Category Archives: Sourcing Innovation

Analytics Must Drive Source-to-Pay, but not necessarily Gen-AI

Xavier recently penned another great piece on Analytics in P2P: From visibility to actionability where he highlighted the failures in analytics in traditional P2P:

static, backward looking, spend by category, invoice cycle time, approval rates, compliance rates
insights only after transactions are processed, payments are made, and cycles completed
late payments multiplying, exceptions accelerating, and supplier risk accumulating
lack of operational insight

According to Xavier, P2P can only be modernized if the embedded analytics shift from descriptive to diagnostic.

don’t report KPIs, explain the root causes (which approval paths contributed the most to approval time)
don’t report exception rates, identify suppliers that consistently cause them
don’t report spend anomalies, break it down and identify root causes

It’s a great start, but where it needs to get to is actionability. Xavier begins to address this point by stating the next step is “predictive awareness” where the system anticipates likely outcomes within active processes, such as predicting which invoices are likely to miss payment terms, which requisitions are likely to stall in approval or which suppliers are likely to generate disputes based on current patterns as that allows a Procurement professional to intervene before issues arise.

Finally, Xavier gets to the main point — the real inflection point comes when analytics begin to recommend actions and influence execution paths. Prescriptive analytics in P2P requires tight coupling between insight and control. If analytics identify a high-risk transaction, the system must be able to route it differently, apply additional validation or prompt a specific decision. If analytics detect a low-risk, repetitive transaction, the system must be able to reduce friction without manual intervention.

But it needs to go one step further. It must not only route differently, and apply more controls, but it must still do so automatically based on the diagnostic and predictive analytics. It can’t just apply a “one-size-fits-all” approach for automation and kick every exception out for human processing. You can’t always make the default path smarter because there should be different paths depending on the cost of the purchase, the risk associated with the purchase, the discrepancy between the invoice, goods receipt, PO, and/or contract terms and conditions. You need multiple streams that are auto-selected by predictive analytics that support the right actions given the assessment of the conditions.

The reality is this — except for truly exceptional situations, once you’ve made the decision on what to purchase, procurement should be 100% automated. It’s all e-document exchange, analysis, authorizations, and (payment) transactions. Unless something is really off, a buyer should never be involved once all the workflows, rules, and authorizations are setup.

But this automation should extend back into, and through, source-to-contract. Building on the Busch-Lamoureux Exact Purchasing pocket-cube framework, there are categories that are low risk, low value, and low complexity — you should NOT be buying these manually. “Agentic” automation should be taking care of these for you, considering that even a worst-case screw up will be of little impact. Then there are categories of moderate risk, value, and/or complexity which can be fully automated if all of the necessary data is available and there is a cost and supply history to build on, there are no special situations that need to be taken into account, and a worst-case analysis indicates that even a statistically unlikely “bad buy” will be of minimal impact. These should be 90%+ automated from the decision to buy to the recommended award, with extensive analytics and augmented intelligence for human review. And if the buyer likes the default recommendation, it should be just one click for the process to go from award to e-signed contract.

All of this requires very extensive descriptive, diagnostic, predictive, and actionable analytics and intelligence with extensive, adaptive, robotic process automation ([A]RPA) that can automate everything that should be. The reality is that while everything should be sourced (or exactly purchased), when you have all of the (market) intelligence, the standard processes, and the organizational goals encoded, then there’s no reason that the systems shouldn’t do the majority (or the entirety) of the work for you.

While buyers won’t be replaced by agentic systems (despite the over-hyped BS claims of AI Employees), they will be heavily augmented by them when most categories aren’t complex, risky, or strategic enough to require human review or intervention.

The King is Dead. Long Live the King!

Learn the phrase, because you will soon be living it in every aspect of your life — it’s not only the new fashion in western politics, but the new fashion in enterprise tech tripling down on the AI hype when the big AI vendors are losing money faster than ever before (as compute costs skyrocket, competition heats up, and a lot of people are getting fed up with a total lack of return on their investments)!

However, in the meantime, as the hype wave makes it way though the mass market, a slew of startups emerge building on LLMs and fake AGI offerings, and the marketing mania takes over, expect the e-Procurement is Dead, Sourcing is Dead, and Contract Management is Dead rhetoric to hit all time highs as these new players cr@p their new apps as fast as they can, with new — natural language centric — interfaces, more automation, and instant gratification. (At least when these apps work as desired.)

As these offerings get adopted at a rapid pace in organizations who are just adopting modern solutions (which make up half of the space, or more), replace first generation apps from the noughts in organizations who decided that anti-complex is the way to go, and start to get noticed, the rhetoric picks up the pace and echos.

But that’s all it is — rhetoric amplified through a microphone. Sourcing, Procurement, and Contract Management are not dead, the fundamental requirements are not changing, and these systems are not being adopted en-masse. Not just because they don’t always work very well, but because they don’t fit. (And even when they do, they are just replacing one interface with another.)

