 62%, all other methods (including credit cards / p-cards) are still less than 50%!
  • e-Invoices are increasing
    but up to 34% of invoices are still paper (in organizations under 100M in particular)
  • OCR, on average, is still under 50%
    (as low as 37% in organizations under 10M) and, more importantly,
  • utilization of basic automation, ML, and/or AI is even less
    when modern RPA + ML systems exist that can automate e-Invoice processing through simple rules, m-way checks, bounce backs for correction, completion, and verification, to 98% … and
  • approval times of one or more weeks averaged between 16% and 45% across respondents, depending on the number of approvers needed and organization size … when the majority of invoices should be auto-processed and auto-approved …

In other words,

  • You’re losing money on overhead,
  • You’re losing money on early payment opportunities,
  • You’re losing money on over billings and duplicate billings, and
  • You’re losing money on fraud …
  • … when the majority of this loss is easily preventable!

So why not get a modern e-Invoicing solution, standalone or part of a S2P platform, and stem the bleeding and use that money to hire more A-class talent to identify long-term strategic savings build on a supply resilience strategy?

Driving Procurement Visibility: Why & How

Today we welcome another guest post from Brian Seipel a Procurement Consultant at Source One Management Services focused on helping corporations understand their spend profile and develop actionable strategies for cost reduction and supplier relationship management. Brian has a lot of real-world project experience in sourcing, and brings some unique insight on the topic.

Nobody ever suffered from too much clarity in their personal lives, and the same is true from an operational standpoint. Procurement teams that run most efficiently typically have a high degree of visibility – they use this view to identify cost cutting opportunities faster, and communicate them more effectively to get the job done quicker. They also don’t suffer the lost opportunity cost of letting maverick and tail spend savings slip through the cracks.

But I’m not telling you anything you don’t already know. For most organizations, the business case is already clear for increased visibility – the challenge is attaining this increase and using it to improve Procurement practices. So, how do we do it?

Keys to Better Visibility

Strategies for improving visibility can be broken down into three groups: Focusing our efforts on People, Process, and Technology will set the stage for the improvements we need.

Are Our People Set for Success?

The first step we must take is ensuring our human resources are up to the task. There are plenty of skillsets your team already has in place that are mission critical – strong negotiating skills, relationship management, and the ability to drive change are our bread and butter. What about data analytics, statistics, or tech-based skills needed to interact with the latest data management and visualization toolsets? These aren’t skills every Procurement team has readily available.

Closing this gap may mean bringing in outside hires. On one hand, we can quickly assimilate the skillsets we need by bringing in data scientist and analyst roles. On the other hand, this can be a tough sell internally, especially if you’re building a brand new data practice. The ROI will certainly be there in the longer term, but it may take some time to get to that point.

Another direction is to grow internally. Review the members of your team and assess their ability to pick up data analytics skillsets. At the same time, work with your IT team to understand what building up this practice will mean, and utilize their expertise to do so.

Do Our Standard Processes Encourage Visibility?

The best resources will still get hamstrung if they have to stick out outdated, cumbersome, or bureaucratic SOP. If our processes aren’t built from the ground up with visibility in mind, odds are good that they’ll pose a challenge down the road.

How many steps are there from the time a purchase is requested to a PO being generated to a supplier getting that order? I’ve seen some complicated processes built around this staple of Procurement activity, requiring the input and effort of multiple team members, stakeholders, and ultimate product/service users. Despite the heavy lift, everyone’s actions are siloed, with visibility only to the point of their own sign-off.

We need to rethink SOP – simpler processes requiring the effort of fewer resources (yet open and visible to many) is key. This is especially true any non-critical, easily standardized purchases. Anything we can do to automate these purchases or implement catalogs to support buyers is a win.

Do We Have the Right Tools in Place to Succeed?

Lurking behind both our People and Process goals is the set of technology tools we need in order to function. As with traditional processes, technology platforms and practices built without visibility in mind could become a bottleneck.

Before even considering the tools, themselves, think of the data they are used to marshal. It isn’t uncommon for these data sources to be diverse in terms of physical or logical location, ownership, update frequency, and other key variables. Implementing a master data management (MDM) methodology solves this issue by establishing a centralized “golden record” that serves as a single point of reference. This way, everyone has the exact same view of data, and knows exactly where to go to find it.

As far as important tech tools go, we’ve already covered the business case for a few. Are platforms in place to establish proper Supplier Relationship Management? Do we have an electronic procurement system that supports and promotes the use of PunchOut catalogs? Have we ingrained unified communication platforms into our processes to ensure proper communication at every step? Have we built dashboards that actually act like dashboards (offering an at-a-glance look KPIs instead of cramming a bunch of numbers on a screen)?

The Benefits are Clear

It is far easier to describe the steps above than it is to enact them. The road to improved visibility isn’t short, and requires more than just process change – better visibility requires an organizational mindset change from everyone involved in the Procurement process as well as those that support it or depend on it.

Yet the benefits are clear. Better visibility is critical to strategic sourcing and shines a light on all of the dark spend that our teams would jump to address… if only we knew about it. It also helps to reduce soft costs by streamlining our process, cutting out wasted time and energy to maintain manual, opaque practices.

Laying the groundwork today will ensure that our teams move into 2020 in the best position possible to impact our organizations.

Thanks, Brian!