Category Archives: SaaS

Tonkean: Making Enterprise Procurement work with ProcurementWorks, Part 1

Tonkean was founded in 2015 to transform the enterprise back office. Tonkean leverages smart technology to bring people, process, and technology together in a manner that revolutionizes how businesses operate, allowing people to focus on high value work that gets results, and not redundant data processing, unnecessary application usage (which requires unnecessary training and unnecessary time), or unnecessary emails. One of the big problems Tonkean saw with traditional enterprise systems is that anyone who didn’t need to use the system daily was resistant to learning yet another system they saw as difficult or cumbersome (which applied to any system that didn’t use their terminology), adoption was a major problem, and employees would constantly look for ways to circumvent the system. Tonkean’s goal was to solve the adoption problem by providing users a superior intake experience, that could be as simple as a standard form-based or natural language interface like they’d find on the web, that didn’t require any training and that helped these employees make their requests through official channels instead of sneaking through back doors and dark hallways.

After a few custom projects, they found an initial niche in the Legal department and created Tonkean LegalWorks to help Legal Teams with legal mail routing, legal matter intake, matter lifecycle management, legal discipline and category classification, conflict waiver processing, law firm onboarding, contract routing and review, and even legal risk monitoring. It brought together the systems used by Legal (email, word processors, specialized Legal Billing Management solution, etc.), any risk and compliance applications they use to ensure their lawyers and firms dot all the ies and cross all the tees they need to take on every case and practice in every state they are taking legal matters in, and any other enterprise applications the team used to work and communicate internally (Slack, Teams, etc.).

And while we’re not here to discuss LegalWorks, it is through the development of LegalWorks that they learned how to bridge the gap between people, process, and technology in a in a way that empowered their clients to spend more time on strategic (legal) work instead of redundant data entry and system usage, get more value out of the tools they already purchased, and be more productive and satisfied with their technology. They learned how to enable a department to use the tools they have in ways that went beyond the original use cases, and learned they could do more and set out to identify where the biggest needs were and where they could do more. And once they found Procurement, and realized that Procurement had a lot of the same challenges as Legal, but considerably more amplified (with more systems, more complexity, and higher stakes), they knew they had found an area where they could provide their enterprise clients with the most value (and especially those that were using the major S2P suites but getting low utilization rates due to lack of intake support and a lack of integration with other internal systems).

When investigating Procurement in their enterprise customers, they found that while the major suites were reasonably suited for, and well used by, the Procurement team in strategic projects, they weren’t used much in tactical purchasing, especially in tail spend, as most of the organizational users found the system too complicated and bypassed it whenever possible (as the P2P tool lives on the long tail of enterprise applications of choice for the average enterprise employee).

So, as with some of the new breed of vendors who started specifically with the goal of Procurement intake and/or orchestration, one of their first goals was to help their Enterprise customers get more value out of their big S2P suites (and Ariba and Coupa in particular; for example, they have Intake Orchestration for Ariba and the Coupa Intake Experience to help the organization route all indirect spend, no matter how far down the tail, through Ariba or Coupa). While that’s where they are still focussed (given their current Enterprise customer base), they’ve expanded their ProcurementWorks to be a full Procurement lifecycle orchestration solution, from intake to resolution, regardless of what solutions the customers have or don’t have, what enterprise applications the teams use to communicate, what external catalogs or data sources they need to integrate with, and what policies and procedures need to be followed. In this way, ProcurementWorks is a system-agnostic solution that wraps around the customer’s existing process and applications to orchestrate and better coordinate that process.

However, one major difference is that, to Tonkean, full orchestration means creating a solution that solves all of the Procurement related problems an organization’s employees have, not just Procurement requisitions or catalog buying. That means answering all of their Procurement related questions in addition to taking their product and service requests, guiding them to the right systems if needed, or being the one interface of choice if Tonkean can be that. That means a much smarter intake process that can take any Procurement related natural language request, interface with all of the organizational data sources, and provide an appropriate answer.

For Tonkean, that starts with a smart AI interface, that they call the AI Front Door. The AI Front Door, unlike many other LLM-based products, is not just ChatGPT in a shiny wrapper, but a hybrid solution based on in-house engineering, the client organization’s preferred LLM, and knowledge systems owned by the client. It’s a very sophisticated “chatbot” compared to most offerings on the market, a technical definition would be very extensive (and lose non-PhDs), but we can illustrate much of the uniqueness of the capability with a high level overview and an example or four.

For example, when a user inputs a request, the general approach the system takes is:

  • use their AI to process the question for the type, intent, and goal
    and inform the user if they have no information (or are unable to process it) while simultaneously
    redirecting any unanswerable query to a human expert for review
  • use internal, trusted, knowledge bases to get initial information and potential answers
  • feed the question, processed clarification, and internally retrieved knowledge into the organization’s LLM to provide Natural Language feedback to the user, which could be the answer, or a refinement question if ambiguity existed in the question or potential answers from organizational data sources, which causes (an extension of) this 3-step loop to repeat
  • verify the response is sensible before presenting to the user (and, if not confident, route to a human for feedback for future internal Tonkean model training while informing the user no relevant information can be found)

Thus, if the user asks if there is an agreement with Vendor V:

  • their AI Front Door will process the query and determine that the user is asking if there is a signed contractual agreement with Vendor V that is currently active, and potentially what that agreement is
  • create the appropriate queries for each organizational system that stores contracts and agreements
  • take the responses and construct a carefully engineered prompt for the LLM that will return an answer indicating if there are agreements, and, if so, what they are and where they can be found (possibly including a direct link if the document can be accessed through the Tonkean platform)

If the user asks if she can purchase a license for SaaS app S:

  • their AI Front Door processes the request, determines that the user wants to make a purchase, it falls in the software category, and asks a few clarifying questions about the type and purpose of the product and, if it discovers the organization already has a license for a tool of that type, asks why the other tool won’t do
  • the system takes the responses and prompts the user with a link to launch a purchase request, where the system then pre-populates key fields of the organization’s software license purchase request form based on its learnings from the AI Front Door interaction and data attributes from other relevant systems (such as budget information in the ERP)
  • the system bundles the appropriate information and prompts the LLM to create grammatically correct responses that not only explain the request to the Procurement Buyer, but a Supplier if an RFP is required
  • the draft form is then presented to the user to verify, and one click puts it into the Procurement Request queue (where it can be accessed from the ProcurementWorks My Requests page at any time)

If the user asks for the procurement policy for SWAG for the marketing event she is attending:

  • their AI FrontDoor processes the requests and determines its a policy question
  • it creates the appropriate pattern match, DQL, or index query for each of the organization’s policy document data stores and collects the appropriate responses and documents
  • creates an appropriate prompt for the LLM that appropriately forms the question while asking the LLM to use only the inputs fed to it to create the response
  • ensures the response that comes back has a decent similarity to a subset of the text from the documents and then presents the natural language summary to the user

If the user asks the system for the results of the hockey game he missed working late:

  • the system processes the requests, realizes it doesn’t have that information (unless, of course, the enterprise is a sports news outfit), informs the user it doesn’t have that information and ends that interaction there

In other words, it’s built to be the central information source and jumping-off point for all types of inquiries and tasks a Procurement professional or employee with Procurement needs is likely to have, with the intent of cutting out 90% of unnecessary emails, texts, questions, and requests an augmented intelligence system can answer or guide a user through.

Moving on, the core of the Tonkean Intake Orchestration Platform that their Procurement solutions were built on is a workflow automation platform with extensive built in workflow customization, data integration, and form creation capability. In the platform, the customer can build forms (using a no-code form editor) they need to power any Procurement process (which can be created and modelled using a no-code process editor) they have, and customize them for requesters, buyers, risk & compliance, IT, or any other department as needed. They used this capability as the foundation not only for their Coupa Intake Experience and Intake Orchestration for SAP Ariba (as organizations never replace major investments, but innovative organizations look to improve and expand upon them), but their guided buying experience, supplier onboarding, and tail spend automation (among others).

One key differentiator is that any workflow can be updated at any time, something which is generally not possible in your traditional Procurement Suite such as Coupa, Ariba, and Jaggaer. For example, many of their customers now require an additional AI Review of any platform that uses AI to determine the nature of the AI and any direct and indirect risks in its proposed application to the business from a technical, legal, and brand perspective. For example, if the vendor is using Open Gen AI (such as ChatGPT), there are technical risks in that these platforms have been repeatedly demonstrated to have biased, harmful (and even murderous), hallucinatory, thieving, and sleeper behaviour. There are direct legal risks in that you could be sued (and on the hook) if the AI makes a recommendation that ends up causing personal or business harm, and indirect legal risks if the technology was trained on stolen data or data that contained copyrighted, illegal, or national secret material. There are brand risks if the Open Gen AI product you are using all of a sudden suffers extreme public backlash for its actions (or your software results in a decision that tanks shareholder value or increases environmental harm). However, they have found that most of the suites they work with do not yet have many of these new “standard” compliance checks in their relatively rigid product workflows (and telling their customers to just include it in the InfoSec review), which increases the likelihood a key check will be missed. [Considering the attention that AI is getting and the fact that legal frameworks will need to come soon, not the best idea for a large organization NOT to be assessing AI risks now.] However, with Tonkean, it takes minutes to add a compliance check and ensure it gets done by the right people before a decision is made on any Software purchase or use.

In our next article, we will dive deep into the major components of the Tonkean ProcurementWorks offering.

Scalue Wants to Scale Up Your Strategic Procurement with Strategic Spend Analysis

Scalue is a spend analysis company that was founded in 2018 by veterans of Procurement with two decades of experience in Düsseldorf, Germany to help companies identify various, immediate, areas of potential savings, improve their overall purchasing processes, and, most importantly get started quickly (as many large organizations can take between 6 and 24 months just to get their data foundation in order if they take the traditional route and start with a consultancy partner that starts with a data cleansing, classification and enrichment project before building the first cube and starting the opportunity analysis).

Scalue was built to be ready to use the minute that you loaded the starting data set from either

  • a set of flat files or Excel workbook (which are auto-mapped if you use their data model and/or standard field names) or
  • the ERP/MRP (AP) (for which they have a library of pre-built integrations to the majority of the major ERP systems; they may need minor customizations, but those are usually quick to accomplish, and if you need something custom, they do have certified ERP integration partners).

Of course, how ready it is will depend on how good your classification is in the raw data you import. For the majority of companies just starting on their data foundations and/or spend analysis, chances are their data classification is very poor. Fortunately, classification in Scalue is quite easy and can be done by supplier, material group, material, GL coding (if available), invoice (line), or a combination thereof. Scalue typically begins an engagement with a working session to help, and guide the users on creating/updating their categorization and doing the initial spend mappings.

Updates are on your schedule. Most customers prefer monthly (so they can share and do consistent analysis), but they can retrieve updates weekly, daily, or even hourly if you want with a direct (ERP/MRP/AP) system integration or as often as you update an incremental file without an integration.

