The World Has Changed … Procurement Has Not!

In a recent post, that I hesitate to link to because it doesn’t help me stay in the obscurity you seek out only when you’re ready to learn, Joel tell us that Procurement Has Changed when, in fact, it really hasn’t.

It seems that I have to again argue that Procurement has NOT changed since the first book on Purchasing I know of was published 138 years ago. (The 1887 Handbook of Railway Supplies). The goal is still the same: assure supply at the lowest cost that minimizes risk to the business while creating the most overall value so the business can remain profitable and grow. NO CHANGE (or at least there shouldn’t be)!

It’s the world that’s changed. The business models we play in. The economic landscapes we trade in. The processes we’ve developed to deal with the complexity. The tools we use to do our jobs (and this is now the best of times and the worst of times: computational power to optimize global networks and Gen-AI LLMs to hallucinate answers so convincing, but yet so wrong, they could destroy your business).

It’s learning how to quickly adapt to changing business environments, changing economic models, and changing global landscapes, especially with dichotomies we haven’t seen before — a double down on sustainability by the EU and some countries as we hit year after year of record heatwaves, and an abandoning of all commitments and many recent legislations in the USA. Same for DEI. Then dealing with those changes that are coming orders of magnitude faster than in the past (the majority of tariffs would generally change only [semi-]annually when government bodies got around to it or a crisis happened, now you have them fluctuating sometimes daily).

It’s realizing that the STEM skills you need to navigate the technology to do this are far beyond what you would have received UNLESS you entered Procurement from a STEM field, and shoring up those skills, as well as your ability to use tools that help you with those skills. It is navigating fractured relationships caused by political bodies outside of the scope of your influence. And so on.

It may feel like Procurement has changed, but the reality is that it hasn’t! It’s everything around it that has changed.

Bells and Whistles Lead to Cells and Thistles! Part II

In Part I, after noting that I’ve been hearing and seeing the following too often lately:

  • smaller vendors struggling to close/losing deals because the bigger/splashier vendors have more “Bells and Whistles”
  • vendors getting lots of (and possibly too much) funding focusing heavy on bells and whistles

I said that we were going to dive into some of the most common bells and whistles and why, in the best case, they’re a complete waste of money and, in the worst case, the thorn prick will end up being so painful that your team will simply stop using the software. (And often do so before the subscription is half, or even a third, up, which leaves you in an expensive subscription jail you cannot stop paying for even though no one is using it.)

But before we continue with the modules, here are two of the most common bells and whistles across all Source-to-Pay platforms that deliver absolutely no value whatsoever.

Flashy UX

A lot of startups over-focus on the UI and UX, believing that the big problem with today’s platforms is that they are too unfriendly and too hard to use (which is often the case with older generation suites, but not the case with the majority of newer, mid-market, suites and best-of breeds) and that everything can be made simple with an AI-driven workflow that makes all of Sourcing and Procurement easy-peasy (which it is if you are buying pens and paper for the stockroom, but that’s about all that’s easy peasy).

They then get professional speakers and presenters to train their salespeople on these very flashy, impressive looking, platforms to give awe-inspiring demos on the pen and paper buying process (with the promise that everything is just as easy) that management and buyers eat up, even though the buyers aren’t allowed to play with it first (and see what happens if they try to source custom built FPGAs for their control systems or specialized implementation and integration services for their new supply chain planning software that needs to connect to the ERP, the direct sourcing module, and the CRM — which is where their over-simplified flashy UX will fall apart completely as there will be no deep functionality behind it).

