Strategic Procurement for Strategic M&A

A recent article over on Fierce Healthcare on how strategic procurement can maximize M&A benefits noted that consolidating procurement can slash costs by standardizing purchasing processes and taking advantage of volume discounts for supplies because a smart business buying strategy involves using one technology platform for purchasing a wide variety of products from multiple sources.

The healthcare sector has also been ripe with M&A over the past few years, with $13 Billion in revenue now required to be a top 20 healthcare system, as many systems have grown significantly as a result of inorganic M&A growth over the past few years. According to the article, the recent M&A activity has been characterized by cross-geography deals designed to create value by scaling investments in platform capabilities across digital, analytics, shared services and workforce management.

But Procurement can find more value beyond shared products, shared supply base, and shared systems.

As hinted in the article, Procurement can also:

  • identify opportunities for shared services across the merged companies:
    this can allow for service provider contract consolidation and renegotiation for better rates
  • better workforce management:
    Procurement can help analyze the workforce needs across the proposed combined organization to better reallocate workforce needs (and possibly reduce the need for outsourced services)

But it doesn’t have to stop there.

An organization spends money across:

  • employees
  • contractors
  • facilities
  • utilities
  • products
  • systems

Procurement can help identify opportunities across each of these.

In other words, don’t overlook:

  • facilities:
    maybe you can reduce the number of locations through relocation of some personnel, and even reduce the overall cost through better facility identification
  • utilities:
    some states have energy deregulation, and there is significant opportunity in telco (like SaaS)
  • software: well beyond the S2P tools

Anywhere money is spent, Procurement can help provide an objective, fact-based view — not just on product-based spend.

Are the Seven Suites Sailing the Seven Seas Sans a Sextant?

Post Edit: The summary on LinkedIn has been removed. Note that this is an opinion piece and read why it was removed from LInkedIn in the Social Media Policy.  [Also note that this is about [marketing] direction, not about the actual platform, which we have covered, or advised the coverage on, here or on Spend Matters (in the past)!  (See the end of this article for links.) We have recommended all of these suites and will continue to recommend them from a product and platform perspective where they are a great fit (even if we lament the [marketing] direction).]

You knew this was coming. It was foreshadowed in our top 10 ways to be labelled as a (Procure)Tech Noise / TroubleMaker article. (Where satisfaction was guaranteed if you followed the advice.)

Basically, in this new age where hype trumps straight-shooting, fake Gen-AI* trumps HI (Human Intelligence), intake and orchestration trumps the ability to actually do Proper Prudent Procurement, and carbon calculation trumps the ability to actually do anything about carbon reduction, the question becomes are the senior stalwart suites, who have an install base, good recurring revenue, and the ability to weather storms, staying the charted course or straying off towards the rocks and the siren’s call?

More specifically, are the seven suites that have ruled the enterprise Source-to-Pay Solution Maps since those maps were introduced still staying the course and slow and steady moving towards the next generation of real Source-to-Pay solutions that will solve real customer problems, or getting lured in by the siren’s call and sailing towards the rocks (and inevitably delaying the next great version of their platform)?

After noting we have links to previous in-depth coverage at the end of this article (so you can get the full picture), let’s take them one-by-one:

(SAP) Ariba

As far as we are concerned, SAP has been sailing without a direction since they acquired Fieldglass and Concur in 2014 (after acquiring Ariba in 2012) and formed the Intelligent Spend Group in 2015 (which has since seen numerous changes in leadership, direction, and even interpretation). They started off with a great idea (like Jaggaer who came up with “One” in 2018 after acquiring Pool4Tool and BravoSolution in 2017), but never really did anything significant with those acquisitions. (We can’t say why, but numerous leadership changes suggest disagreement on direction and priorities.)  They are still, more or less, three solutions, on three stacks, which aren’t deeply integrated … unless, of course, you buy their new brand-spanking new Spend Control Tower which will integrate all your Procurement, CWM, and T&E spend, as well as your HR/payroll spend and other un-captured spend if you have other SAP modules or modules that integrate with SAP.  (Or augment it with an orchestration interface that was built for SAP.)

Their top of page message about “automating spending processes and actively manage more spend for better control, greater value, and more savings” and “managing all sources of spend for increased control and business resilience” is pretty good, and one might think they are staying the course … still a decade behind the times in some ways (as Control Towers were so early 2010s), but staying the course. Unless, of course, you were paying attention to their most recent announcement pushing “SAP Business AI built into your procurement processes“. Even though they first announced an AI Co-pilot in 2018, it received pretty low fanfare, and was kept in the backroom, until this year, where it is now “super-charging” its AI Co-pilot with Gen-AI and other new capabilities!

