Category Archives: Procurement Innovation

Has Procurement Tech Peaked?

If you’ve been following along, you know the following:

  • the doctor is very disheartened at the lack of innovation, and even direction, among the major suite players
  • the doctor is tired of the nth solution popping up that does the same thing as solutions 1 through n-1 (which is why SI doesn’t even try to review every solution of the 666+ solutions that exist, but only those with actual improvement or innovation)
  • the doctor is fed up with the fact that almost every vendor has been blinded by the hype of Gen-AI and are focussed on shoving it into every virtual nook and cranny they can find in their product (whether or not it provides any value whatsoever)
  • the doctor is fed up with the constant claims that we will soon have Agentric AI that will solve all of our problems and eliminate the need for Procurement professionals

Which begs the question. Why is all of this happening?

  • why is there a lack of noticeable innovation, and even direction, among the major players (besides cramming Gen-AI into all of the nooks and crannies)?
  • why are there so few new, innovative solutions (and 40 carbon calculators when one will do)?
  • why are so many vendors jumping blindly on the Gen-AI bandwagon (heading straight for a cliff with no steering and no brakes)?
  • why are so many vendors claiming that the next generation of tech is Agentric AI?

Is it because Procurement Tech has peaked?

Sadly, for the time being, the answer is … YES!

Even though there is sill much that can be done, for the time being, procurement tech has peaked. There appears to be three major reasons for this:

  • an almost all-in focus on Gen-AI, a technology that has not delivered on its vast over-promises and likely never will;
  • an emerging focus on Agentric AI in the hopes of replacing people, instead of augmenting them; and
  • an over-focus on orchestrating what is there, instead of orchestrating what is missing.

Each of these reasons prevents the necessary innovation that is needed to take Procurement Tech to the next level.

  • As the doctor has repeatedly told you, Gen-AI is only useful if the problem at hand can be reduced to either large document search and summarization or natural language translation of inputs and outputs. The continued quest to force this technology to solve problems it fundamentally can’t is preventing any research and development on tech that would actually advance Procurement.
  • As the doctor has repeatedly claimed, the answer is not in Artificial Intelligence but in Augmented Intelligence
  • As it stands now, orchestration is just gluing best of breed systems together, it’s not really enhancing any ProcureTech.

And until

  • Gen-AI is relegated to just another AI tech that is only used where appropriate,
  • we stop trying to replace people and start trying to make them productive at a super human level, and
  • we stop gluing and start truly enhancing

ProcureTech is stuck where it’s at. That’s just how it is. For now. Maybe someday it will change. But not before you insist you want it to change, and do so loud enough that maybe a few vendors will hear you and listen and stop wasting all their time and all your money chasing the wrong tech for problems you don’t actually have.

666+ S2P+ Solutions … But Key Problems Are Still Not Addressed! Part 2

In Part 1 we noted that, by now, you should have seen the Mega-Map and the 666 solution logos on it.

We also noted that you will have repeatedly heard the doctor and THE REVELATOR say repeatedly that another massive purge is coming to our space over the next 18 to 24 months (which will be the greatest since 2009-2011 where hundreds of companies were acquired, merged, or went insolvent), and that it’s already starting (with a few notable insolvencies, at least as far as the doctor is concerned, already occurring).

And you’ve heard us say multiple times that there isn’t room for this many companies because even if you account for market size and vertical, we still only need so many solutions that more-or-less do the same thing.

That being said, there are still core needs not being met in the modern enterprise, especially given that we are seeing a return to protectionism, sanctions, and border closings; a continual rise in natural disasters; and a continual disruption in logistics. Solutions are needed that go beyond siloed Procurement. And any company that steps back, analyzes the problem and the needs, and takes the time to define, and build, something truly new still has a chance to breakout and succeed in today’s overcrowded SaaS market.

the doctor is not alone in this understanding. Back in 2022, THE PROPHET saw this need to rethink Procurement Technology and that’s why he proposed his alt-suites. And while we believe he didn’t get them all right, some of the fundamental issues he saw and reasoning he gave, when expanded upon and thought through, will lead you in the right direction. Just like two of our last three suggestions were built on the core ideas behind his DFS [Design for Sourcing] (which was almost perfect) and A2M [Assess to Monitor] suites, two of today’s take some ideas from two of his suggestions as well.

4. Third Party Management (TPM)

Now, you’re probably saying “wait up, we already have that” since we have third party risk management and third party compliance management solutions starting to pop up, but those just represent a slice of Third Party Management requirements. Now you’re probably saying “but we have some very extensive supplier management solutions that do development and performance and they can be used” but the answer here again is that they represent another slice as they are not only supplier centric, but typically found in organizations that need to manage direct suppliers for quality and cost control — and typically not used to manage partners for consulting or implementation (which those systems have no capability to support).