The reality is that it is not flash, fancy UI, or even AI-driven automation, that matters in enterprise software. What matters is the effort required to do daily tasks of moderate plus complexity, and that is often best accomplished by sophisticated workflows that are pre-configured for different scenarios and very simple, step-wise, input screens (with the current step and complete workflow highlighted) that allow a person to see where they are, why they are there, what they need to enter, and what comes next. It’s often the case that the screens aren’t minimal, aren’t colourful, and aren’t flashy. (There’s a reason that green screens lasted so long and that’s because, well designed, they made work efficient — remember, it’s not personal entertainment software, it’s business software your team might need to use 10 times a day and if the flashy software requires 30 screens because they are all too minimalistic [when it should require 10], or doesn’t support the process at all, it doesn’t matter how good it looks or how easy it is to use.) The best software is designed to ensure that all of the common repetitive tasks, no matter how variable they can be, can be accomplished as quickly as possible with as little human input as possible, and you can’t always make that minimal, flashy, or appealing to the inner artist.

Adaptive AI-Driven Automation

A lot of (over-funded) startups on the Gen-AI Hype Train (who have been Blinded By The Hype) believe that they can use the latest and greatest version of Gen-AI (which, FYI, has a 48% failure rate if we’re talking the latest ChatGPT version as of the time of this being posted) to automatically adapt to all input requests and automate every sourcing and/or procurement process they claim to cover. They can’t. And they never will be able to because hallucinations are a core function of LLM technology (regardless of which LLM you use).

As a result, while it will work great for most of the standard requests and processes and get them mostly, if not entirely right, anytime anything sophisticated or exceptional comes along, it will break down completely. If you’re lucky, it won’t know what to do, won’t do anything, and force human intervention — forcing you to design and build a full process by hand through it’s painful conversational interface that will require you to repeat yourself multiple times and specify the same request in six different, increasingly precise, manners until it builds the process you need. If you’re not lucky, it will assume your request to order 1000 Ford brake shoes (for your fleet of vans) is actually a request to order 1000 Nike Jams (breaking shoes) because your last order from James Ford (a sales manager who likes to abuse his P-Card and gets away with it because he signs the largest contracts and the boss looks the other way) was for Nike Jams, and the system automatically orders 1000 pairs of Nike Jams, shipped to Fords office. Moreover, you don’t notice, because it says order placed, delivery in 5 days, and you don’t bother to verify because you’re in a hurry (and it worked okay on the last 9 order requests you made).

If, in comparison, you had an e-Procurement system that you could setup with standard re-orders off of contracts, you could type re-order brake shoes in the universal search bar and it would brings up the standard order pre-filled with units, supplier, and standard delivery date and you could simply hit submit to get the standard re-order with 100% certainty, or change the supplier, delivery location, delivery time, and/or units to make a simple change. No ambiguity, and no chance of error. It’s 3 words and 2 clicks, and you’re not waiting 15 seconds for it to parse your request and 15 seconds to do who-knows-what and give you a verification.

In other words, bells and whistles look and sound cool, until you realize that the ringing can be deafening to the point it gives you such a headache that you can’t get your work done.

Moreover, after 25 years in the space and 19 as an (independent) analyst, I can tell you that this correlation almost always holds true:

The more bells and whistles a product has, the less actual functionality or support for complex or exceptional situations or process is actually embedded in the tool, and the less useful it ultimately is over time.

The tool will ultimately end up as yet another piece of shelfware (that you are locked into for another year or three if it’s SaaS, and more if it’s not), and that’s why the average mid-sized and larger enterprise has somewhere between 300 and 1000 SaaS applications! (Because most aren’t used!)

Seek deep solutions that solve your problems and allow your team to become more efficient over time, not razzle-and-dazzle solution based on the wisdom of P.T. Barnum: “the people like to be humbugged“.

To make it clear how useless bells and whistles are, we will continue this series and address major areas of Source-to-Pay starting in Part III.

