Category Archives: Procurement Innovation

Don’t Overlook Enporion at the Emporium!

If you’re looking for a corporate e-Procurement solution and you’re thinking along the lines of Ketera [acquired by Deem] or Ariba,[acquired by SAP] be sure to include Enporion [acquired by GEP] in the mix. Even though they started as a procurement consortium and technology provider for the utility industry back in 2000 when they were founded by seven utilities, and even though they used to use SAP Markets Technology, they have come a long way from their roots and now offer a fully-featured on-demand web-based procurement solution that was developed one hundred percent in house and is tightly integrated.

Their platform supports full bid management, order management, catalog management, invoice management, settlement, contract management, project management, vendor management, and basic spend reporting on all transactions executed through the platform. They have a strong technical services division that supports dozens of standard and custom data formats (including EDI, XML, xCBL, and OCI) and are capable of handling all aspects of supplier catalog management on behalf of you and your supplier.

But perhaps the biggest reason you should look at them is for their capability on the services side. Since day one they have not only been conducting sourcing events on behalf of their clients, who collectively put over 10 B in annual spend through their platform, but have also arranged numerous group purchasing contracts worth millions upon tens of millions upon hundreds of millions of dollars. Considering that few group purchasing organizations can make the same claim-to-fame, this is no small feat! With Enporion, you can be sure you’ll get the services help you need when you need it.

Getting back to the technology, certain components are deeper than you might expect given that there are providers out there with suites that do not have the depth to back up the breadth. For example, their contract manager has some best-of-breed capabilities revolving around contract creation. In addition to the standard clause library, repository, tracking, reporting, and administration – it also supports administrator, and user, defined decision trees that can be used to automatically pull together appropriate contract templates for a commodity based upon the category hierarchy, value, strategic importance, and other relevant attributes. By working through the process before the RFQ is issued, a junior buyer can be guided on what attributes are important and focus on the right issues, terms, and conditions in the RFQ and subsequent negotiations.

The entire platform is built on an underlying many-to-many hub for transaction processing that supports multiple transaction types and is capable of appropriately routing any transaction from any buyer through the platform to any supplier as required. Thus, even though it might not be much to look at (but we already know that looks can be deceiving – take BIQ [acquired by Opera Solutions, rebranded ElectrifAI] for example, any random screen on its own will not catch your eye, but ten minutes diving into its analysis capability demonstrates that it is one of the most powerful analysis engines on the market), it packs a decent punch.

Furthermore, like Ketera, they’ve also come to the realization that the future of e-Procurement is the integration of the physical and financial supply chain and they already have projects in R&D to tie the needs of the treasury into their platform. Although I don’t have much in the way of details yet, this is one upcoming development I’ll be keeping my eye on and talking to them about more in the future.

Hacket Evolves the Procurement Value Proposition

In Hackett’s latest Advisory Piece, Evolving the Value Proposition of Procurement: A Five Stage Model, Pierre Mitchell & Christopher Sawchuk present a five stage model (with three supply management stages and two customer management stages) that procurement executives can use to assess where they stand on the evolutionary scale of procurement service models. The five stages presented are:

  • Supply Assurance
    The goal is the right goods and services at the right place and the right time, with a focus on perfect order.
  • Price
    The goal is the right goods and services at the right price, with a focus on cost savings and avoidance.
  • Total Cost of Ownership
    The goal is lowest Total Cost of Ownership with a focus on quality, capital, ancillary costs, and opportunity costs.
  • Demand Management
    The goal is to reduce demand variance and complexity immediacy with a focus on reducing maverick spend and increasing customer satisfaction.
  • Value Management
    The goal is to increase business value derived from spend with a focus on overall operational metrics.

These stages are more or less correct – the one caveat is whether or not a company approaches them in the order given, or a slight variation. Some companies will start with a focus on price rather than cost assurance, and after achieving a basic mastery of TCO some companies will move on to trying to maximize value before trying to manage demand

In addition to laying out the stages of procurement mastery, they also have a number of insights from their book of numbers. First of all, world-class organizations spend proportionally more on strategic processes than their peers – and 27% more on sourcing strategy and analysis and 45% more on supplier management and development in particular. Secondly, 78% more world class companies actively involve procurement in the firm’s planning and budgeting process. Thirdly, world class organizations spend proportionately less on transactional processes – and 25% less on compliance management and 50% less on supply data management in particular.

Some of the best insights relate to their fifth stage, value management, where procurement has no other agenda than to advance and support the business strategy. This is harder to achieve than it looks since procurement:

  • can not use a parallel measurement system as it must be restricted to the metrics that define value for the organization as a whole,
  • must harness the power of supply markets to identify breakthrough business strategies instead of simply translating existing business strategies to supply markets, and
  • must make the business strategy development process itself a core competency.

Leaders of world-class procurement organizations don’t simply wait for a sea change in business leadership to evolve these value propositions. They sense when there’s an opportunity to elevate the firm’s game to the next level and then fill in the leadership void themselves. As they do this, they evolve not just themselves and their teams, but also evolve the concept of procurement as a whole, raising the stakes for all other firms to follow.