While a bit behind the times (which makes sense for them as their enterprise customers don’t want to be suffering hit-and-miss innovation on the bleeding edge), everything was looking pretty good in our books until they started diving all in on the (Gen-)AI Co-pilot.

We’re especially saddened by the new, deep, focus on the (Gen)-AI Co-pilot because, and while this is as much on the SAP side as the Ariba side, they seemed to have been making some very good progress on the improvement and modernization of the direct side — catching up to the big specialists (namely Ivalua and Jaggaer) that were, through their DirectWorks and Pool4Tool acquisitions, respectively, working hard to build a better direct mousetrap and take SAP customers away).

Coupa

Well, you know our opinion here … the way things are going, this could be Coupa’s Third and Final Act. They replaced BSM with MMM, which they say stands for Make Margins Multiply, but what does that mean?

Even worse, they’ve apparently now gone all-in on AI, recently releasing 100+ AI powered innovations in their spend management platform and redoing their tagline to “optimizing your spend with the #1 AI total spend management platform“. Which is sad for us. It’s acquisition of Trade Extensions made it the #1 sourcing optimization platform and its acquisition of Llamasoft gave it the ability to optimize supply chain networks as well. It could literally optimize your spend across Souce-to-Pay and Supply Chain better than any other source to pay platform out there and yet it too has gone all in on AI, which does NOT optimize!

Ivalua

Ivalua, which, like Coupa, has been tracked by SI since the early days, was one of the platforms we felt was on the right track. Especially since it was one of the few platforms that was built up on one native, integrated, code base that allowed for true, integrated, end-to-end S2P processes that felt fragmented on other suites that built up their functionality by acquiring modular vendors and loosely integrating them.

At first glance, it seems like they are still on the right path. Off the top its “SIMPLIFY PROCUREMENT with a Unified Source-to-Pay platform” messaging is on course. Moving on to “complete transparency, seamless automation, and enhanced collaboration” elicits a hear, hear. “It will make you #LoveProcurement“. Doubtful in our books (unless you love it already because, if you love procurement, you love the process and not the tech). But you certainly won’t hate it with a good platform. “Make your spend matter with a complete, future-proof platform to manage all spend.” Not quite all spend, but certainly enough to make a big difference!

… and use “IVA to supercharge procurement with Gen-AI“. NOPE! It was a great start when they tried to be the first S2P vendor to create a true cross-platform search capability through a single search bar. Their early chat-bot interface which allowed for the execution of platform functions through simple statements, which could be learned and remembered, as they would be interpreted the exact same way every single time, was good for people who didn’t want to jump around through menus and modules and quickly access reports, documents, and simple system functions.

But when you introduce Gen-AI, you have unpredictability, the need to answer six or seven questions to explain, and get, what you hopefully want, and the opportunity for inappropriate (and if you hook it up to the web, even bad) data to be retrieved, which means bad decisions and bad results. In our view, they were so close, but now … we’re hoping they reverse course just a little bit.

Jaggaer

As we noted above, after the acquisition of Pool4Tool and BravoSolution in 2017, Jaggaer announced “ONE” in 2018, but under Accel KKR, they never achieved “ONE”, and, in fact, they didn’t even come close to true cross-platform data integration (level 1 on a 5 level hierarchy of integration) in our deep assessments (which included SolutionMap evaluations at the time), largely due to all the layoffs and operational cost reductions. It wasn’t until Cinven (who flipped them to Vista Equity earlier this year) acquired Jaggaer in 2019 that they started serious integration efforts (and, in the early 2020s, made very good progress).

Since then, they have continued to focus on:

1. “Harnessing the power of ONE intelligent S2P platform to turn procurement into a value-adding force with Jaggaer’s AI-powered, S2P solutions and supplier collaboration platform“, which is great.

2. “Unlocking the shared value in your procurement ecosystem to accelerate business outcomes, automate complexities, and manage spend with Jaggaer’s intelligent S2P and supplier collaboration platform“, which is greater.

3. “Accelerating your autonomous commerce journey to turn procurement into a value-adding force with Jaggaer’s AI-powered S2P solutions and supplier collaboration platform“, and there it is. Autonomous is okay when “autonomous” is just automating tactical tasks. But AI powered … especially when they are now going down the Gen-AI path, not good. Not good at all in our books. They have all the know how between old SciQuest (Indirect), Pool4Tool (Direct), and BravoSolution (Complex Services) to be one of the few suites that can handle any type of buy using best-in-class processes and capabilities. Continuing to bring that together, magnifying the opportunities, and continuing to introduce new capabilities and streamlined workflows and interfaces around that would not only be a huge differentiator, but one of the biggest in our book. Wasting talent on Gen-AI conversational interfaces which carry the risk of exacerbate as many complex events as they simplify, the exact opposite.  (As per our previous, grudging, admission, we believe Gen-AI has very few valid uses in Procurement, and believe that for most of those uses, Jaggaer already had better tech and approaches — and all that was needed was some streamlining and UX improvements.)

