Playbooks? Those Were the Good Old Days!

THE PROPHET Jason Busch recently posted about 50 Years of Pivots in Procurement where he stated that:

  • 1980s: Procurement is Supply (prioritize)
  • 1990s: Procurement is Sourcing (save)
  • 2000s: Procurement is Transactional (systematize)
  • 2010s: Procurement is Spend (manage)
  • 2020s: Procurement is Playbooks (rinse/repeat)
  • 2025 : Procurement is …

the doctor‘s first response to this: Playbooks? He wishes!

In the late 2000s and 2010s, the top Procurement consultancies had playbooks that had good processes, methodologies, and metrics that would help any organization not best in class out-of-the-gate because they were built on tried-and-true processes, analysis, and results that worked. They weren’t centered on just implementing tech for tech’s sake, trying to roll out Procurement for the masses (who didn’t want, or need, a full Procurement solution — just easy acquisition of the products and services [they were responsible for buying to do their jobs on a daily basis] in an organizationally compliant way), or implementing AI for the heck of it (because they over-invested in training their workforce on Gen-AI solutions that have no value).

But that’s not the worst of it. In the doctor‘s view, the worst of it is that

2025 Procurement at many organizations is (on the road to) “Consumer” (intake/orchestrate).

Procurement is now all about ensuring every single person in the organization can “buy” on their own from the catalog or preferred vendor with no real management as long as they have “budget”, “authority”, or it’s a “preferred vendor”.

That’s just transactional Procurement on steroids. (i.e. it’s 2000 all over again, we just survived Y2K, and we don’t know how to manage spend with tech … really?) Now, it’s true that getting Spend Under Management (SUM) is good if you do something with that Spend Under Management data, but this surely isn’t.

Why? First of all, if you talk to a real old timer who did Procurement in the 80s/90s about this “intake” or “orchestrate” phase and they’ll probably say they just don’t get it. As far as they are concerned, Procurement is supposed to be more strategic and focus on all encompassing processes, strategies, negotiations, etc. Not about trying to manage every single nickle-and-dime purchase in the organization. This is one of the leading reasons results (and costs) in most organizations are getting worse, and not better.

Secondly, see our recent post on how Marketplace Madness is Coming on how

  • “Pay For View” Intake makes no logical sense
  • “Solution Sprawl” Orchestration doesn’t make any logical sense either
  • when it comes to I2O, it’s “where’s the beef” and “where’s the market” [hint: not where most of the providers are looking]

Furthermore, the age old analogy applies here — they can’t see the forest for the trees. Nor can you manage it that way. If you spend too long trying to focus on each individual sick tree you come across, the sickness will spread and consume the forest. Sometimes you have to just cut and burn the tree.

In other words, the madness is taken us towards consumerism in Procurement, and it’s the wrong path! We need to get back to process-centric playbooks, and let the tech take back-stage, as the tech supports Procurement, it doesn’t do it, or solve it, on its own.

More Valid Uses for Gen-AI … this time IN Procurement!

Some of you were upset that my last post on Valid Uses for Gen-AI weren’t very Procurement centric, arguing that there were valid uses for Gen-AI in Procurement and that the doctor should have focussed on, or at least included, those because why else would almost every vendor and their dog be including “AI” front and center on their web-site (about 85%+)!

Well, you’re right! To be completely fair, the doctor should acknowledge these valid uses, even if they are very few and very far between. So he will. Those of you following him closely will note that he mentioned some of these in his comment on LinkedIn to Sarah Scudder’s post on how “AI is a buzzword“.

AI is a lot more than a buzzword, but let’s give Gen-AI it’s due … in Procurement … first.

With Gen-AI you can:

1. Create a “you” chat-bot capable of responding to a number of free-form requests that can be mapped to standard types.
This is especially useful if the organization employs one or more annoying employees who always waits too long to request goods and then, after you place the order, insist on emailing you every day to ask “are they here yet” in reference to their request, even though you flat out told them the boats are coming by ship, it takes 24 days to sail the goods across the ocean once they are on the ship, typically 3 days to get them to the port, 3 to 14 days to get them on that ship, 3 to 7 days to get the ship into a dock, 3 to 4 days to unload the ship, and 3 to 4 days from the fort, for a minimum delivery time of 35 days, or 5 weeks, and asking week one just shows how stupid this employee is.