As with the majority of Hackett’s insight pieces, this piece is for members only, but it goes to show that with Hackett, the insights you get with advisory services are worth your time.

Key Sourcing Trends Impacting Procurement

The European Leaders Network recently ran an interesting article entitled “The Key Trends in Sourcing Impacting Procurement Today” that summarized the key trends in the Sourcing Industry for 2007/8.

According to the author, the following market trends are currently impacting the way procurement professionals source goods and services.

  • Increased multi-sourcing
    Mega-deals are on the decline and niche players are on the rise. Value-add is slowly overtaking the ‘monolithic empire’.
  • Greater significance to governance
    The skills and disciplines associated with good governance are starting to be recognized as the key to sustainable relationships with their associated benefits.
  • Continued rise of global sourcing
    These days global sourcing is more a question of ‘when’ and ‘how much’ and not ‘if’. Even Europe is embracing the paradigm.
  • Consolidation in the IT supplier market
    There is significant consolidation occurring in the outsourcing space which should ultimately serve to benefit sourcing professionals.
  • Concentration on value
    Whereas the last few years have placed emphasis on short-term objectives in transaction execution, pushing sustainability onto the service provider, going forward, the trend is to concentrate on long-term value up-front and ensure that delivery will be metric-driven and focussed on the business needs in an effort to meet the overriding goals.

This is a good start, but it fails to mention the following trends that are also in play, as pointed out in Sourcing Innovation’s recent Sourcing 2007 and Sourcing Innovation cross-blog series. Consider the following:

  • On-Demand Software-as-a-Service Providers and (Enterprise) Open Source is changing the landscape
    Companies like Iasta (acquired by Selectica, merged with b-Pack, rebranded Determine, acquired by Corcentric) and Procuri (acquired by Ariba, acquired by SAP) are driving down cost while driving up value.
  • M&A activity is also happening within the software provider space
    The latest example is the Cormine (acquired Perfect Commerce, rebranded Perfect Commerce, rebranded Proactis) and Perfect Commerce announcement.
  • Sustainable Supply Strategies are becoming mainstream.
    Consider the recent Goldman Sachs report that found that companies implementing environmental, social, and governance (ESG) policies outperformed the general stock market by 25% over the last two years.
  • Raw material and commodity prices are skyrocketing across the board.
    The days of the constant Walmart rollback are over, especially if you are a minerals buyer.
  • The Talent Crunch is worsening by the day.
    Supply teams have no choice but to adopt best practices and do more with less.

The Coupa Sunflower Starts to Blossom

Coupa, who just hosted their first webinar, is still heads down in their quest to make their enterprise e-Procurement application better and better by the day, and still succeeding. Now covering the full order management cycle from requisition to two-or-three way reconciliation, the only thing it doesn’t do yet, at a basic level, is payments. However, you can export your purchase orders, invoices, and goods receipts to an XML, or CSV, file and integrate into your e-Payment system that way. It even has the option to track tax codes, which will simplify you tax reclamation processes. They have begun directing mid-size organizations to their hosted e-Procurement application as well, as they build up to a rumored major announcement slated for early September.

For a product that’s been out of the gate for less than a year, it’s come a long way. With it’s built-in basic RFP capabilities, which will soon support direct supplier entry of relevant bid and product information in addition to the e-mail based interface it already supports, you have the option of starting with an RFX or a purchase order (template). When the order arrives, you can generate a goods receipt for three-way matching, and the system can be configured to automatically send the buyer a notice when an invoice is submitted if they haven’t confirmed receipt of the goods or service.

And you don’t have to take my word for it anymore – you can ask for
references from one of their clients if you feel it’s necessary. But with their low price point, you might just consider buying it to try it. Coupa has adopted the low-cost per-user model made popular by SalesForce, SuccessFactors (acquired by SAP), and others. Their ultimate goal, for larger organizations, is a price-point less than some organizations are still paying for their e-mail inboxes. Speculation on pricing from nervous e-Procurement competitors continues, but I have it on very good sources an average organization can expect per-seat pricing of slightly less than $40 per user per month (with a minimal commitment) – or not much more than the cost of hosted e-mail and calendar functions with IT support for many organizations – for a fully featured e-Procurement system.

Plus, unlike hosted behind-the-firewall solutions, you get updates and constant improvements for free. Coupa intends on releasing a series of minor updates to their solution between now and the fall, when the next major version of their enterprise platform will likely be released. What can you look for? Although an update schedule has not been finalized, since Coupa believes on implementing commonly requested feature first, you can expect streamlined payment system integration, more built-in reporting, and more pre-enabled punch-outs in the coming months. Add this to their newly completed filter-based budget reporting, enhanced approval workflows (with approval limits), tolerance-based invoice matching, multi-currency support (including the ability to integrate with the Bank of New York exchange rate web-service on a regular basis), improved survey and template creation, and extremely-fine grained roles-based security (with template support), and the solution footprint has considerably improved.

So, if you’re looking for an e-Procurement system, be sure to check it out. You might just find what you’re looking for. And when it comes to constant improvement, you can be sure they’re going to Coup-at-it