Category Archives: Procurement Innovation

2020 is Fast Approaching – What Have You Accomplished? Part II

As per our last post, it was just five years ago that all of the big consulting houses — PWC, Accenture, Deloitte, etc. — were talking about the future of procurement in 2020 and how it was going to be nothing like what it was then, or should I say, what it’s like today because, to be frank, it really hasn’t changed that much in the past five years.

We ended yesterday’s post asking you what today’s Source-to-Pay have that yesterday’s applications didn’t have. To answer this, let’s consider the typical Source-to-Pay platform capabilities:

Analytics: Take out the AI classification (which takes a lot of training and can’t always outdo a human despite claims) and there isn’t a single platform out there today that has more raw analytics capability than BIQ did almost 10 years ago. Better UX? Yes. Better capability? Not really.

RFX & Auction: There’s nothing new. Better interfaces. Tighter integration. More support for third parties. But nothing new.

Optimization: Trade Extensions was the most powerful platform then. It is now. Jaggaer/SciQuest CombineNet and Jaggaer/BravoSolution (VerticalNet (Tigris)) were the close runner ups then. And they are now. And about the only new capability is greater infeasibility and sensitivity analysis. But these capabilities were in their infancy then.

Contracting: The only real improvements are in deep semantically driven contract analytics — and they only appear in specialist vendors like Seal Software or Exari (Adsensa). Not in traditional CLM platforms for Source to Pay.

e-Procurement: Catalog Management. Guided Buying. Requisitions. Purchase Orders. The song remains the same. Nothing new.

Invoice Management: e-invoicing. m-Way matching. OCR and meta-data match. The tech has become a bit smarter, but nothing different.

The fact of the matter is that we’re not that much further technologically then we were five years ago, and that’s probably why Procurement has not really progressed much in the last five years (and why it caused many to Proclaim it dead because, if something stops moving for long enough, you pretty much assume it’s dead).

And that’s why we’re asking what have you accomplished? Because it’s certainly nothing close to what all the big firms told us you would accomplished. But then again, knowing that most of these firms are all bark and no bite, what would we expect?

2020 is Fast Approaching – What Have You Accomplished? Part I

It was just five years ago that all of the big consulting houses — PWC, Accenture, Deloitte, etc. — were talking about the future of procurement in 2020 and how it was going to be nothing like what it was then, or should I say, what it’s like today because, to be frank, it really hasn’t changed that much in the past five years.

Despite all the recent talk about Cognitive Procurement and AI hitting the mainstream, Procurement platforms haven’t changed much. There’s only a few offerings outside of very point-based Contract Analytics offerings, like Dhatim, LevaData, and Xeeva, that have anything that’s truly cognitive-borderline, but even these platforms only work on a very narrow range of categories in one or two industries.

And sourcing platforms haven’t changed much either … very few have any capabilities whatsoever that didn’t exist five years ago. The biggest change is that you have more S2P suites, partly as a result of the M&A frenzy and partly as a result of PE firms investing deeply in platforms with the capability to be leading S2P platforms. Whereas a few years ago you really only had Ariba, Emptoris and Jaggaer (known as SciQuest) — although, five years ago, Jaggaer was more a collection of applications that would eventually become a platform; Emptoris was much stronger in Source to Contract than Procure to Pay; and Ariba was just acquired by SAP, which stagnated development for a few years.

But today, we have eight major S2P platforms, which are included in Spend Matters Q4 Solution Map: Coupa, Determine, GEP, Ivalua, Jaggaer, SAP Ariba, SynerTrade, and Zycus. Coupa, which was a leading P2P platform, acquired Analytics, Optimization, and Risk; built out contracts, and now has a complete S2P platform using a classic definition. Determine, which resulted from Selectica’s acquisition of Iasta and b-Pack and replatforming of everything on the b-Pack platform. GEP, which acquired Enporion in 2012, integrated, built up, and built out and now has S2P. Ivalua, which just acquired DirectWorks (formerly Co-exprise), has been building out end-to-end since the early days and now has pretty much everything except optimization from a classic S2P perspective (and is getting deeper in direct capability as a result of DirectWorks). Jaggaer integrated everything through a common data layer and had S2P, and then acquired BravoSolution last year (which also just achieved S2P from its Puridiom acquisition), and now has 2 complete S2P platforms as well as deep direct sourcing capability (from its Pool4Tool acquisition). SAP Ariba (which acquired Procuri years ago) has been developing extensively, replatforming its analytics on SAP Hana, simplifying implementations and supporting the mid-market through partners with SNAP, deepening its risk management to go head-to-head with best of breed, and so on. SynerTrade, like it’s counterpart Ivalua, has been developing an integrated platform for almost two decades, which started out as a collection of “apps” (like Pool4Tool started out as a collection of modules), and has everything one would expect as well as integrated optimization — it’s the best platform most of you haven’t heard of. And then we have Zycus — once the “dollar general” of S2P platforms, it’s come a long way and is starting to hold its own with the best of them (and with it’s new iRequest module, it’s bring S2P visibility to the masses).

But when you think about it, what do they have that past platforms didn’t have?