While Scalue has experimented with multiple AI technologies for classification, they do not use any technologies across the board, and instead use specific instances on specific use cases (for initial classification rule creation, but all AI mapping rules can be deleted or overridden), because they have found, as the doctor knows all too well:

  • classification accuracy in direct, especially when dealing with a multi-national enterprise that sources in different countries that use different SKUs and coded product descriptions for the same product and do so in multiple languages, is poor. Maybe 90%, but you really don’t want 10% of your data misclassified, especially if it relates to high spend transactions
  • classification consistency with the black box is poor, while retraining from corrected classifications will correct some classifications, others that were right are now wrong
  • while it sometimes can produce starting rules, you can’t always trust the confidence and still need to verify all the rules manually
  • a good mapping process will get a spend analysis / data management team to fairly high accuracy (90 to 95% +) in just a couple of days at most (even in large organizations) and the rules are 100% accurate and reliable

When the average direct buyer enters Scalue, the first thing they see is the Cockpit Dashboard in the Management module which helps them understand their spend and drill in to find immediate opportunities. The cockpit, like any good entry dashboard, summarizes spend volumes, suppliers, spend by material group, supplier, and measure for a time period and allows a user to drill in by any (pre)defined dimension or measure in each of these drill downs, and order the drill downs in any order they like. Each drill down brings up a dedicated report screen, where the user can not only drill, but select a dimension/measure subset as well. When a user identifies a high spend (sub) area that they want to address, they can kick off an initiative, which we will discuss later.

Scalue promises a return of 1% on total addressable spend in your first 12 months and has consistently delivered across its customer base for the last few years. This might sound low compared to the numbers quoted by indirect spend analysis providers, but one should remember the following:

  • while the average return on an indirect category that is strategically sourced during non-inflationary times will be 5% to 10% with a modern sourcing solution and good insight,
  • and the average return in the tail spend will be 10% to 15%,
  • the average return in a direct category is usually in the 3% range (as it’s much more carefully evaluated and managed by a company that needs to invest millions in materials and goods to serve its customers)
  • and contracts are usually three (3) to five (5) years.

Thus, if you save 1% a year despite much of the spend being locked in by existing 3+ year contracts, with a average ceiling of 3% on savings on (re)sourcing. that’s actually quite good — and for a company buying 500M in direct, that’s 5M straight to the bottom line in the first year on direct spend alone!

The next step for most users is either the ABC Analysis or the Business Development overview, which is where they will typically go next. The Business Development screen summarizes purchasing volume, regions of origin, and ABC analysis (by country by default) which can also help an analyst dive in to find immediate opportunities (by focussing in on high volume categories where the spend trend is going up, categories that are being sourced from too many regions and present a consolidation opportunity [without increasing risk], and high spend material groups that might be going unmanaged).

The ABC analysis, that the user can drill into from the Business Development tab (or jump straight to), allows the user to see the material group or supplier split by the top 80%, next 15%, and final 5% (or 70/20/10 or however they want to define the A,B,C spend ranges under their interpretation of the Pareto Principle) and just drill into the spend that matters the most.

In summary, users usually start with these three Management Dashboards

  • Cockpit – an overall spend overview: volume, cumulative cost variance, top suppliers, top measures, etc.
  • Business Development – looks at price spreads across all of your products to find immediate opportunities (by consolidating to lower cost parts where possible)
  • ABC Analysis – the standard ABC analysis that groups material groups into high spend (A), medium spend (B), low spend (C) using the modified 80/20 rule into 80/15/5 (which can be modified as desired by the customer); this allows an analyst to focus into the high spend / critical material groups first and then see what groups or suppliers are out of control in the tail

Once the initial exploration is done, most analysts will move to the Structure dashboards:

  • Invoice Compliance – how much spend is billed not using contract rates
  • Contract Compliance – how much spend is off-contract that should be on contract
  • Payment Terms Optimization – looks at payment terms and early payment (cash) discounts across suppliers and helps you optimize payment terms and time-frames
  • Delivery Time & Performance – average delivery time, on-time, late, by supplier
  • Terms & Conditions – where they can analyze payment terms and delivery terms across a supplier (cluster) or material (group); keeping on top of this is very important if your suppliers provide early payment (cash) discounts or charge interest for late payments (and hold your critical orders until invoices past due are paid); includes a portfolio view of associated value with each material group-term pairing

From there, they will usually progress into the Control Dashboards:

  • KPI Dashboard – a customizable dashboard that centralizes your KPIs of interest
  • Material Cost Variance – summarizes the cost variances across materials and material groups
  • Report Builder – allows an end user to build a report on set of dimensions and/or measures in the system

Once they have completed their analysis, the users will probably want to set up initiatives (projects) to (re)capture savings and hit the 1% reduction on total spend Scalue can deliver within the first 12 months. To do this, they will move over to the Action Hub:

  • Tracking – the main dashboard that provides an overview of all (open) initiatives including [savings] type, forecast, and captured to date
  • Approvals – the approvals dashboard where an admin can accept, and lock, dates, forecasts, entered amounts (to date), etc.
  • P&L Savings – the savings against the P&L by month for a given time-frame
  • KPIs – allows for a deep cross-initiative analysis that computes averages and statistics across initiatives, categories, manufacturing groups, and other KPIs of interest by time periods of interest
  • Admin – allows for customization of initiative management — the admin can define the phases, the employees who can edit initiatives, the priority classifications, the savings types, the project statuses, and other dimensions upon which the KPIs will be based

As with all spend analysis systems, the end user administrator can setup and maintain the category tree, material groups, supplier, and invoice categorizations completely self serve and inspect it at any time through the module for Data Health:

  • Material Clusters – group material groups by product lines, related uses, or another common denominator you want to be able to do analysis by; see the allocation by spend or volume, and drill into the percentages
  • Supplier Clusters – group suppliers by parent company, region, or another common denominator you want to be able to do analysis by; see the allocation by spend or volume, and drill into the percentages
  • Category Tree – define the category tree and the overarching material groups
  • Material Group Categorization – dive into a material group and map materials
  • Supplier Categorization – classify suppliers by material category
  • Material Categorization – supports product/SKU level mappings
  • Invoice Categorization – define line level overrides where needed