2. Similarly, you can create a “you” chatbot for RFP Question Response.
More specifically, you can create a bot that can simply regurgitate the answers to sales people who won’t read the spec and insist on emailing you on a daily basis with questions you already answered, and which they would realize if they weren’t so damn lazy and just read the full RFP.

3. Create meaningless RFPs from random “spec sheets”.
Specifically, take all those random “spec sheets” the organizational stakeholder downloaded from the internet just so you can check a box, send it out, and make him happy. (Even though no good RFP ever resulted from using vendor RFP templates or spec sheets.) Which is especially useless if you have a subscription with a big analyst firm that includes helping you identify the top 5 vendors you are going to invite to the RFP where you will focus on the service, integration, implementation, and relationship aspects as the analyst firm qualified the tech will meet your needs. (After all, sales, marketing, human resources, and other non-technical buyers love to be helpful in this way and don’t realize that just about every “sales automation”, “content management”, and “application system” has all of the same core features and you can usually make do with any one of a dozen or more low-cost “consumerized” freeware/shareware/pay-per-user SaaS subscriptions.)

4. Or, do something slightly more useful and auto-fill your RFPs with vendor-ish data.
You could use the AI to ingest ALL of a vendor’s website, marketing, and sales materials as well as third party summaries and reviews and auto-fill as much of your RFP as you can before sending it to the vendor, and then approximately score each field based on key words, to ensure that the vendor is likely capable of meeting all of your minimum requirements across the board before you ask them to fill out the RFP and, more importantly, spend hours, or days, reviewing their response.

5. Identify unusual or risky requests or clauses in a “ready to go” contract.
Compare the contract draft handed to you by the helpful stakeholder to the default ones in your library that were (co-)drafted by actual Procurement professionals and vetted by Legal and don’t have unusual, risky, or just plain stupid clauses. For example, an unvetted draft could have a clause that says your organization accepts all liability risk, you agree to pay before goods are even shipped, you’ll accept substitute SKUs without verification, etc. (because the helpful stakeholder just took the vendor’s suggested one-sided contract and handed it to you).

6. Automatic out-of-policy request denial.
Program it to just say “denied” for any request that doesn’t fall close to organizational norms.

7. Generate Kindergarten level summaries of standard reports for the C-Suite.
Got a C-suite full of bankers, accountants, and lawyers who don’t have a clue what the business actually does and need simplified reports translated to banker-speak and legalese? No problem!

Of course, the real question is to ask not what Gen-AI can do for you but what can you do without Gen-AI because the doctor would argue that you don’t need Gen-AI for any of this and that the non-Gen-AI solutions are better and more economical!

Let’s take these valid uses one-by-one:

1. You could hire a virtual admin assistant / AP clerk in the Phillippines, Thailand, or some other developing country with okay English skills to do that for 1K a month!
Furthermore, this full time worker could also respond to other, more generic, requests as well, and do some meaningful work, such as properly transcribing hand-written invoices (or correcting OCR errors), etc. And give your employees the comfort of a real, dependable, human for a fraction of the cost of that overpriced AI bullsh!t they are trying to shove down your throat.

2. Classic “AI” that works on key phrases in the hands of the admin assistant will work just as well.
It will find the most appropriate data, and then the admin can verify that the question can be answered by the paragraph(s) included in the RFP, or that the sales person actually read the RFP and is asking for a clarification on the text, or a more detailed specification. The sales person gets the desired response the first time, no time is wasted, and you haven’t p!ssed off the sales person by forcing him to interact with an artificially idiotic bot.

3. When they said the best things in life are free, they weren’t referring to vendor RFPs.
In fact, those free RFPs and spec sheets will be the most expensive documents you ever handle. Every single one was designed to lock you into the vendor’s solution because every single one focussed not on what a customer needed, but the capabilities and, most importantly, features that were most unique to the vendor. So if you use those RFPs and sheets, you will end up selecting that vendor, be that vendor right, or wrong, for you. The best RFPs and spec sheets are the ones created by you, or at least an independent consultant or analyst working in your best interest. No AI can do this — only an intelligent human that can do a proper needs, platform, and gap analysis and translate that into proper requirements.