We’ll let you dwell on this for a day …

If you still think you don’t need to get with the program … Part II

So, if you’re still reading, you don’t believe that you are losing:

  • opportunities,
  • time,
  • innovation, and
  • value

by sticking with your 2nd (or, even worse, 1st) generation S2P platforms without program management. That’s fine. Maybe you have a crackerjack analyst team that is exceptional and finding opportunities. Maybe you have very well designed processes and your team, with experience, has actually become very efficient at using the platform. Maybe you R&D team is already using a cloud-based innovation platform. And maybe you actually got a good deal on the older platform you are using and actually realized value. It could happen. But, that’s not all you are missing by not getting with the program. You’re also missing:

Opportunities

… you don’t find. Let’s face it, no matter how great your team is, they can only analyze so much. And only on the data they have. An integrated S2P platform / process with integrated program management can allow all parties to not only do analysis to identify potential opportunities, but provide data, insight, and research the team didn’t do.

Relationship Building

Maybe you have SRM, and it contains functionality to manage your supplier relationships, but supplier relationships aren’t the only important relationships. Relationships with your extended team, especially the team members who manage your supplier and third party relationships, are critical. And without a platform to keep tabs on where they are, and how things are going, are you really maintaining the right relationships with the extended team across the global organization?

Process Innovation

Maybe you have an innovation platform that helps R&D with product innovation. And maybe it works great. But if you really want to maximize value, you have to optimize process efficiency. And if the process is disconnected across multiple BoB platforms, and only the core Procurement team is on the platform, you don’t get the full perspective, which means you don’t get enough perspective on how to possibly innovate the process. Which is another loss.

Enhanced Collaboration

If your platform is disconnected, your team is disconnected. Yes, you can do a lot over the phone and video conferencing, but that’s disconnected from the process. And where’s the record of it? And how do you know what’s been collaborated on, and what hasn’t? You don’t. Collaboration without program management is, whether you want to admit it or not, limited.

And this is just the tip of the iceberg of benefits you are missing without program management. So why don’t you get with the program?

If you still think you don’t need to get with the program … Part I

… maybe we should ask why?

Earlier this year, SI authored a paper, sponsored by Synertrade, on The importance of program management for savings and value realization (registration required), that laid it bare as to why you need to get with the program.

And then, over the past few months, over on Spend Matters Pro [membership required], the doctor, with the help of the prophet, the maverick, and the revolutionary, has been penning a series on Program Management and how you might go about actually doing it across the Source-to-Contract cycle. For those who might have missed it, here are the links:

But, of course, the how to is irrelevant if you don’t accept the why. Without getting into too many details, as you can download The importance of program management for savings and value realization for free upon registration, the main reasons we pushed you to get with the program were:

  • lost opportunities,
  • lost time,
  • lost innovation, and
  • lost value

But maybe you think you have all the answers with your current non-program based S2P platforms and systems. Maybe you think your processes are sufficiently refined such that you can identify all the opportunities, attack them efficiently, and still innovate acceptably without program management. And if this is the case, you’re probably quite happy with an easy to use, adoptable, second generation S2P platform(s) and see no need to modernize again. But you need to. Why?

Come back for Part II.

e-Procurement Benefits – What’s the ROI? Part II

In our last post we reminded you that there are valuable benefits to e-Procurement systems, as evidenced by the fact that many organizations are claiming to have saved millions of dollars thanks to their modern e-Procurement systems. This is great, but one shouldn’t just look at the savings, because if you spend enough on anything, you will likely show some savings for it. The real measure is the ROI.

And when you break it down as to where the ROI comes from, you see that it’s possible to get almost the same benefit from pretty basic systems that enable the proper processes and provide the right insight, often at a fraction of the price tag that comes with the big P2P/S2P systems. This means that the organization is not getting the ROI it could be — and isn’t the smartest business move to always chase the biggest ROI? (Since that leaves more money on the table for other high-performing initiatives?)

Yes, it is. So does this mean you go with the cheaper systems? That depends. On what? On what else the integrated system brings, your ability to use it, and your ability to define more sophisticated — and more appropriate — ROI models. If the benefits you expect to take advantage of in the beginning are few, and there are lower-end systems that give you 80% or more of those benefits for a fraction of the price, maybe you should acquire a low-cost SaaS subscription to a lower-end system for a few years. Reap the reward, improve your Procurement proficiency, and when you are ready to take advantage of more benefits, then you can upgrade to a bigger better system.

For example, a bigger, better, more integrated system can also bring the following benefits:

  • negotiation management and contract creation support — integrated redlining, audit trails, e-Signing
  • centralized supplier data and scorecards — make better informed, more risk averse decisions and identify opportunities for non-risky supply base consolidation and volume leverage
  • wider adoption throughout the enterprise — this is important especially when department managers are authorized to do their own purchasing up to 10K or 25K …
  • … and a slew of others …

But only if the organization is ready for them. In other words, in order to determine if an e-Procurement system is the best buy, the organization needs to evaluate the solution against an ROI model that accurately models the benefits its able to capture, not the benefits that are theoretically there.

In other words, just like there is still no one-size-fits-all P2P/S2P solution (and that’s why the doctor works with Spend Matters to make sure Solution Maps accurately capture and convey the differences), there’s no one size fits all ROI model either. Just because a competitor saved 9M on a 1.5M investment and saw a 6X return, that doesn’t mean you will. You have to take your time, do the proper evaluation, and run the proper analyses. That’s the only way to truly benefit from e-Procurement.