Bells and Whistles Lead to Cells and Thistles! Part I

I’ve been hearing and seeing two things lately:

  • smaller vendors telling me they’re struggling to close / losing deals because their potential customers are telling them they are leaning towards the bigger/splashier vendor with more “Bells and Whistles”
  • vendors getting lots of (and possibly too much) funding are focussing heavy on bells and whistles (because they believe it will help them sell fast and meet the significant, and often unrealistic, sales targets of the investment firm[s])

So I have to address this because if you select a solution based on bells and whistles, expect to end up in a cell while your fingers bleed from the thistles that prick you every time you try do something that’s not the primary, simple, use case. This then leads to usage of your purchase declining quickly, causing you to end up with another piece of shelfware before you get even halfway through the initial contract subscription.

Now, to help you understand I’m not making this up for clicks and shares, we’re going to dive into some of the most common bells and whistles and why, in the best case, they’re a complete waste of money and, in the worst case, the thorn prick will end up being so painful that your team will simply stop using the software. We’re going to do this across source-to-pay.

Intake

Everyone’s gotta have it because, apparently, it’s brand new and Zip invented the category a few years ago. This is, of course, complete bullsh!t because

  1. Coupa has had full intake since Procurement Independence Day in 2006. You just didn’t know because when Robbie took over the Coupa factory, licensing switched from enterprise size to per user, and the cost was too much to give non-Procurement users a license so you didn’t see the intake that was there. (And to that effect, if Zip is pricing per user, how is this better?)
  2. Zycus had one of the first modules dedicated to intake, iRequest, over a decade ago

Moreover, everyone has to have Gen-AI intake, because, apparently, using a few drop downs to figure out what a user wants is too difficult for the average iZombie who has been zombified by ChatGPT over-dependence.

While this is useful to parse an initial request from a user — do they have a question, want a report, or want to make a requisition (and if so, is it from a catalog or do you have to go to market) — beyond that initial parsing (which will never achieve an initial parsing accuracy beyond 90%, so at least 1 in every 10 requests will have to be rephrased for the system to get it right), it goes from useful to painful to useless.

Here are a few examples:

  • Policy Question: as we’ve said before, Gen-AI has two strengths: large corpus search and summarization and natural language processing; in this circumstance, if the success rate is 90%, it’s mostly useful, but to be honest, if you know the right terminology, elastic search will work just as well, retrieve the exact clause, and never hallucinate a response. Summary: sometimes useful.
  • Catalog Buy: good luck with this because you’ll spend at least 5 minutes trying to order a box of gloves, and I kid you not — see this post where we illustrate how it will take you five minutes to explain to the Gormless AI what you want when you could place an order in a well-defined catalog in 15 seconds with 3 words, 1 number, and 4 clicks. Nothing will drive your users to maverick purchasing off of Amazon, BestBuy, and even Walmart faster than a Gen-AI intake portal. Summary: painful.
  • Analytics Request: while it’s great for a simple “how much am I spending on supplier S” (especially if that total exists in a spend cube), the fact that Gen-AI is very bad at math (to the point that you can ask the same question twice in a row and get a different answer), and not so great at parsing very specific requests such as how much did we spend with supplier S on steel products last quarter which makes it all but useless — even Gartner, the ring leaders of the Gen-AI lovefest, have predicted that “conversational analytics” will completely leave the ProcureTech vernacular in two years. Summary: useless.

… but this is just the beginning. We’ll continue with the Source to Pay process in Part II.

In ProcureTech, Stop Caring What Gartner, Forrester, or IDC Thinks!

I shouldn’t have to address this again, but every year multiple vendors reach out and ask how to get on these vendors maps because they believe it’s the only way to get more market visibility and/or be selected by certain customers, including you. It’s not the only way to get visibility and if a vendor can’t convince a potential customer from thinking that only map companies are good, I’ll tell them this right now — that’s not a customer they want (because that vendor will be out on the renewal with whatever vendor overtakes them in the map when the CPO changes in 3 years, because companies without vision to look beyond a meaningless map don’t keep real talent, and only real talent will identify and select the best solution and ensure that solution is kept over time).

But I digress — this post is about you, the potential customer, and why you need to STOP caring what Gartner, Forrester, or IDC thinks.