Once a company has mastered the basics and taken full advantage of the standard dashboard and analysis that deliver almost immediate payback, they can do the more advanced portfolio analysis that allows them to analyze portfolios by buying power, supply risk, ESG/CSR, etc. as long as they have the data to do so (and have defined the appropriate supplier/material group clusters). Scalue can pull in the data from the ERP if it exists, and if it doesn’t, it can build (or the end user can build) questionnaires to collect the data from organizational users. This advanced analysis is accomplished in the Strategy Hub:

  • Questionnaire – used to collect baseline data to provide a foundation for portfolio analysis
    (around ESG/CSR, Organizational Buying Power, Supply Risk, etc.)
  • Supplier Portfolio Specifications – used to collect specific data for portfolio segregation by supplier (cluster)
  • Supplier Portfolio Analysis – analyze the spend by the desired portfolio breakdown, dashboard is customizable on implementation
  • Material Portfolio Specifications – used to collect specific data for portfolio segregation by material group (cluster)
  • Material Group Portfolio Analysis – analyze the spend by the desired portfolio breakdown, dashboard is customizable on implementation
  • Combined Portfolio Analysis – see the portfolio analysis by supplier (cluster) and material group (cluster), dashboard is customizable on implementation

Finally, for ERP customers that have multiple years of data in their ERP, they also have a ProcessView module:

  • Dashboard – a summary of the process analysis which focuses on process discovery, lead time analysis, and a breakdown by lead time cluster
  • Statistics – summarizes statistics related to the different steps of your process around average time in the step, which can be broken down by supplier, material (group), user, etc.
  • Query Builder – build queries to answer questions not answered in the dashboard
  • Modeler – adjust the process model as required
  • Impact – The statistics and KPIs are converted into easily understandable process descriptions based on intelligent models to aid the analyst in interpreting key figures and estimating the initial impact.
  • Comparison – The results of a process comparison across suppliers and product (groups) to highlight why one supplier or product is better (or worse) than another.

As with any good platform, you can drill into any data set on any dimension, reorder the dimensions, and drill right down to the individual transactions. Also, since they have a number of implementation partners certified on the major ERP systems (SAP, Microsoft, etc.), you can have it implemented quite quickly, and the partners can work with you to get your data properly classified in a very short time frame as well. You can also export all of your data at any time.

When it comes to user administration, an admin user can grant other organizational users access rights done to the record level (and may only see some modules, dashboards, and menu items as well) and define new measures for report building.

The platform is very useable, but to ensure that all of their users can make the most of it, they have an extensive on-line education library in German and English on their Training Site. These courses go beyond platform basics and even include courses on negotiation, supplier consolidation, strategic category assessment, and so on.

If you’re doing a lot of direct spend and looking for a best of breed spend analysis solution, it’s one to include on the short list.

Strategic Sourcing & Procurement for Technology Cost Optimization

Given that we recently published a piece noting that Roughly Half a Trillion Dollars Will Be Wasted on SaaS Spend This Year and up to One Trillion Dollars on IT Services, it’s obvious that one has to be very careful with technology acquisition as it is very easy to overspend on the license and the implementation for something that doesn’t even solve your problem.

As a result, you need to be very strategic about it. While you certainly can’t put the majority of your technology acquisitions (which can be 6, 7, and even 8 figures) up for auction (as products are never truly apples to apples to apples), you definitely have to be strategic about it. As a result, you should be doing multi-round RFPs and then awarding to the vendor who brings you the best overall value for the term you want to commit to, once all things are considered.

But these have to be well thought out … you need to make sure that you are only inviting providers that are likely to meet 100% of your must haves, 80% of your should haves, and 60% of your nice to haves (and, moreover, that you have really separated out absolute vs highly desired vs wanted but not needed because the more you insist on, especially when it’s not necessary, the shallower the vendor pool, and the more you are going to end up paying*).

To do this, as the article notes, you have to know what processes you need to support, what improvements you are expecting, what measurements you need the platform to take, and what business objectives it needs to support. Then you need to align your go-to-market sourcing/procurement strategy with those objectives and make sure the RFP covers all the core requirements (without asking 100 unnecessary questions about features you’ll never actually use in practice).

You also need to know what quantifiable benefits the platform should deliver, both in terms in tactical work(force) reduction (as the tech you acquire should be good at thunking), and the value that will be obtained from the strategic enablement (in terms of analysis, intelligence gathering, guided events, etc.) the platform should deliver. If it is a P2P platform, how much invoice processing is it going to automate, and, based on that, how much is it going to reduce your average invoice processing cost? If it’s a sourcing platform, how much more spend will you be able to source (without increasing person-power) and what is a reasonable savings percentage to expect on that? Understand the value before you go to market.

Then you need to understand how much support and help you need from the vendor. If you just want a platform that does a function, then you just need to know the vendor can support the platform in supporting that function. But if you need help in process transformation or optimization, customized development or third party tool integration for advanced/custom processes, etc. you need a vendor that cannot only provide services, but also be a strategic provider for you as well.

And so on. For more insights, we suggest you check out a recent article by Alix Partners on Strategic Sourcing and Procurement for Technology Cost Optimisation. It has a lot of great advice for those starting their strategic procurement technology journey.

*Just remember, if you’re a mid-market, and you’re flexible (i.e. define what a module needs to accomplish for you vs. a highly specific process) you can get your absolute functionality and most of your desired functionality for 120K in annual SaaS license fees, excluding data feeds and services. If you’re not flexible, or not really strict in really separating out absolute vs strongly desired vs nice-to-have, you can easily be paying four times that.

Also remember, if you’re enterprise, your absolutes and strongly desired are much more extensive, typically require a lot more advanced tech (like optimization, predictive analytics, ML/AI, etc.), and licenses fees alone will cost you in the 500K to 1M range annually at a minimum, not counting the 100K to 1M you will need to spend on the implementation, data cleansing and enrichment, integration, training, and real-time data feed access, so it is absolutely vital you get it right!