Edit: 2024-Nov-06: Jaggaer has reached out and indicated that while they believe in using Gen-AI wherever they think it has value, it is fully optional and they are more concerned with maintaining their focus on full platform integration and utilization of the right AI for automation where tactical processes can be automated.  Hopefully marketing can balance the messaging more going forward so people don’t make inferences to the contrary.

GEP

GEP used to be all about “SMART” Procurement. They named their suite, which was a complete re-write from scratch as a fine-tuned integrated suite, “SMART” back in 2013. They were playing a bit of catch-up, but it was a good, well oiled, integrated suite. Then they built NEXXE, so they could do supply chain, which, while not quite on the scale of a Big dedicated Supply Chain player (like Blue Yonder or Infor), given that they are also a full-service company, was more than good enough to support end-to-end S2P and Supply Chain for many of their G3000 clients.  (And if you knew who some of their clients were, you’d be amazed.  They support big names with very complex sourcing, procurement, and supply chain problems.)  By the end of the 2010s, the UX needed updating in both, but if you look at the Spend Matters Solution Map scores, it was more than enough to do the job. A few new advanced capabilities in a few areas and it was a great solution for their target market (G3000 who wanted end to end software and services across S2P and Supply Chain).

So where are they now? “GEP’s AI-First approach seamlessly integrates strategy, software and managed services, enabling enterprises to rapidly establish the infrastructure and capabilities necessary to build and run high-performance procurement and supply chain organizations.”

Why, why, why? First of all, in our experience, customers don’t buy GEP for AI-First, or even UX, they buy because they want the one-throat-to-choke solution-and-services model that works that GEP offers across source-to-pay and supply chain, which is something only SAP and Oracle can offer, and, more importantly, neither of them can offer it as a company that started as a S2P, and then Supply Chain, specialist (as SAP and Oracle both started as ERPs and also split focus across so many other areas — HR, CRM, etc.). Secondly, they want their their Procurement and Supply Chain managed, not run by a dumb bot who may or may not make random decisions on anything at any time. Thirdly they want predictable, repeatable results that they can bank on, as well as the ability to get to the root cause when something is screwed up. None of this says, or even implies, AI.  And definitely not Gen-AI!  Ugh.

Zycus

While much less visible in North America over the last few years, Zycus for a while was making a splash as the “affordable” solution that could be obtained in the six (and not seven) figures and do the majority of what most large mid-markets (LMM) and enterprises needed, especially in industries that didn’t require a lot of “direct”. It was a great solution for LMM multi-nationals on the rise to true global enterprises. And their messaging was straight to the point: the “Power of Procurement” through their Source-to-Pay Procurement Suite. It was clear what they did, what they offered, and why you wanted to use Zycus to go digital. Even the most novice of Procurement practitioners could understand it. Heck, they were one of the first to build a custom intake module (iRequest) for their entire platform a decade ago. (It should have been built in at the core, but not many suites would admit this oversight halfway through their journey and actively work to correct it.  Zycus deserves big props for this.)

Where are they now? “Make Procurement Intelligent: World’s first Generative AI powered S2P Platform that helps you achieve 10X speed and efficiency in procurement.” All-in on the Gen-AI hype train! (And given how many specialists launched on Gen-AI over the last couple of years, and how they are usually showing up after the party starts, following a best value approach, we will tell you that while they are one of the first, they are definitely NOT the world’s first.  However, in fairness, we will note that they were undeniably one of the first to investigate and deliver automated spend classification, and were so early in doing this they could have been the first full source-to-pay suite to have it, all depending on your definition of suite.)  Basically, more of our hopes and dreams that the big suites are resisting the Gen-AI hype are dashed.

Interlude

So where are we now? That’s six suites all in on AI, and, for the most part, Gen-AI, and, in our opinion, sailing the seas sans a sextant (at least with respect to their marketing direction)! (After all, despite the fact that it continues to perpetrate the Gen-AI hype, Gartner recently reported 85% failure rates in AI projects last year — and Bain is now reporting technology project failure rates of 88%, an all time tech failure high! This should be more than enough to turn away from Gen-AI, even without a discussion of all the problems Gen-AI comes with and all the risks Gen-AI entails. [Hallucinations, sleeper code, implanting false memories, etc. etc. etc.])