First of all, in the public sector, you have to follow rules and frameworks even for tail spend. These systems have no guardrails, and by their very nature can’t guarantee the rules will always be followed. So these systems can’t be adopted.

Secondly, in many large private organizations, very large investments have been made in big suite models (which still have long term subscriptions in place), so unless the new AI solution enables functionality (regardless of interface) that does not exist in the current platform, or allows for a considerable number of seat-based licenses to be dropped on renewal (for a similar or less number in the new, cheaper and more functional, app), it’s not even going to be considered. Even if buyers get blinded by the hype because the CFO is going to say no.

But yes, some organizations will be in a position to adopt these systems, echo that SaaS is dead, hail the new Agents / AI as king, and go back to doing the same old thing through a shiny new interface.

So while THE PROPHET might find it fun to pontificate who killed the e-Procurement king, the reality is that no one killed the king, because the king will die a death by a thousand paper cuts, and then his clone will be put on the throne.

Why? Well, using THE PROPHET‘s examples:

most intake/orchestration platforms just put lipstick on the pig you are already using (and the pig isn’t very happy about it), and the king you will get is Merkimer’s clone
ERP will do what they always do, acquire what their customers are already using (and this time do it in fire sales as investors who paid 10X for suites get desperate for anything back as the growth in these suite companies stalls), and the king you will get is the next CEO, who will be picked to clone the current CEO in form and function
people will see through the BS of “concierge AI employees” when they falter on more complex purchases, over spend on basic items, and allow Sony PlayStations to be charged to the snack budget (because the only AI employees that perform are those based in India), and they’ll keep the king they have until he nominates his successor (whom he expects to be just like him)
the viper strikes from fed up merchants being overloaded with RFIs and RFQs to quote items in their public catalogs at non-discount volumes will be laced with poison, and the only way the king will survive is to back down …
data aggregators and intermediaries will thrive, and they help to select the next king, but they won’t be king

The King is Dead. Long Live the King!

Despite what they say, Size Matters! Part II

In Part I, we noted that size really does matter … when you are selecting a ProcureTech or Source to Pay solution, and, in particular, it’s the size of YOUR spend that matters (and not the size of the vendor or even the vendor offering).

We noted that there is no one-size fits all, that the three main tiers of organizations (small, mid-sized, large) have three different needs (which are nuanced, especially in the mid-market as going from small-mid to big-mid can require leaps in complexity), and that you should be paying based upon the tier you need.

But with 3 tiers of solutions out there, the reality is that if you select a bigger solution than you need, you’re going to pay a lot more for a much smaller return. And that’s just NOT good Procurement.

So what should you pay?

It’s all based on your size, maturity, and need. Well, we answered this a bit in the past when we did our series on how much should you outlay for source to pay. (Part 1, Part 2, and Part 3.)

In the series we did in 2023, our answer was 120K to 500K+ (a year), and we were mainly focussed on the mid-mid-market upward. The answer today is similar.

Small Enterprise, < 20M in external spend, 12K to 24K a year. All you need is basic e-Procurement and basic process support. Many shareware suites and low coding platforms will allow you to configure a lot of what you need. At 20M, your full savings potential is 2M or less, and you’re likely to only realize a quarter of that in the first year, or 500K. So spending more than 24K on a license (when you’ll also have implementation and support costs) does not guarantee a worthwhile return.

Medium Enterprise < 500 M in external spend, 60K to 240K a year. You need basic sourcing execution and e-Procurement. A baseline solution does enough at the lower end, and an enhanced solution with deep supplier management, deep P2P+, and some compliance and risk capabilities. Here, the potential savings could be as high as 50M at the high end, or as low as 3M on the low end, with a potential opportunity ranging from 1M to 10M in the first year. At the low end, especially considering the personnel costs, you probably don’t want to pay more than 100K to guarantee a return. At the higher end, you could pay a Million for a small suite and get a return, but considering there’d only be a couple of categories where it would deliver any incremental value, why pay a Million when there are solutions for 250K that deliver the same value for 90%+ of activity. (For the few categories where it’s worth it, just hire a consultant with access to specialized tools!)

Large Enterprise >= 500M in external spend, 480K to 1M+, depending on the particular deep capabilities you need and any specialized modules and support you need. There’ll be more than enough categories to justify the additional spend, and saving an extra 2% on a 50M category will pay for the increased platform cost!

That’s the rule of thumb. Higher or lower depends upon the expected return. This means that before you spend more, you should work out a realistic ROI. If the return isn’t realistically there, you don’t spend more than you need.

Now I know plenty of vendors will disagree with me, but when solutions exist at all tiers that do everything an appropriately sized buying organization will need at the price points above, why pay more? (Even though the ABC suites will tell you that you should!)

Also, please note, these are license costs with basic support only. If you want or need more support or services, expect to pay more. (And do the ROI on the services before you contract them.)