Sievo is Still Constantly Sieving Your Data For New Opportunities

While the doctor has never covered Sievo on Sourcing Innovation, he did cover them in depth at Spend Matters, and, if you have appropriate Content Hub access, you can find the last 3-Part in-depth Vendor analysis here in Part I, Part II, and Part III.

A Quick Recap

Sievo was founded twenty years ago in 2003 in Helsinki, Finland and is probably the oldest remaining standalone spend analytics player, as a significant portion of all of the M&A that occurred in the 2010s was on leading spend analytics players. (The next oldest standalone vendor is likely Rosslyn Analytics founded in 2007.) While it started as a standard service-based spend analytics offering, by the time of the doctor‘s in-depth update on Spend Matters in 2020, Sievo had moved well beyond basic spend analysis and centered much of its value proposition on driving savings and improvement (as Sievo is not just limited to spend data and can also process compliance, risk, and ESG/GHG/Carbon data, for example) program identification (through automated insights), measurement and management across the full spectrum of spend, where they do the data management services, the foundations for savings and improvement program management, and even the meta-data management to power advanced organizational initiatives.

With regards to data management, it handles all of the system integrations; refreshes on your schedule; does all the classification (working with your team to build the classification you want); cleanses, normalizes, and enriches your data; and rolls out (customized) market and category intelligence to your organization.

With regards to classification, they use a mix of (black-box) AI and human (re-)classification and review, guaranteeing 94% accuracy, and usually achieving 98% to 99% accuracy. They use multiple techniques including customized in-house LLMs, DeBERTa Large v3, BERT, evolutionary algorithms, and NER models, with and without feedback. (And while the doctor knows most of you won’t understand any part of that sentence, it means their AI/ML team actually knows what they are doing and they are not just a bunch of college drop outs randomly feeding open models with random data and assuming anything that appears to give them 90% accuracy is good. Which happens quite a bit in “data science” consulting shops. See the doctor‘s post about how to do Analytics and AI Right.) Mappings, especially for low confidence, high spend, and new categories/customers are also manually reviewed on a regular basis, corrected, and the models retrained. In addition, a user can request a reclassification at any time, and once a customer admin approves, the data is reclassified (in an override) and the model retrained.

With regards to integration/refresh, they’ve integrated with over 100 ERP/AP/data systems and dozens upon dozens of market, risk, and ESG feeds that they can use to enhance your data and typically refreshes massive data sets daily (but can do faster or slower depending on the desires of the organization).

With regards to traditional analytics, the platform has the standard set of modern drill down dashboards, support for user-defined calculated/derived dimensions, and incredibly powerful filters that support functions that can be used on any dimension (base or derived) which collectively allow a user to break out, and drill into, any subset of data of interest.

With regards to out-of-the-box reporting and analytics, Sievo has over two-dozen out-of-the-box dashboards that provide deep insight into spend by category, PO, invoice, supplier, emission, cycle time, tail, geography, etc. There’s also pre-built insight dashboards for savings opportunities on price (variance), payment terms, currency exchange, and efficiency/cycle-time improvement.

With regards to savings tracking and management, Sievo includes a realized savings dashboard that can automatically compute the spend difference period-over-period, currency fluctuations, and changes due to changes in market indices (where a contract price is tied to a market index). It provides insight into spend that results from non-performance and allows Procurement to pinpoint the exact reason for deviation from a plan. Note that savings tracking is very extensive in the platform and users can define budgets, demands, expected trends, milestones, approvals, etc. and track each initiative as a separate project in the platform.

It also supports forecasting/budgeting, contract metadata management, and price benchmarking based on over $1 Trillion of customer spend (and their customers now represent 1% of global GDP) mapped to a common internal schema and with their deep knowledge of direct material pricing (from indexes, etc.), they can help customers benchmark down to the material level in a BoM.

So What’s New? (Since 2020.)

Since 2020, Sievo has made a number of platform improvements and included a number of new offerings in the spend analysis platform. The most notable of which are the following:

Integrated Actions

In addition to supporting (savings) action plan, some associated actions can now be initiated within the system (with more being added with every release). Email contacts relative to supplier performance / sustainability can be initiated with the system, automated negotiations through Pactum can be kicked off within the system, and Ecovadis requests (detailed below) can be kicked off within the system. A user can also access the Sievo Academy, Sievo Support, reclassification requests, associated contracts (not just metadata), and roadmap suggestions/product feedback directly through the platform.

Integrated Sustainability and Third Party Dashboards

When we last covered Sievo, it had an Ecovadis integration and could pull in select data for enrichment dimensions or measures, but, if you have the subscription, they now maintain all Ecovadis data natively in their platform and have a new Sustainability dashboard where a user can dive into the different Ecovadis scores (Global, Labor, Ethics, Environment, and Sustainable Procurement) by category, material, supplier, etc. and see the global score, assessed suppliers (as not all suppliers will be assessed by Ecovadis), assessed suppliers, score by top 100, score by category, score by organization, global score heatmap, etc. A user can drill down to an individual supplier (by category and material) and see all of the Ecovadis details natively in Sievo. If a supplier has not been evaluated and the organization would like it evaluated, they can even initiate a request directly in the Sievo platform. (Alternatively, if you have other sustainability/risk data feed licences, including [but not limited to] SupplierIO, RiskMethods, D&B, etc.] all of that data can now be brought in and maintained natively as well.)

CO2 Analytics

There’s also a new set of CO2 Scope 3 Emission management dashboards that can, at a category, material, and/or supplier level, summarize total CO2(-equivalent) emissions, related spend, intensity, carbon price amount, with breakdowns by category, GHG protocol category, organization, region, supplier country, share of emissions per higher level category/supplier, etc. A user can dive in and see the Unit of Measure (UoM) conversion rates, inflation rates, mapping quality, and types of estimates used at the meta-leval and the mapping source, emissions factor, validity dates, and associated backup (attachments, etc.) at the mapping level.