This is very sad in our view as these are six suites that grew and attained their status by attempting to, and then building, real solutions that solved real customer problems sufficiently enough to sign big customers, keep big customers, and grow big customer accounts. Since, with the possible exception of Ariba (that might have been added on by a SAP ERP customer), these aren’t ERP vendors with ERP lock in, you know they had to, and have to, be doing something right! Why risk that track record on unproven (and usually inappropriate) (Gen)-AI?

Now, as per our Coupa coverage, we hope we are dead wrong, that they all have a plan to continue building great solutions without Gen-AI (dominance), that they will continue to remain strong suites, and that we will be covering them for years to come (if they ever return our emails and messages and answer our demo requests).  We’ve invested almost two decades covering these solutions, and, more importantly, we have recommended and strongly recommended all of these solutions in the past and fully expect to keep doing so.  (Some clients need a suite, and we base our recommendations on current product capabilities, not how good the vendor is at marketing those capabilities.  That’s the advantage of having a deep understanding of technology!)

This just leaves us with:

Oracle

Specifically, their Fusion Cloud Procurement, which, to be honest, was the one suite we would almost never put on a shortlist for a company looking for a specialist S2P solution since they were usually less extensive and less feature-rich than the other suites that started as best-of-breed. (But definitely would for Oracle Shops that liked strong S2P integration with the ERP.)

However, when you go to their page, you see their messaging is all about asking if “your procurement suite can automate procure-to-pay, strategic sourcing and supplier management processes“? Then their messaging about how their “Fusion Cloud Procurement capabilities, built-in collaboration and analytic insights drive agility, manage risk and increase margins“. Moreover, “Oracle Fusion Cloud Procurement is an “integrated source-to-settle suite that automates business processes, enables strategic sourcing, improves supplier relationship management and simplifies buying resulting in lower risk, improved savings and greater profitability.” And, finally, it consists of modules for supplier management, sourcing, procurement contracts, purchasing, direct procurement, and procurement analytics.

Moreover, not a single mention of ANY AI on their main page. Just straight to the point messaging an average buyer and executive can understand. Moreover, searching for AI immediately takes you to Oracle AI for Fusion applications where you have a list of traditional AI for spend classification, predicted shipment and cycle times, dynamic discounting, supplier recommendations, demand sensing, anomaly detection, etc. No Gen-AI out of the box. If you dig deep, you find that you can have a Gen-AI based Procurement Tool with Natural Language Queries if you want it (and you are willing to custom build, configure, and train it), but they aren’t pushing it, you have to look for it, and ask for it. In other words, if you really want it, you can have it (because some customers will want it without researching it and they do give customers what they want), but they recognize you don’t need it for value, so they aren’t focussed on selling it (or even marketing it). (Just like they didn’t fall for The Cloud is a Crystal Ball hype, they ain’t falling for the Gen-AI Hype [yet].)

And that makes them the only suite that might not be sailing the seven seas sans a sextant (at least as far as their marketing direction is concerned). Now, we’re not saying they’re the best at using the sextant and charting a course, as they are typically behind most of the other suites in leading S2P functionality, but the simple fact they know that getting to your destination requires staying the course says something, and, in our book, that now makes them definite short-list material. Plus, like SAP, most of their customers are big enterprises that don’t want leading (and definitely don’t want bleeding) edge and instead want tested tried and true solutions.  And that’s why they’re going to be around for their 50th anniversary in 2027 and, if they so desire, might even be around in 2077.

In other words, they might be the tortoise, but we know in the end, if it stays the course, it eventually wins the race. (And this is something we never thought we’d write about Oracle in the early days. After all, Davie left Oracle to start the Coupa Factory in 2005 because he didn’t think they’d ever get where was needed in a timely fashion. How times have changed!)

Markets evolve, suites evolve, and messaging evolves.  Maybe when the Gen-AI hype dies down, we’ll see clearer messaging and be able to see the routes the suites are charting.  Only time will tell.

* Gen-AI stands for Generative Artificial Intelligence but should stand for Generative Artificial Idiocy as none of the generic Gen-AI LLM tools are intelligent and, moreover, can’t even do basic reasoning. Only the “generative” part is accurate, as generative literally means “make stuff up” and that’s what this hallucinatory technology does all the time!  (And that’s why SI is so scared when vendors start trying to rapidly incorporate it into their products.  As per previous coverage, their aren’t many valid uses cases with high reliability.)