Just like an organization needs a Risk 360 for it’s Risk Management function, it needs a TPM system to fully monitor and manage the third parties it works with, regardless of what it uses them for. Having separate systems for product suppliers (SXM), contractors (CWM), services providers [for implementation, integration, and support) (TPRM), etc. not only gives a fragmented view of the organizational partner ecosystem, but doesn’t even give a complete view for any single partner. A services partner may provide you with internal headcount (CWM) and third party service outsourcing (TPRM). A product partner may provide you with goods (SDM) and select services (TPRM). And so on. Plus, there’s also quality control systems and customer support systems that will have relevant data on the partner performance.

In other words, you can’t just Assess-to-Monitor from a Risk perspective, but you also need to manage and develop as well. And while you might think that Risk360 could be a sub-offering, risks go beyond the entities you are dealing with to include risks that are independent of partner and sometimes specific locations.

5. Vertical Enterprise Project Management

Now, before you say the doctor has lost it, because we have more project management systems than we can shake a stick out, the reality is that most of these “project management” systems don’t really manage projects across the enterprise, and most don’t support anything beyond timelines, milestones, and resources — not nearly enough to handle the intricacies of complex projects that involve the entire enterprise like NPD/NPI, building/facility construction, partner-aware supply chain (re-)design, and so on.

When THE PROPHET said we needed Commercial Value Management (which was defined as the next generation of Contract Lifecycle Management), he was onto something … because no one really “manages” contracts; no one really takes full advantage of what modern, advanced, contract modelling/creation/analysis systems can do; and no on ever pulls the contract out of the electronic filing cabinet unless there is a dispute … even though it is the foundation of the relationship and should be used as the baseline for relationship management. Commercial Value Management was defined to fix all that, putting the contract at the center of organizational “value”, but “value” is nebulous, and organizations have already proven time and again that they only thing they want to do with a contract is redline it, sign it, and resign it to the e-filing cabinet.

However, at the core of the CVM concept is an ability to manage projects off of the contract, projects that would span multiple departments throughout the enterprise. That is useful. If we focus in on that and then realize the problem with most “generic” project management solutions is that they don’t meet specific organizational needs because every vertical has its own unique project needs, we can see that what enterprises need is true enterprise-wide project management support tailored to its vertical. Software that understands the intricacies of construction/facility construction and how it requires the coordination of sub-projects with many contracts and subcontractors, as well as temporary assignment, use, and return of equipment. Software that understands NPD in electronics and how the quest to even determine if you are going to design a new mobile personal computing device will require input from the entire company tailored to electronics project design, component and supplier identification, supply chain design, customer support, etc. Software that understands the unique aspects of identifying an organization’s needs before, during, and after the rip-and-replace of an ERP system and all of the project aspects that will be required (process analysis, data analysis, gap analysis, integration requirements, change management, training, etc.). And while there are tools to support the core activities in the core departments, none take an enterprise view and, further more, can link into the TPM system, ERP/Inventory/HR system, CLM system, etc. and take a truly enterprise view of project management customized to a vertical.

And while it’s possible that someone could build a baseline solution that can support multiple verticals, the front end and customizations required will require separate offerings for each vertical that company goes after. Efficiency, which should be the goal of technology acquisition, cones from supporting integrated processes, not piecemeal tasks.

6. Real-Time True Enterprise Analytics

This is a bit of a cheat in that the doctor knows of one system that can do it (Spendata), but the reality is that the vast majority of enterprise analytics systems claiming to be “best in class” cannot. Even the majority of “best in class” spend analytics solutions don’t even permit true, real-time, do-it-yourself spend analytics.

At a minimum, a modern analytics system must be capable of:

  • pulling in any type of data from any source in real time (and mapping it to a structure that supports analysis)
  • allowing the user to define whatever rules are necessary for cleansing, enrichment, validation, and mapping to not only the internal structure but multiple, simultaneously supported, taxonomies for analysis
  • defining as many derived dimensions as necessary, on whatever calculations and metrics are required
  • supporting as many cubes as are required to accommodate the different data sources being pulled in
  • enabling federation across as many cubes as are required for the analysis
  • managing not only supporting multiple views across the federation, but linked views that support simultaneous drill down
  • creating arbitrary, reusable, filters that can filter on an dimension using any value, or calculation, as is required
  • enabling derived cubes, federations, and views as needed to support dependent, what-if, and problem specific analysis
  • performing data updates in real time, and then propagating those updates through all affected cubes, federations, and views as well as all derived cubes, federations, and views in real-time
  • permitting a user to do all this, on demand, in real time

Most current Business Intelligence (BI) solutions are still based on ROLAP, at best, and all analysis is done against fixed cubes that are updated on a schedule (or on demand, but the entire cube needs to be recalculated before any analysis can be done). They also generally support fixed view types on the provided ROLAP cubes, and an analyst is very limited in terms of what they can do.

The same goes for most Spend Analysis systems. The providers support a fixed number of cube types, give you a default set of reports and dashboards, and you are limited to customizing views on those cubes and dashboards. Building whatever you want, whenever you want, from scratch is out of the question, as is real-time data updates. The best solutions will allow you to bring in additional data to augment your analysis, but unless it’s in the main database, it will be lost when the analysis expires, which is whenever the core cube is updated as only one of these solutions currently supports true inheritance.