4. Okay, you need AI for this … but … traditional, now classic, AI could do that quite well.
Modern Gen-AI doesn’t do any better, and the amount of human verified documents and data you need to sufficiently train the new LLMs to be as accurate as traditional, now classic, AI, is more than all but a handful of organizations have. So you’re going to pay more (both for the tech and the compute time) to get less. Why? In what world does that make sense?

5. Okay, you need NLP at a minimum for this, but you don’t need more. And you barely need AI.
All you have to do is is use classical NLP to identify clause types, do weighted comparisons to standard clauses, analyze sentence structures and gauge intent, and identify clauses that are missing, deviating from standard, and not present in standard contracts. And, as per our last use, do it just as well without needing nearly as much data to effectively train. Leading contracts analytics vendors have been doing this for over a decade.

6. Even first generation e-Procurement platforms could encode rules for auto-approval, auto-denial, and conditional workflows.
In other words, you just need the rules-based automation that we’ve had for decades. And every e-Procurement, Catalog Management, and Tail Spend application does this.

7. Any semi-modern reporting or analytics platforms can allow the templates to be customized to any level of detail or summary desired.
And if you have a modern spend analysis platform, this is super easy. Furthermore, if your C-Suite is filled entirely with accountants, bankers, and lawyers who don’t understand what the business does, because they fired all the STEM professionals who understood what the business actually does, then your organization has a much bigger problem than reporting.

In other words, there isn’t a single use case where you actually need Gen-AI, as traditional approaches not only get the job done in each of these situations, but traditional approaches do it better, cheaper, and more reliably with zero chance of hallucination.

At the end of the day you want a real solution that solves a real problem. And the best way to identify such a solution is to remember that Gen-AI is really short for GENerated Artificial Idiocy. So if you want a real solution that solves a real problem, simply avoid any solution that puts AI first. This way you won’t get a “solution” that is:

  • Artificial Idiocy enabled
  • Artificial Idiocy backed
  • Artificial Idiocy enhanced
  • Artificial Idiocy driven

As Sarah Scudder noted on “AI is a buzzword“, AI is a delivery mechanism which, scientifically speaking, is a method by which the virus spreads itself. This is probably the best non-technical description of what AI is ever! And the best explanation of why you should never trust AI!

Marketplace Madness is Coming Because History WILL Repeat Itself

Over on LinkedIn, Jon The Revelator asked what 2005 could tell us about Procurement AI in 2024, reminding us that major ERP companies have tried multiple times to move “down market”, there’s (still) no dominant player in the pure “Procurement” sector (with a number of big firms showing up in a slice-of-the-pie analysis (and most analyst market maps), and many names that were around in 2004 are names most of today’s practitioners have never heard of.

And, as part of the conversation (check the comments), Jon asked if history will repeat itself. (i.e. Will many of today’s players disappear? Jon listed a dozen names that are no longer in existence.)

the doctor‘ answer, MOST DEFINITELY!

To be more precise, the doctor is predicting twice the percentage of (fire-sale) acquisitions and out-of-business/shut-downs over the next eighteen (18) months compared to usual. What does this mean numbers wise? He usually removes a few dozen vendors from his database every year (which is about 5% of the number of vendors in the Source-to-Pay+ [S2P+] space, as captured in the Sourcing Innovation Mega-Map), and expects that within eighteen (18) months, he will need to remove a few few dozen vendors from his database, which translates into 10% or more, or a number of vendors that is closer to 100 than 50! That’s significant.

Why? A number of reasons, which include, but are not limited to:

1) A lot of the smaller 1 or 2 module pure-play VC funded companies that took (too much) money before the Silicon Valley Bank failure and are not yet profitable are now in a bad situation given that VC funding is still recessed, PE is now looking for close to 300K/FTE for a “good” investment, and these smaller companies are not there as enterprise Procurement software acquisition for the last two years has been recessed (due to overall market fears of recession), and, in addition to sales being down, buyers have been risk averse and newer / smaller players have, in general, being doing worse than they were doing during COVID (when companies were desperate for solutions that were pure SaaS) and just pre-COVID (when companies were more willing to try smaller plays in what they thought was a globally stable economic environment).

2a) A number of smaller plays were started by consultants with no funding, no real sales team, and no marketing support and they just can’t get traction through the noise (or funding).

