While Not a Significant Source, Some New Vendors are Contributing to the Procurement Stink!

There are many reasons that Procurement Stinks!

Some of them are due to the Marketplace Madness.

Some of the marketplace madness (a small amount, but non-zero), is aptly summarized as follows.

We’re pre-revenue, pre-product, and pre-idea.
So any help would NOT be appreciated!

(Which, to give credit where credit is due, is
a slight rewording of the tag-line to an Andertoon).

Those companies will likely be among the first companies to fail. When there is at least 50 companies that are offering every S2P module, and over 100 for most modules, there is only so much room for differentiation. This means that most of the new startups by the young 30-somethings that did NOT do their market research (but think they know it all because they are tech wizards who built a solution that did slightly more than the three inappropriate products they were stuck with at their last job) don’t really do anything different from a product perspective (and, in fact, usually do a heck-of-a-lot less — hence, “pre-product”). It might be a newer tech stack, it might look slicker, it might be a bit easier to use, but they all fail to understand that THIS IS PROCUREMENT.

This means that, at a minimum, any “product” they want to sell has to satisfy the following:

  • they have to demonstrate a significant ROI, within a decent return within the first 12 months before the CFO will even consider cutting a cheque
  • but before that, they have to show how they will generate long term value before they will even get budget (if the value is one-time like a spend analysis project, especially at Big X quotes of seven figures, not likely)
  • they have to show that it fits in with the current tech stack or IT will object
  • they have to show that it is compliant with regulations or Compliance will object
  • they have to show how it will also decrease overall procurement or supply chain risks, or risk management will steer the budget elsewhere
  • they have to demonstrate they will be able to do more and protect the brand or the CEO will object

Procurement tech is not about cool. That’s consumer tech. Procurement tech is not about the most modern stack to power the business. That’s IT tech. Procurement tech is about VALUE. Procurement is expected to cut costs, NOT increase them!

Until the new generation of founders learns that, and learns there is no way that Procurement will NOT be able to make a case for their 𝘯𝘦𝘸 𝘩𝘰𝘡𝘯𝘦𝘴𝘴 that literally does nothing different than the 𝘰𝘭π˜₯ 𝘣𝘢𝘴𝘡𝘦π˜₯ tech that came before, the old Procurement Pros aren’t going to buy it. And these start-ups won’t hit break-even as a company, and if they don’t get acquired, they will go belly up as the investors realize how over-crowded the space is and any further investment would be throwing good many after bad into the bottomless money pit.