In other words, a Strategic Spend Terminal is not enough. Not even close. In fact, it’s just one view, tailored to Sourcing, on the federated data sets that such a next generation analytics solution will support. In fact, there should be multiple strategic spend terminals, one per business unit that shows them the data they need the way they need to see it to allocate their time and effort accordingly.

Until analytics is rethought at the core, users will never be able to do the what-if analysis they need on different data types to get the insights they need when they need it, and AI won’t solve the problem. AI allows for better predictive analytics IF you have the right, verified, structured, data and IF you know the right AI algorithm to apply to the question at hand with the data you have. If you don’t have the right platform, AI is ultimately useless.

666+ S2P+ Solutions … But Key Problems Are Still Not Addressed!

You’ve seen the Mega Map and the 666 solution logos on it.

You’ve heard the doctor and THE REVELATOR say repeatedly that another massive purge is coming to our space over the next 18 to 24 months (which will be the greatest since 2009-2011 where hundreds of companies were acquired, merged, or went insolvent), and that it’s already starting (with a few notable insolvencies, at least as far as the doctor is concerned, already occurring).

You’ve heard us say that there isn’t room for this many companies because even if you account for market size and vertical, we still only need so many solutions of the following varieties:

  • Sourcing
  • Supplier Management
  • Spend Analysis
  • Contract Mangement
  • e-Procurement
  • Invoice to Pay (I2P) / Accounts Payable (AP)

And even when you consider the wide variety of needs across all possible size – vertical -region combination, two to three dozen solutions in any category is more than enough to handle all of the complexities when you take even the most varied companies into account, but we now have over a hundred options in some of these categories. Only the strong, sorry, the smart, will survive … and only if they have enough money to do so (and enough control to make smart decisions, i.e. if they are controlled by greedy investors who double and triple prices that force them out of their target market, they will be the next casualty).

But even with all these solutions, core needs are not met. The reason being: in today’s business environment that is seeing a return to protectionism, sanctions, and border closings; a continual rise in natural disasters (thanks to global warming that will once again reign unchecked under administrations coming into power in multiple “first world” countries); and a continual disruption in logistics (due to epidemics, pandemics, reduced capacity, Panamanian droughts, and Houthis in the Red Sea), solutions are needed that go beyond siloed Procurement.

Back in 2022, THE PROPHET first tried to get the message out there with his proclamation that alt-suites would rise. (They still haven’t, but we do need new types of cross-functional applications.) He also made five predictions. They varied in terms of usefulness and vision (in the doctor‘s view, two in particular are desperately needed, although one of these needs to be broader than defined; one is nothing more than just an enhanced dashboard across various S2P applications and needs to be rethought, and two aren’t quite right [but contain ideas that can be built on]).

But THE PROPHET was right in that we need to rethink Procurement Technology in some organizations, who needs to contribute to Procurement, and how Procurement Process fits into overall operational processes. The solutions that worked for the last 20 years aren’t always enough anymore, and it’s not just a question of “intake” (which is not new despite what the providers will have you believe, see our prior posts on the subject) or “orchestration” (which is just a fancy term for SaaS middleware).

Here are three solutions that are needed now more than ever:

1. Design for Supply (DFS)

THE PROPHET was right on the money here. Not only is 80% of the cost locked in during design, but so is 80% of the risk. You not only need cost control, but you need supply assurance. This means that R&D needs to work with Procurement during design to ensure the products can be sourced affordably at low risk, and that Procurement needs to work with Supply Chain / Logistics to make sure the products can be reliably sourced in a timely manner (and the organization won’t have to stock months and months of inventory). Product design and development organizations need integrated DFS solutions that span R&D, Procurement, and Supply Chain.

2. Supply Chain Sourcing (SCS)

In the world of Direct, when organizations need to source for BOMs (Bill of Materials), they need to do it Supply Chain Aware. Under pressure, Procurement will always search for the lowest cost — but what if that is from a supplier in an unstable region; that is not part of the current, optimized, supply network; that can’t offer timely and secure delivery? Sourcing needs to be supply chain aware. And Supply Chain needs to be aware of what Sourcing is looking at so they can do network planning if the current supply network is not sufficient.

In fact, it would be even better if the DFS and SCS solutions were hosted on the same underlying platform.

3. Risk 360

This was the second platform where THE PROPHET was almost right on the money as well with his Assess-to-Monitor alt-suite. Risk is everywhere, both inside and outside the organization, inside and outside your partners’ organizations, inside and outside your suppliers’ organization, and its everywhere your physical, financial, and digital supply chains touch. Supplier risk, supply chain risk, cybersecurity risk, personnel risk, etc. can’t all be separate solutions. They need to be one integrated platform that constantly monitors, assesses, and protects your organization.

There are, and will continue to be, a need for new solution types, in S2P+, but these would be a great start!