One unique feature of the Sievo platform is that the CO2 can be used as a second currency alongside spend and allow users to see the spend/carbon trade off of different decisions. (For example, switching to supplier S for Product P can save D Dollars but cost X emissions.)

Curated Data, including Science-Based Target Initiative (SBTI), Support

Sievo has not only started tracking supplier ESG and net-zero status data, but also correlates an organization’s spend against SBTI records and summarizes percentage of spend with SBTI suppliers (who have set a target), percentage of spend with SBTI suppliers with near-term targets, total spend with net-zero targets, and percentage of de-listed suppliers as well as spend by top 100 suppliers and net-zero status, spend by category and net-zero status, and spend by organization and net-zero status. It’s a great way to see SBTI spend coverage at a glance.

At a finer grained level, for each supplier, it summarizes the supplier’s general status, number of commitments, number of targets, net zero status & target year if committed, near term target status (targets set or not), long term target status, company temperature alignment, spend, sector, org type, region, location(s), etc. and all data can be accessed by a drill in to the supplier level.

AI-Extended Supplier Profiles with Feedback and Human Validation Available

In addition to spend benchmarks powered by community intelligence on well over One Trillion Dollars of spend mapped to a common, centralized, taxonomy, they have also been building a common supplier database which currently consists of over 6 M suppliers (with the goal of 10M by EoY 2024) with enhanced supplier profile data around geography, categories and materials, CO2/GHG and sustainability, SBTI, and other relevant data from a spend analysis perspective. In addition, they have been augmenting it using customized AI/NLP/LLM that uses web-based data (from the supplier’s web site, Wikipedia, supplier intelligence platforms, etc.) to provide a more complete picture in order to provide clients with deep embedded supplier insights, which will eventually support deep discovery in a future release.

Sievo manually validates a subset of high-spend suppliers for every client and every user can provide feedback on supplier data they feel is incorrect and request validation on a supplier if desired. Suppliers whose profiles have been manually validated are marked as verified (and data is not changed without human verification if such data comes from a data feed where the provider, such as Ecovadis, has manually verified the data).

Extended Supplier 360 Dashboard and CraftBoards

The dashboard summarizes total spend (for the given time range), it’s spend rank, PO coverage, avg invoice, spend share by category, by organization, by ERP supplier (instance/subsidiary), by payment terms, invoice-to-due days, due-to-pay days, [local] price [consolidation] opportunities, price opportunities vs. best price from a different supplier, top insights (from the new insights dashboard, discussed below), and, if desired, key metrics from the new SBTI dashboard (summarized above).

Since our last update, Sievo has also added CraftBoards, which allows users to build their own dashboards on any data subsets they like. Sievo can process and display any type of data, and the user can build cubes and dashboards on any data source they like.

Adaptive Insight Recommendation Engine

Sievo has doubled down on identifying all types of savings opportunities across price (variance), payment terms, process optimization, risk and compliance, and the (supplier) tail. Sievo has also doubled down on a new insights overview dashboard that currently summarizes system-identified opportunities across almost twenty (20) types of analysis across those five categories (with more coming in future releases). With regards to price optimization, it will summarize price (variance) opportunity and high price impact. With regards to payment terms, the outlier opportunity, the early payment impact, and overall consolidation opportunity as well as (interest/penalty) losses due to critically late spend. With regards to process, it summarizes order consolidation spend, hidden tail spend, non-PO outlier spend, and after-the-fact spend that is likely ripe with opportunity. With regards to risk and compliance, FX exposed spend, outlier sustainability spend, single sourced material spend, and hidden locally sourced high risk spend. Finally, with respect to the tail, they break it down by category, material, new supplier, new supplier non-PO, and supplier count increase which is super rife with opportunity. It’s super easy to drill into each dashboard metric, see the breakdown by supplier, category, or location, and quickly identify the top opportunities for savings. And, of course, dive into the suppliers with the highest opportunities as the Sievo platform was designed to automatically bubble up insights from the data in a manner that is relevant and actionable.

For each area, there’s also an insight dashboard that summarizes the total number of insights identified, and the breakdown by open, assigned, completed, and removed. One major difference in their platform is that a human user can identify when an insight is immaterial or non-actionable and the system will not only hide it, but learn from the feedback, and not show the insight again. For example, a payment term rationalization across a supplier’s location will not be possible if the average payment term is longer than legally allowed in France or the UK (as a result of recent laws designed to ensure [small] suppliers are paid timely). Note that insights can be assigned for action to a user and, once assigned, generates an action plan in the Sievo system.

The individual opportunity dashboards are incredibly detailed, and you can see prior coverage or a Sievo demo for details. For example, the payment terms consolidation dashboard, which allows you to dive into a category (as most contracts are category based), allows you to pick a supplier, see the supplier spend and summary, spend by payment terms, spend development opportunities by payment terms, totals by ERP supplier instance, best payment terms, overall working capital opportunity by ERP supplier, etc. etc. etc.

New Widget-Based Insights-Oriented Home Page

The main dashboard can summarize the top insights (as per the insights discussed above) across each area analyzed by the platform and provide quick links into each insight area and bubble up insight while also giving users quick access to:

  • their current/open initiatives
  • their bookmarked dashboards
  • their current/open reclassification requests
  • recent bulletins
  • quick links to relevant courses in the Sievo Academy
  • top CO2 emitters
  • other widgets the user wants on their home page

Extended Do-it-Yourself Self Service Report Creation

Not really new, but as they have added dimensions and measures, they have all be included in the self-service dashboard (and organized by measure type such as spend, payment term, supplier, invoice, PO, material, category, etc. for quick location). Similarly, as new chart types have become available, they have been included as well. (And you are not restricted to traditional bar, line, pie, and table charts — full featured pivot charts, scatter plots, and mekko charts are also available in self-service).