Now, in full disclosure, SI hasn’t reviewed any of these solutions, except for two discrete modules in Coupa (Sourcing Optimization and Supply Chain Solutions), in the last 2 years, but this is not for lack of trying. SI has reached out (multiple times) to all but two of these companies, and, despite being one of the first sites to cover some these companies in the past (and do so in the early days when no one else would), has either been declined or completely ignored. (All the suites seem to care about now is Gartner and sometimes Spend Matters.)

First Coverage of:

  • Ariba: one of the few vendors that would not talk to SI in the early days, first covered by the doctor on Spend Matters in a 2-part piece in 2018 on Sourcing Decision Optimization Part 1 and Part 2#
  • Coupa was first covered in 2006 on the first Procurement Independence day
  • Ivalua was first covered in 2010 in a two-parter on end-to-end sourcing and procurement (Part 1 and Part 2)
  • Jaggaer is rebranded SciQuest, which was another vendor that wouldn’t talk to SI in the early days, even though the majority of its acquisitions, including AECSoft, Upside Software, Spend Radar, CombineNet, Pool4Tool, and BravoSolution, all did; the doctor did advise on Jaggaer coverage on Spend Matters as Lead Solution Map Analyst, but did not cover them directly;  he would advise checking out Spend Matter’s coverage if you have access: (S2C 1, S2C 2, and
    S2C 3 as well as P2P 1, P2P 2, and P2P 3)
  • GEP was not covered on SI, even though it acquired Enporion which was, as GEP was not highly relevant for SI’s market (focussed on companies who wanted insight into DIY platforms); the doctor did work with Xavier Olivera, Pierre Mitchell, and Jason Busch to do a deep dive in 2019 (Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7) which was the 6th most popular PRO article of the year! (Source)
  • Zycus, unfortunately, was not covered on SI as they never made our radar until the doctor started contributing to Spend Matters, where he advised on coverage, but did not do the vendor coverage (which included the 2018 Vendor Analysis, which we recommend: Part 1, Part 2, and Part 3)
  • Oracle, another of the original vendors that would not talk to SI, was never covered on SI, and while the doctor did consult on their platform capability during Solution Map capabilities, never contributed to a write-up (but would recommend anything Xavier Olivera or Jason Busch ever wrote about them, including Cloud Surprise, Part 1, Part 2, Part 3, and Update 1)

# Note that the Spend Matters site migration of June 2023, in addition to removing all articles pre-2013 and many more pre-2020, also dropped co-authors on many articles as well. Most of what the doctor wrote in the early days was always co-authored with Jason Busch who usually received lead credit (and, thus, was the author who survived the migration).

So You Admit You Might Be a Dead-Company Walking. How Do You Avoid the Graveyard? Part 8

In short, as per Part 1, you

  1. keep admitting to every mistake you are making and do something about it, then
  2. continue by looking for cost-effective opportunities for improvement and pursue them and finally
  3. never, ever, ever forget the timeless basics.

Today, we’ll continue by describing what you do when you identify, and admit to, one of the last two mistakes (mistakes 11 & 12) we chronicled in our two part introduction to our “dead company walking” (Part 1 and Part 2) series (where we helped your potential customers identify problems that signify you are a SaaS supplier they should be walking away from). (You can find part 2, part 3, part 4, part 5, part 6, and part 7 here.)

A) Our tech works, any failure is the result of the implementation team/org

We’ve said it numerous times before:

Any failure is your fault, no ands ifs or buts.

If you sell the product, you are responsible for making sure it can work before selling the deal, does work after the implementation, and gets used. Otherwise, you failed.

Moreover, when it comes to external implementation teams, it’s up to you to make sure they are up to snuff.

Put together an implementation partner certification program, and don’t allow anyone to implement your product until their personnel takes your program and passes your course.

Now, it’s true that certification alone isn’t enough to make sure the partner’s personnel puts in the proper effort, but at least you have certainty that they do know how to implement your product, and if a partner will actually go through the effort, they are probably serious about doing a good job on the implementation, which greatly increases the odds of success.

And if they won’t get certified, then you know they don’t care about customer success, just revenue. And, to be blunt, that’s not a “partner” you want!

B) We know what we’re doing.

Okay, the doctor will admit he misled you and is only offering up a solution to one of the mistakes in this article because this is the one mistake you won’t admit to, and he knows it. You think that because you raised a lot of money on a great story that you know how to write the story all the way to, and through, the ending, and that the ending will be a great one. And nothing will shake you from that belief. He’s seen it too often in recent years. Big money creates big egos, and they don’t reset until the walls come crashing down.

Now, for any of you dumb companies reading this for whom it’s not too late, here’s the reality of the situation that you must do everything in your power to avoid.