First of all, we’ve said it before, and we’ll say it again: It’s NOT the Analyst Firm. It’s the Analyst!.

In addition to all of the skillsets and education that an analyst needs to have to get it right, which we covered in detail in that post, the analyst needs a lot of relevant experience, and history in the ProcureTech space, to make sense of the ProcureTech world today. Ask yourself: how many of the analysts with the right education have at least 10 years in our space? The answer is very few. How many have 20 years in (independent) analyst roles? You can count them on your fingers. I know of myself, Jon Hansen, Pierre Mitchell, and Chris Sawchuk with 20 years of (independent) analyst experience in our space and a deep technical (STEM) education. Everyone else who started covering this space day in, day out two decades ago has moved on or retired. Now, of these analysts, how many have also built actual solutions in the ProcureTech space, connecting the dots between the education, theory, and practice? Two of us — myself and Jon Hansen. (But we should note that Pierre and Chris spent part of their careers on solution advisory consulting and implementation guidance, and have deep knowledge about the implementation and integration requirements, which is also very unique and useful in technology selection.)

Now remember the second point: Vendors Have Lured Big Analyst Firms Astray and that you’re not getting a map of the best solutions, but the best solutions from the analyst firm’s pool of vendor sponsors and research subscribers, where the reality is that only the big, established, cash-rich companies can afford the high-priced subscriptions that keep them in front of the overworked analysts who have to spend over half of their time taking inquiries or keeping high paying subscription customers happy. (Whereas analysts at smaller firms or independents get to focus on studying and understanding the solutions, not general inquiries or whether or not the contract [or pricing model] is good.)

This means that these big firm analysts are not spending a lot of time, if any, looking at the up-and-coming mid-sized companies that have not only been around long enough to develop mature enterprise solutions, but solutions that are more modern, more powerful, more usable, and more intelligent (with embedded analytics, RPA, and the right AI for the task at hand), and possibly (much) better for you. Moreover, if the enterprise is a mid-market company, or able to go with a best-of-breed as a bolt-on to their enterprise ProcureTech platform, they’ll never know about the majority of these solutions (as only the overfunded startups will have the money to get the big analyst firm attention, and these vendors often have more financial stability problems than the smaller vendors who are bootstrapping or taking minimal funding and actually have stable, happy, paying customers keeping them afloat).

Third, and most important, it’s not the best rated solution, it’s the best solution for your organization. Not only is it the case that this solution is very likely not on a map of only 20 companies (when there might be 100 companies that offer that solution), but it might also be the case that it is the lowest ranked solution on those maps — especially when these maps tend to rate solutions on a lot of subjective factors that match what the analyst thinks are the most relevant for an average organization, whereas you are a specific organization which has a specific set of relevant factors that you care about, with specific requirements for those factors. The more divergence between your factors and the analysts’, and your scale and theirs, the worse the map is for your needs, and the worse the solution you select will be.

The only maps you should care about are those that rank solutions solely on the tech capabilities and/or the customer rankings. But only so far as potential solution identification, not selection. Maps that concentrate on pure tech (like Spend Matters Solution Map) allow you to identify vendors that have the tech foundations, giving you a starting pool, but don’t allow you to identify vendors that have a solution — because a solution is tech and appropriate process support and integration capability and support and culture and whatever else transforms another piece of potential shelfware into a solution that will be used daily by your employees.

Note that we used the word “potential” for a reason. No map (including Spend Matters) is complete, so you will need to look at multiple sources (like ProcurementSoftware.site and the upcoming Art of Procurement ProcureTech 100) to put together a complete list of vendors to consider. Then you will have to cross reference with real analyst vendor write-ups (which can include the hundreds of write-ups here on this site if one or more of your potential finalists are included) to whittle down that list to the best starting set for your best practice technology RFP (of which we have a lot of advice on how to write that on this site as well).

At the end of the day, it’s about what solution will work for you, not about which solution is on which map!