Near-Term Roadmap

Community Data

Sievo users will be able to benchmark their data against anonymized data from other Sievo companies’. For example, a company will be able to gain insight into its payment term competitiveness with respect to market average. A variety of pilots are ongoing to determine the most useful data, but these insights will extend the value Sievo can bring to its users.

Index-based Price Forecasting

In the materials forecasting module, more functionalities are being integrated to ensure a deep understanding of future budgeting and spending and simplify usability. Soon (in Q2 2024), forecasting based on indexes will become available, making the process even smoother and accurate for Sievo users.

Supplier Portal

ESG emissions in the supply chain are largely related to those from suppliers, and thus collaboration with suppliers is a must for emission reduction. A new supplier questionnaire and supplier portal enables users to ask suppliers for information related to their emissions, sustainability initiatives, and more.

In conclusion, if you are looking for a Best-of-Breed spend analysis solution, Sievo continues to be among the best in the space and should be on your RFP short-list.

Take the Tedious out of the Tactical Tail and Autonomously Avoid Overspend with mysupply

The taming of the tail is tedious and that’s why it’s overlooked in many organizations beyond whatever a catalog can address. There are only so many strategic sourcing professionals, there are only so many projects they can handle, and only so much spend they can get under strategic management. After that, beyond what’s in the catalog, IF there is a catalog, it’s typically the wild wild west for Procurement — especially if it fits on a credit card or P-card. There just isn’t enough bandwidth to manage more than a measly modicum of the tactical tail in an average organization.

Many organizations believe it’s okay to ignore tail spend because it’s only 20% to 30%, and because they believe that overspend probably can’t be that high on small purchases. They’re wrong on both points. In most organizations, even when the strategic categories are defined to include 80% of spend, because products and services change all the time, organizational buyers and / or overworked sourcerers won’t always catch when new products or services should be included in a strategically managed category; and because p-card/T&E is never included in the initial estimate, tactical/tail spend that’s unmanaged is usually 30% to 40%. If it’s 40% that ends up being unmanaged when the expectation is 20%, that’s a lot. Secondly, spend analysts and tail spend analysts have regularly found that the average overspend in the tail is in excess of 10%, with some categories of spend routinely being in the 15% to 30% window because no one ever looks at it. And if your organization is losing out on 10% of 40%, that’s 4% that could go straight to the bottom line with a good tactical tail spend solution.

To put into perspective just how good 4% straight to the bottom line is, consider the fact that, in direct organizations, strategic events on carefully managed direct categories that are regularly sourced typically only net 2% as the categories have already been squeezed. It’s only the mid-tier categories where you will see higher savings rates, which will typically average in the 5% to 7% range at best as these categories at least go to auction or multi-round RFP regularly. So if you save 2% on the top 30% and 5% on the next 30%, that’s only a savings of 2.1% that hits the bottom line. In other words, if your organization has been actively strategically sourcing top spend for five or six years, your organization has twice the cost avoidance / savings opportunity in the tail. It may seem counter-intuitive, but it’s the truth. Let that sink in for a moment before you read on.

mysupply is the newest start-up that aims to tackle the Tactical Tail Spend space, which has been historically underserved since the first specialists popped up (and then disappeared) to tackle it in the early 2010s. Even today you can count the true tactical tail spend specialist solutions on one hand without a thumb, compared to the seventy-five plus sourcing providers, but the new generation of providers, and mysupply in particular, understands that no one wants their spend in multiple systems (as you can’t do integrated spend, PO, and invoice management otherwise, key for Procurement success) and are developing their system as an extension to current sourcing systems, not a replacement for.

mysupply, which is even available on the SAP app store for those that use SAP (Ariba) and want a quick-start into tactical tail spend management, was designed to integrate with, and feed into your existing sourcing / procurement platforms — and in the case of Ariba, will fully use the Ariba Catalog and Ariba PO system to manage all spend. mysupply allows for:

  • quick event definition for sourcerors short on time (though the App or ProcurementBot)
  • roll-out to organizational users who can do their own quick-hit RFPs/Auctions/Catalog buys (also through the app, if needed, or ProcurementBot)
  • integration with your intake platform of choice for event push to the sourcing team

While it’s not designed as a full intake (or intake-powered) platform, as it was built for tactical tail spend and not all organizational spend, it was built from the ground up with integration in mind (as their goal is not to replace any platform you might already be using, as they are going after the enterprise market) and has a lot of orchestration capability built in and could even serve as an intake platform if desired (and route requests that should be strategically managed spend to an existing strategic sourcing application or to mysupply, which can also be used for strategic sourcing if desired).

Event creation in mysupply can be super easy. Options include:

  • in-house LLM-assisted Event Creation and Management via API-powered ProcurementBot, that can be integrated through existing enterprise collaboration platforms (Microsoft Teams is in Production, further integrations are planned)
  • Existing event templates that define all of the items being sourced, data required for bids, and (pre) approved vendors (which can easily be augmented or removed) (any event can be saved as a template to kick off future events)
  • events from scratch, where the platform is very adaptive and you only need to specify as much information as is necessary to source the product/service, which, if already defined in the system, can simply be an RFP request and a due date

and, most importantly, all of these strategies can include

  • demand bundling, even if different products or services should be sourced using different strategies, which can be across buyers for a given timeframe (i.e. collect all requests for a week or a month and then source)
  • pre-selected, custom, or hybrid supplier lists
  • customized lots, as the platform allows sourcing by item (price) or lot (price)
  • multiple tender/go-to-market approaches (i.e. each lot can be designated for a different [type] of RFX or auction), where the approach doesn’t need to be selected until suppliers have confirmed interest AND initial bids are in (which is very relevant for tactical spend where you don’t know the market dynamics because you haven’t researched the market and/or don’t source the product or service regularly; it’s not like strategic spend where you know there are seven suppliers, and five will show up to a reverse auction)
  • automated negotiation via (lot-based) QuickBot or multi-line item QuickBot
  • multiple scenarios for negotiation award analysis (where the items can be broken up for further negotiation/award after an initial bid event based on total spend, number responses, etc.)