2b) A lot of smaller plays were started by Procurement practitioners with little or no funding, the same sales and marketing problems, and a bigger disadvantage because they only know their problems, and maybe the problems of a small peer group they meet with in their local organization’s monthly meet-up, and they don’t know the problems in general, what sells, and what doesn’t. This makes funding for them hard (as smart investors know that Procurement experience alone only goes so far), and sales and marketing harder (they were buyers, not sellers; and they don’t understand that the message they needed to hear is not one that will cut through the noise and reach buyers who aren’t as experienced and enlightened as they are).

And when you start to break down Source-to-Pay+, you find that …

3) There are way too many “tech without a cause AI plays” … with no real, demonstrateable value, and, in reality, no future. (Especially since anyone from the Golden Era remembers that all the rebel without a cause managed to do was get his friend killed.)

4) A lot of the carbon “calculators” offer no new functionality (and thus no new value). Most good DIY (do-it-yourself) spend analytics application providers can help you build one in 15 minutes (no joke! — give Spendata a call, for example). Furthermore, you need good data for them to work, so if you don’t have integrations to good data and systems with better data, what’s the point?

5) Moving on to classic sourcing, every developer and their dog can whip up eRFX functionality in a matter of weeks and there is no differentiation there anymore if you’re just another eRFX. So you have a slightly different take on a UX. Well, guess what, that don’t impress me much … and the doctor ain’t alone in that viewpoint.

6) Moving onto classic CLM, if the platform doesn’t support deep analytics, negotiation support, or something that makes it more than an e-filing cabinet, it’s going, going … gone. Way too many over-glorified document management solutions out there to survive, especially at a price point beyond a few hundred per named user per year (given how many freeware/shareware/end-consumer document platforms exist in the open-source repositories).

7) There’s over one hundred (100) SXM plays. OVER ONE HUNDRED. Given that SXM is a CORNED QUIP mash, and you need different types and depths of solution for organizations of different sizes in different verticals, there’s room for two to three dozen. But one hundred? Forget it! Especially since if all your solution ends up being is a glorified SaaS (relational) database, there’s no value there.

8) While there is a desperate need for analytics, and not enough true analytics players, first generation solutions that are nothing more than pre-generated static (OLAP) reports are about to go the way of the dodo. Real-time, dynamic, customizeable analytics are what’s needed today.

9) Standalone ePro is going to go. Given that there are dozens of P2P solutions, and a growing number of P2P solutions with built-in payment support, why would you want old-school ePro, which doesn’t help the average organizational user or get tail-spend under control.

10) AP without full I2P support, integrated payment support, or integrated P-Card support or value beyond classic AP is also going to go. There are dozens and dozens of these solutions (including dozens that started during COVID because people needed to do business entirely online, and since there appeared to be an opportunity for anyone who didn’t do their research beyond bill.com, which is more people than you’d think, see The Biggest Mistake founders in S2P+ keep making after two decades, too many of these were started). The market just doesn’t need that many!


11) Stand-alone Intake(-to)/Orchestrate solutions. The current poster children of the space will soon have a fall from grace (and only the smart will survive)! Call me Scrooge if you like, but there’s a logic behind why I’m developing a bah-humbug attitude towards most of these. And it goes something like this.

Intake

  • Pay For View if modern procurement solutions are completely SaaS, then they should be accessible by anyone with a web browser, so why should you have to buy a third party solution to see the data in those applications? wouldn’t it make more sense to just switch to modern source to pay solutions that allow you to give variable levels of access to everyone who needs access instead of paying for two solutions AND an integrator?

Orchestrate

  • Solution Sprawl while orchestration is supposed to help with solution sprawl, it’s yet another solution and only adds to it. Wouldn’t it make more sense to invest in and switch to a core sourcing and/or procurement platform with a fully open API where all of the other modules you need can pull the necessary data from and push the necessary data to that platform?

I2O

  • Where’s the Beef? Talk to an old Pro who was doing Procurement back before the first modern tools began to be introduced in the late 90’s and they’ll tell you that they don’t get this modern focus on “orchestration” and managing “expenses” and low-value buys because, when they were doing Procurement, it was about identifying and strategically managing multi million (10, 50, 100+) categories where even 2% made a significant improvement to the bottom line, and way more than 10% on a < 100K category.
  • Where’s the Market? This is only a problem in large enterprises — right now, many of these I2O solutions are going after the mid-market who are eating it up because of ease of use, but as soon as they realize the emperor has no clothes, and there’s no support for real strategic procurement (yet alone strategic sourcing) and you have to go out and buy more platforms, what’s going to happen? The reality is that the mid-market is better served by a federated catalog management / punchout platform, and will likely be better served still by a new breed of e-commerce B2B solutions for end-user Procurement (which is being led by providers like BlueBean. Which will only leave the enterprise space, and, more specifically, the enterprise players who are stuck with older generation solutions (due to sunk costs, etc.) that don’t integrate well or have modern bells and wizards.