Despite what they say, Size Matters! Part I

Before your mind wanders off in the wrong direction, I’m talking about your manageable external spend size. (Not your company size, or revenue size, but your actual external spend size!)

You see, not every solution fits every company, and it’s not just a matter of company, process, and Procurement Maturity; not just a matter of what is being bought and for what; but a matter of spend size.

Here’s the thing, sourcing strategy depends on three primary factors:

the category
current market conditions
spend size

The third is critical. If you’re only spending 100K, you’re not going to do a multi-stage RFP with multi-objective optimization analyzing multiple factors against multiple award scenarios and spend 10K in personnel time and cloud costs for a 5K savings. If you’re spending 100M, you’re going to do a multi-stage event with deep supplier and product vetting, should and target cost analysis, multi-objective optimization models against multiple potential award scenarios, multi-round negotiation, and so on.

This is very important. If you’re a small mid-market that only spends 20M a year externally, and your largest category is 200K, your sourcing scenarios are going to be pretty simple. Even though those categories are strategic for you, they are not strategic sourcing in the enterprise sense of the word, which is the sense the big suites try to sell you. All you need is an e-Procurement+ solution with simple RFPs for your big categories and RFQs for the rest.

Now, if you’re a mid-mid-market spending 100M a year with categories 1M plus, that’s not enough. You need sourcing support, but it’s not full fledged strategic sourcing as defined by an enterprise suite. It’s sourcing execution. You need some onboarding, some qualification, some multi-round RFP support with feedback, some basic analytics, and some negotiation support. You don’t need deep optimization or a top-of-the-line analytics solution, an end-to-end third party risk management and compliance solution, or extensive integrated contract creation and redlining support — you just need Word document support as you’re redlining in Word.

In other words e-Procurement isn’t enough. You need some supplier management, sourcing, analytics, and contract document management. And it should all be integrated cohesively. But it’s not a suite.

Now, if you’re a large global organization, spending 500M plus with 10M to 100M categories, that’s different. You need broad and deep. Full multi-stage sourcing with auto-RFX generation, scenario support, and sourcing optimization, which needs to be deeply integrated into the deep supplier and third party management module with extensive onboarding, compliance, risk, and performance support; the analytics module that can analyze offers and compare them against historical, project, should, and target cost scenarios; and the contract lifecycle module that manages the full negotiation, indexing, tracking, and execution of the contract.

This is all very relevant because it determines two things

what type of solution you need
how much you should expect to pay

So how much should you pay? Stay tuned.

The Sourcing Innovation Source-to-Pay+ Cascading Mega Map! (2026 V2 Edition)

^{(c) 2026-01-10}

Still useless, but still slightly less useless than every other logo map that clogs your feed!

1. Every vendor still offering software/services as of 4 days ago!

2. Every vendor logo is clickable and takes you to a live site (as of 4 days ago)!

3. Every vendor is mapped to a meaningful category as of the last date of analyst investigation!

So what’s the point?

To again make it utterly clear you can’t select a vendor based on a random grouping of logos on a map, even if they are categorized!

Not even if the map categorizes the vendors by market size, industry, and/or geography. Those are just proxies for organizational spend, solution needs and cultural requirements. And not every mid-market manufacturing plant in the USA is the same.

The only way to select a good vendor is to follow a proper assisted process and engage an expert who understands what vendors are out there to identify the right vendors to invite to the RFP process once your true needs have been identified.

Especially considering the true number of vendors out there is many times more than what an average big analyst firm will tell you, especially when they restrict their recommendations to their paying clients in their maps, and multiples of what an average big consultancy will tell you, especially when that consultancy only knows their partner solutions (that they need to maintain significant focus on to maintain their preferred partner status).

So, what’s the value?

As we explain in detail in the real value of the sourcing innovation mega map (2026 Ed), it shows you

why you need proper proper assisted solution selection (and we can’t stress this enough)
it shows how unstable the space is:
- fixty-six (56) companies are gone
- a dozen-plus (12+) companies have been acquired or renamed
- there are just too many options for an average buyer to make sense of
it (statistically) proves quite a few vendors ARE NOT GOOD (for you at least)

So let this be proof that there are a lot of logos in our ProcureTech+ space and that, if you want logos, you got logos!
666 of them!
Enjoy!

			Source-to-Pay
Souce-to-Contract			Procure-to-Pay				Intake-to-Orchestrate
Sourcing + SXM + CLM	Sourcing + Analytics	SXM + Analytics	e-Procurement	Invoice-to-Pay / AP	Expenses	Payments (& P-Cards)	Training
Sourcing + SXM	Sourcing + CLM	SXM + CLM		Sourcing	SXM	CLM	Analytics
Direct Supply Chain	Cyber Monitoring	ESG / Carbon	Marketplaces	Legal	Marketing	SaaS	Intelligence