For the requester, integrated LLMs through ProcurementBot help the requester:

  • identify the product or service being requested
  • capture demand and critical requirements
  • select the category
  • be presented with the appropriate sourcing approach: catalog, self-service, or central sourcing (team)
    • for catalog, immediately make the buy by presenting the user with the available catalog options and allowing them to select one and complete the purchase (and then the bot completes the process in the source system)
    • for self service, flesh out tender specifics and select (pre-approved) suppliers and then ProcurementBot sends out the tenders and, when they are all returned, or a certain time has passed (as configured by the category manager in the mysupply platform) returns the quotes to the buyer through the initial chat channel (where they can select one)
    • for central sourcing, it collects the request and, if appropriate, bundles it with others that are then rolled up into a managed tender that is then put into a central buyer’s queue for management, which may happen before or after initial quote requests are sent to suppliers (if an event template has already been pre-configured)

Let’s dive into some key sections / capabilities for the sourcing professional.

Demand Management / Bundling

As above, the system can be pre-configured to bundle demand over a period of time for all requests for the same product or products in a pre-defined lot, but for the rest of the requests that come in, there is the demand management/bundling section. In this section, the buyer can see all of the requests, have mysupply suggest a bundling, and either pick a suggested bundle or create her own bundle. She can quickly search and filter to create custom sourcing project bundles and then immediately kick off a workflow to define a new sourcing project bundle.

When a new sourcing project is kicked off, the user is taken to a screen where they can select starting pre-defined supplier groupings that are relevant for each item requested in the demand bundle (and, of course, the system will not include duplicate invites if the supplier is in multiple supplier groups, so the sourcing organization doesn’t have to create intersection groups, just groups for each commonly requested item).

Standard Sourcing Process

Once the buyer defines a basic event through one of the workflows (kicked off from a single request or request bundle), the platform takes the user to the event summary. From there they can:

  • define the automation and starting strategy — the event can be setup to automatically select all approved suppliers, send the request out at a certain time, remind suppliers, automatically advance to evaluation when all starting bids are in or the deadline is reached, kick off automated negotiation rounds (where suppliers are given a chance to update bids based on rank information and built-in game theory negotiation strategies), and basically free the buyer until it’s time to evaluate the first round of bids and either award, or kick off another round — at this point, the buyer can change the negotiation strategy, and even split the event up into multiple parts; this is different from most platforms where the entire event structure, and strategy (single round, multi round, Dutch action, etc.) has to be defined up-front and cannot be changed — something which makes no sense in tactical tail spend sourcing where you don’t know the supplier interest or current market dynamics; note that the starting strategy can be multi-pronged based on event value (if the award can be done under 10,000, then just award the lot to the current lowest bidder; if under 25,000 use autonomous QuickBot negotiation and award to the lowest bidder on an item basis; if over 25,000, do a 2nd round RFP with the three best suppliers and more negotiation/bundling to motivate better pricing; etc.)
  • flesh out the request — quote breakdown (while it is tactical tail spend, you may still want shipping, handling, taxes, service fees, etc. broken out), basic information required, documents required, delivery and payment details that must be accepted, compliance requirements, etc.
  • invitation of the selected suppliers (where you can add or remove suppliers that were pre-populated from supplier groups appropriate to the items in the request)
  • the evaluation of the bids that come back – manually, autonomously, or a combination thereof;
    the platform supports best price strategies, threshold strategies (which allow the strategy to be dependent on the amount of the bid, i.e user-driven negotiation above a range, best price negotiation within a range, and best-price auto-award below a range), QuickBot single lot auto-negotiation, Multi-Item QuickBot, English auction, Dutch auction, ranking (based on weighted responses and costs), buyer awards (no auction/negotiation); it supports lot strategies (best distribution by single-item award or all split); it also supports multiple rounds if desired with pre-scheduled negotiation windows (for RFQs and auctions); and, finally, it supports automated awarding if strategies that permit automated awarding are selected (subject to conditions that can restrict auto-award based on LDO — Least Desirable Outcome — or MDO — Most Desirable Outcome — scenarios; however, note that this is just the starting strategy;
  • select one or more bids for negotiation and make an award (unassigned/unawarded items are summarized and the user can see, through color coding, the lowest cost among all offers, select one, and send it to the e-Procurement system; the user can even dynamically kick-off new rounds of the RFP/auction, which may have a smaller supplier set or introduce new suppliers if the responses weren’t acceptable )
  • manage Q&A with the suppliers

A great feature of mysupply is it is not built to replace your current strategic sourcing platform (which most organizations have), your existing catalogs and catalog management applications (they integrate with them through their extensive API support), or your ERP/MRP/AP system which manages your purchase orders (as they integrate with those too). It’s meant to fill the tactical / tail spend sourcing hole in most organizations and, in particular, help organizations with tactical sourcing teams and help desks become considerably more efficient so overall savings can be increased though effective category management practices that capture and encode organizational knowledge so the end users can make the right buys on their own as often as possible, ensuring that the tactical team can focus on higher spend tail spend categories and new categories (and develop the right strategies to manage those going forward).

If your organization does a lot of tactical / tail spend sourcing, mysupply is definitely a platform you might want to check out, especially since its ProcurementBot allows it to do intake through third party platforms organizational users are already familiar with (such as Microsoft Teams).