The reality is that you, like everyone else, can write a story if you put your mind to it. It might even be a good story. But here’s the reality: there’s no guarantee that story is going to sell (or at least sell anywhere nearly as well as you are predicting, or that the ending is going to be the one that you want). The only companies that have achieved both have done so either through luck (which is rare and which you can’t count on) or through learning (by consulting with the best experts they can find across multiple areas of their business).

You know what you know, but you don’t know what you don’t know. And if you

  1. can’t admit this
  2. can’t recognize when someone is right when they are telling you that you don’t know something (or are missing something critical)
  3. can’t recognize when someone is giving you (part of) a solution

You’re in trouble.

You’re also in trouble if you assume that because you are a great leader or a great sales person you are a great CEO, or if you assume that because you are a great CEO you can make the right tech decisions, and especially if you assume that because another great CEO told you something was the right tech move (for their company), it is the right tech move for your company.

Everyone has a particular set of skills they are best at, and a set of skills they are certainly not best at, and that’s okay — especially if the set of skills you are best at puts you in the top quartile or higher and brings a lot of value to your company. No one can be an expert at more than a few things. If it takes at least 10,000 hours or five years, and sometimes 20,000 hours, or ten years, to master a subject, then it should be clear that a person will only be able to master a few skills in their lifetime. And if it’s a hard skill, very few will even try (which makes you incredibly valuable).

For example, just because the doctor is one of the leading experts in the Americas and Western Europe on Strategic Sourcing Decision Optimization* (SSDO), is a great architect of optimization and analytic products, has been a great CTO for SaaS companies building advanced tech problems, and can model almost any business scenario mathematically — including the most complex financial models you can dream of, that doesn’t mean he’d be a good CFO. In fact, he’d be a p!ss p00r one and knows it! (That’s one of the reasons he won’t start his own company and be a CEO because startups require a core mix of skill sets, and the right core team, as per the great Garry Mansell’s Simplify to Succeed, and he only has half of them; and in a pinch, he’s a better [acting] COO than CEO, but even then there are better COOs.) And that’s fine. The skills he has are immensely valuable, so why should he pretend to have skills he doesn’t?

So if you have anyone on the executive team who thinks they know it all, or don’t need help, you only have one recourse: get rid of them. It’s harsh, but nothing will kill a startup faster than one that won’t get the help it needs, and it will need help until it can afford a team with all the skill sets it needs to make the business successful. Big money only takes you so far, because if you aren’t selling big deals, that tap will be turned off faster than a speeding bullet.

* who at one point not only built or consulted on the majority of SSDO solutions between 2000 and 2015 across the Source-to-Pay market but also built models over a decade ago that were only equalled by CombineNet (acquired by Jaggaer) [Sandholm] and Trade Extensions (acquired by Coupa) [Andersson], and only surpassed by Coupa (who acquired Trade Extensions).

When Should You Use Big X?

I’m often hard on Big X (in general), specifically when it relates to analytics or AI, because I regularly get insight into high project costs with low chance of return, see too many failure stats (where they get the lion’s share of the projects), and know that they struggle to attract the best people in those cutting edge technologies (as there is too much demand across the market, and too few STEM graduates, who want to go to the Big Tech Powerhouses like Alphabet or Meta or Microsoft, or, in AI, Open-AI or to a wild-west startup).

However, I’ve always noted that

  • my opinions are restricted solely to these areas (and not in general, and not even tech in general),
  • I believe they are often the best choices for many other projects, and
  • sometimes they are the best choice. You just have to do your homework. (Some of these Big X have recently acquired smaller providers that built a team of experts in analytics and/or AI and now have some of the best experts in the world!)

But since I just wrote a very critical opinion piece on the (marketing) direction of specialist suite software vendors (when I’m normally just praising best of breed vendors), I’m going to turn the tables and write a very positive piece on when you should use Big X. Even if it may seem sometimes that I’m against them, especially if I’m on a rant (and you have to remember, SI is a blog for information and entertainment purposes, not a paid analyst site!), I’m not. For the most part, especially if engaged properly, you can get a lot of value from a Big X, and, furthermore, sometimes get value you can’t get any other way!

(I’m just critical of non-value, and jumping all in on a new technology / digitization project with a Big X without blindly investigating both the project and the Big X’s proposal is usually not the right way to get value. And yes, in this situation the blame for any failure should fall on the company that didn’t do its homework and not the Big X.)