And so on. The market is over crowded, most of the providers are struggling, funding has dried up for all but the best (who haven’t been overfunded already) [and already profitable with true long-term growth capability], and there’s no room for the rest.

History will repeat, and those who don’t follow best practices and avoid mistakes will be the first to fall.

Mistake X that Procurement Founders Keep Making

As part of the discussion between the doctor and Jon The Revelator on how 2005 can tell us why most AI initiatives fail in 2024, the doctor, who recently finished the first six installments of his Mistakes Procurement Founders Keep making series, noted one mistake that founders keep making that maybe he should have made more explicit.

Specifically, and this applies to founders who are techies / ex-consultants in particular who are tech first, the one big mistake that is still being made two decades later is this:

Building a “solution” without having identified the “problem” they are trying to solve.

Or, as The Revelator put it, you must solve problems before selling solutions.

(And, preferably, not a problem that was already solved, and solved better.)

While this mistake could fall under foundational market research, it also stands on its own because these tech-minded individuals think that just because the tech doesn’t appear to exist, there’s a market for it.

While the “find a new ‘solution’, figure out what it works for later” might work for PhD students (develop a new algorithm, technique, material, etc. and then figure out what it can be used for), it doesn’t work well in the business world.

While techies might think business people want cool, the reality is that business people, especially those writing big cheques, don’t care. Techies think business people want slick UX. The reality is that business people don’t care. Techies think business people want the latest and greatest tech stack. But, again, business people don’t care.

The techies fail to realize that the business people they are selling to are NOT the people in the organization who are actually going to use the solution, which could be on decades old tech, with a horrendous UI and UX, and descriptors from an 80s horror film. All the solution buyers in an organization care about is

  1. will it meet the business need,
  2. will we get it at the lowest price and,
  3. if the solution processes transactions or personal data,
    does it have all the appropriate security certifications and monitoring?

That’s it. The budget controllers only care about whether or not the solution will solve their problem efficiently, effectively, and affordably. And if you can’t demonstrate that, they won’t care whether or not they’re buying it from Someone Who’s Cool.

Dear SaaS Founder. We know you’ll make mistakes, but there’s no excuse to make these!

This month, having seen many of the same mistakes that he’s seen over 18 years as an (independent) analyst and 20+ years as a consultant, still being made in new startups (since leaving Spend Matters almost 20 months ago on 2022 Sep 30) the doctor decided to put his experience to e-paper and chronicle 15 of the most common mistakes he sees all too often — mistakes that don’t need to be made anymore. (In the early noughts, before there were dozens of tech startup books telling you what worked and what didn’t for founders that went before, some of these were excusable. But not anymore.)

Now, these aren’t being pulled out of the air. Over his career, he has researched/engaged in depth with over 500 vendors and their solutions as an analyst, consultant, or diligence professional, and publicly (co-)written up the solutions of over 350 of these on Sourcing Innovation and Spend Matters. He’s also followed the progress, or lack thereof, of many of these companies and seen some grow, some stagnate, some get acquired, and some ultimately have to shut their doors. The number of analysts still active in our space that can make the same claim-to-fame can likely be counted on your fingers!

He’d hope after last year’s series on the 10 + 2 best practices for success, some of these mistakes would become obvious and their frequency would decrease, but he was obviously too indirect in why those best practices were being focussed on and what some key takeaways were.

In any case, because he loves innovation and startups (which should be clear from the fact that he writes about 50 to 75 of them per year FOR FREE) and would like to see founders with good products, platforms, and commitment to their customers succeed, he’s hoping this more direct approach will help those companies who just started and who are still making a few of these stop doing so before it’s too late and help others start on the right track.

So without further ado, here are the links to the articles on the mistakes you’re still making:

Enjoy. Educate. Excel! (No, not the spreadsheet, the intransitive verb!)