So here are three ways to get value out of a Big X, guaranteed and risk free if you approach it right:

  • Strategy: especially
    • Corporate: corporate strategists don’t work for companies, and the best don’t work for small niche consultancies, they work for Big X companies where they do these types of projects for big clients all the time; and only the Big X have enough of an archive across their talent to build up patterns that work and project real industry trends
    • Marketing/Sales: there are a lot of niche marketing shops for small scale consumer marketing, and a few for global marketing, but a lot of these shops are for executing a plan, not all can create one, especially if it needs to be co-created and tie into a corporate strategy
    • Operations: operational excellence is most often found in two places: business schools and Big X. ‘Nuff said.
    • Global Accounting/Tax Efficiency: what small, or even mid-sized, firm is going to have global knowledge of current and upcoming accounting and tax regulations and rates and can advise you on how to expand in a tax efficient manner?
    • Supply Chain Design: it takes a lot of people to have a lot of knowledge of all of the countries a multi-national will need to source from in its extended supply chain and sell to; this knowledge will rarely be found elsewhere (some of it from data subscriptions, but you still need access to human expertise on every country you are considering)
  • Process Redesign: the next step after operational strategy is process redesign, and these firms have deep insight into best practices across the board, detailed playbooks for conducting these projects, and deep insights into what is working and not;
  • Gap Analysis: if you don’t need a total operational process redesign, but just improvements, or technology to fill the gaps, they can just do a gap analysis and find weaknesses, make recommendations, and help you outline technology needs, and even help you create a good RFP to send out to potential vendors (however, unless you do your homework and provide them with good, deep documentation up front on your processes and systems, they will have to do a lot of manual labour to build that picture and that will result in an expensive RFP; but again, most of the cost will be on you and not them)

And, of course, used right,

  • Technology: not all technology is bleeding edge, and there are only a few categories at any given time where there just isn’t enough talent to go around, which is why our only concern is advanced analytics and AI projects (especially where you don’t know what you need*)
    • Enterprise Product Selection: all Big X, which serve big companies, have deep expertise in tried-and-true enterprise applications; moreover, they tend to have partnerships that give them deeper insights than other providers, which can be very beneficial in your selection process;
    • Select Emerging Product Selection: many Big X are investing in technology players that are up and coming that they see as next generation enterprise solutions; they have deep insight into the products they are investing in (but, as you can expect, limited insight beyond publicly available information into solutions their competitors are investing in)
    • Enterprise Product Implementation: they not only have deep insight into enterprise products, especially in the back-office (ERP, Finance, AP, etc.) and supply chain (planning and logistics), but deep implementation experience in the platforms as well; plus they have detailed step-by-step guides that even the most junior hire can follow and succeed
    • Partner Product Implementation: they know their partners well, especially since they usually won’t take on a partner unless it has a training program to train the implementors or a support team for the implementors
    • Appropriate, Well Defined, AI & Analytics Projects: we rant here all the time because most companies ultimately get this wrong (most Big X, most Suites, and definitely most clients); the reality is that the technology has progressed so far so fast that there are very few that understand just what is out there, where it is and is not good, and how it applies to different market/company situations; the reality is that with all of the recent dynamic shifts in markets, supply chains, and demand, and sometimes a complete lack of consistent, historical, data to base on analysis on, standard methodologies don’t always work anymore; you need experts, there are not enough to go around relative to explosive market demand, and you need the right expert for your problem; and even if the right expert exists at the provider you select, you will only get the right expert if YOU define the problem appropriately;
      this being said, with many Big X companies now acquiring specialist AI and analytics firms, as well as world class experts, there are a number of projects they are very well suited for — but you have to define the right project and make sure it’s right for the firms you invite

… and for most of these areas, you’ll struggle to find more than one or two niche companies that can deliver the same value, if you can find any at all! (And they only have the manpower for so many big projects compared to a Big X.)

In other words, we aren’t against Big X, and in fact recommend them regularly (just like suites we also pick on in our opinion pieces) we are against automatically using them for advanced technology projects that aren’t well defined, where they may not have the right expertise available for your problem at hand.

And we’re tired of the high failure rates, so if you don’t know what you need, stick to what they know well and always deliver on to your satisfaction until you know what you want!

* The reason for high tech failure rates usually boils down to two fundamentals. 1) Lack of Preparation and 2), as THE REVELATOR would say, an equation-based technology led platform approach vs. an agent-based human led solution approach. Preparation is key. If you don’t know what you need, and specify it clearly, you can’t expect the provider to know what you need, make the right interpretations, put the right proposal together, and assign the right people when you accept it. (And this goes for all providers, not just Big X.) This means that the Big X proposal writer is forced to make assumptions and then make a plan and assign resources based on those assumptions. And if they are wrong, because you did not provide the right clarification either in your request or your acceptance of the proposal, the project will not deliver the results you expect with the indicated time and effort, leading either to cost overruns, time overruns, or, if you’re not on the ball, complete failure. And, if the Big X did their best to understand your needs, it’s your fault, not theirs, but it’s still another failure.)

Top 10 Ways to be Labelled as a (Procure)Tech Noise / TroubleMaker!

For those of you who want to be a noise maker, trouble maker, Debbie Downer, complainer, etc. etc. etc., the doctor can confidently tell you that these are ten proven ways to accomplish that goal! Enjoy!

10. Point out that Tech Failure Rates have reached an all-time high of 88%! (Bain)

(As it is, in Procurement, We Don’t Get No Respect. We’ll get even less if 9 of every 10 projects fail! They’d fail less if … )

09. State that that RFPs for Tech should be Affordable!
(They are a critical first step in proper vendor selection once your need has been identified, and skipping this step has always proven disastrous. And then, after you select the vendor, the next step is to kick of Project Assurance, so the implementation doesn’t go off the rails.)

08. Go further and suggest that Big X SHOULD NOT be used for analytics and AI!
(The reality is, as we’ve stated again and again, limited tech talent is generally NOT interested in consulting — they want to work with the big powerful mega-corps [Meta, Alphabet, etc.] or join the wild west start-up frontier. Those not good enough get scooped up by the consultancies to try and fill the bench they need to staff the projects they sell. Doesn’t matter how good the outdated playbook is if you’re starting with the B-Team if you’re big, and rich, enough to afford it … or the C-Team if you’re not. Also, as we’ve said before, this doesn’t mean you shouldn’t use Big X for strategy, internationalization advice, etc. or the roots where they started where they have, and attract, the best people — just that, like every business decision, you have to be smart about where, and how, you engage to get your ROI. In fact, there are a whole slew of areas we generally recommend Big X for, and sometimes ONLY recommend Big X for, and these are covered in When Should You Use Big X?)

07. Dare to suggest it may be the end of an era for an early ProcureTech suite!

(Is The Third Act the Final Act?) Let’s ignore the fact that there has been more consolidation and failure in this space over the last two decades than anyone realizes, and that the seven suites appear to be sailing the seven seas without a sextant [foreshadowing?]. See SI’s classic Vendor Day Reprise and count how many of those companies are still around as-is. These were representative of the cream-of-the-crop when they were covered. The rate of disappearance is actually higher across the board!)

06. Note that Gen-AI is way overhyped.

(Unless you want suicidal people committing suicide in suicidal self-driving cars, for example. See valid uses for Gen-AI. And note that one of the big analyst firms pushing it in its hype cycle also noted that that it’s failure rate is 85%! [Source])

05. Remind people that intake & orchestrate is not new!

(With intake in ProcureTech tracing its beginnings back 24 years and orchestrate tracing it’s way back over 50 years as it’s just the fancy new name for middleware, which was a term coined in the 60s and implemented in the late 60s/early 70s with RPC being one of the earliest examples. See Point 11 for more hard truths.)

04. Rail against 2*2 vendor maps, and logo maps, as vendor selection tools!

(They are NOT Appropriate for Tech Selection. At most, they can be used to identify vendors to shortlist — but you still need to create a proper RFP! Remembering that:)

03. FREE RFPS are NOT free!

(How many times do we have to tell you There Are NO Free RFPs? Too many, since vendors will NOT get the message!)

02. State that there is no demonstrable ROI for attendees and vendors at big (Procure)Tech events.

(We need better events. A great experience is not business ROI!)

01. Mathematically argue that no business is worth more than a 10X multiple at investment time.

(‘Nuff said. Deeper dive in linked article.)

Now, I don’t know about you, but if wanting

  • (10) tech project success,
  • (09) affordable RFPs for all Procurement departments that need them,
  • (08) value for your consulting dollar,
  • (07) a true picture of the ProcureTech space and where the best cost/value ratio is for all buying organizations (not just G3000s),
  • (06) real AI powered by real HI that delivers real value,
  • (05) solutions that do what they should with (true) open APIs,
  • (04) real solution guides,
  • (03) valuable RFP advice,
  • (02) valuable events for all (not just organizers and consultants), and
  • (01) fair investments across the board for underfunded ProcureTech companies

means being a troublemaker, then make me the leader of the troublemakers! I’ve had enough of platform failures, enough of marketing soundbites, enough of one-way sales, enough of vendor marketing packaged as analysis and advice, and enough BS. Without procurement, there is no business. And, like Rodney Dangerfield, who unfortunately never got it in his lifetime, we deserve a little respect.

Procurement deserves better!

P.S. If you lead a provider organization that wants to do better, please feel free to reach out!