Myth-busting 2025 2015 Procurement Predictions and Trends! Part 2

Introduction

In our last instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same.

To save you the trouble of reviewing all of these articles, which are going to be 80% the same (as the 71 “predictions” and “trends” from the first 8 articles we reviewed all fell nicely into 10 “core” areas with not a lot of difference between them), we are going to discuss the 10 core predictions (and variants) that you are going to see over and over again, with some of them being the same predictions we have seen over and over again, and, where necessary, contrast the dream with the reality. Just for the heck of it, we’ll do take them in reverse alphabetical order, because, why not?

Technology & Digital Transformation

These predictions basically revolved around the rise of SaaS-based “Digital Transformation” with calls out to agility and integration. More specifically, these were the 10 predictions and trends from the first 8 articles we reviewed.

  • Cloud-Based Solutions
  • Digital Tools
  • Digital Transformation and Technology Adoption
  • Diverse Digital Transformation Technologies will Become the Norm
  • Emphasis on Digital Procurement
  • Integrated Procurement Systems
  • Proliferation of Procurement Technology Platforms
  • Rise of Agile Procurement Processes
  • Rise of Digital Procurement
  • Rise of E-Procurement

As you can see, they all revolve around SaaS/Cloud-based “Digital Transformation”, which should not be a surprise. The SaaS transition started over 15 years ago, and revved up in a big way over the last few years when COVID forced business to put more of their processes online for remote/home access. And even though a lot of big companies are forcing employees to return to work, now that they’ve realized SaaS is easier to maintain (someone else manages the data centre, does the updates, etc.), expense (you’re not paying huge one-time fees up front), replace if needed (provided you make sure, up front, in the contract, that you have the right to export all of your data at any time in an industry standard format), and mitigate you exposure in the case of a cybersecurity breach (as the provider is required to maintain agreed upon security and privacy standards and you can insist they indemnify you for their failures to honour the contract) they are going to continue to replace legacy systems with SaaS as time goes on. It’s just a continuation of what they have been doing for the past four years. Nothing new, exciting, or unexpected here.

And yes, the smarter companies, in addition to ensuring they own their data and have the right to extract all of it at any time, will look for solutions that are easy to integrate into their current/planned SaaS ecosystem as well as those that increase their agility. It’s just good practice to try and future proof your SaaS as much as possible, especially considering poorly managed SaaS subscriptions contributed significantly to 500 Billion in wasted Technology spend last year.

So, yeah, it’s a trend. But did it take any prognostication to notice it? Nope!

What Should Happen? (But Won’t!)

Companies should analyze all of their systems and plan to replace any systems that

  • are not being used / not delivering value
  • don’t integrate with their ecosystem
  • don’t support modern Sourcing & Procurement processes

And we use the word “plan” because:

  • it takes time to identify the right solution, which has to be done by YOU and not a salesperson, and then to implement that solution, which needs to be overseen by YOU and not a third party with no stake and who only cares about how many hours they can bill, and then needs to be adopted by YOU and used regularly
  • the company may be locked into the current system for another one (1) to four (4) years depending on the deal signed by your predecessor, and escaping early may be way too costly, so you might be stuck with it for a few years (and have to focus on finding solutions to make it more usable/valuable)
  • you can only replace one system at a time in any department without causing so much disruption that you risk the business (big bang projects always result in big bangs; just Google “worst supply chain disasters” and you’ll see the vast majority are caused by technology failures, and about half by ERPs alone!)

Once you have the list of systems that you need to acquire / update, prioritize them based on the value a new system can deliver and how soon you could implement / replace a current system, and then begin the to identify, select, implement, integrate, train, and use the first system (on the list) on a daily basis. You should only begin the process of identifying a second system once the first system is being used on a daily basis (and not begin implementation of a second system until you are sure all the bugs are worked out of the first system).

And always remember that your success or failure depends on you. As we have previously noted, digital procurement transformation requires strategy and design … your strategy and your design. After all, you don’t want to be the company that pushes the technology project failure rate over 90%. (It’s 88% now and climbing year-over-year.)

Anyway, that’s one trend myth down, nine to go.

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 1

The ambitious starting pumping these out late November / early December because, apparently, everyone wants to be first … to say almost the same thing they said last year (and the year before that … and the year before that … ) because, if they just keep making the same prediction, it will eventually come true … right?

However, just like the primary conference topics haven’t changed much in the last decade (and, as we pointed out earlier last year, just check out our 2014 series on The “Future” of Procurement and “Future” Trends and you’ll notice the topics are 90% the same as what were discussed last year … it’s only the current “hype” cycle technologies that change), neither have the predictions. the doctor reviewed 71 predictions / trends across 8 articles, and they neatly fell into 10 topic areas, with vary little differentiation between them. 9 of these were hot a decade ago. Heck, these 9 were being hailed as the core/future of Procurement two decades ago! The only difference is that the top prediction/trend just replaced one technology for another.

To make it abundantly clear how nothing has changed in the prediction world, and how very little is going to change in the Procurement world, we’re going to take the major predictions one-by-one and inject a little harsh reality. Often the dream is very nice, and sometimes the dream should be the reality, but, as we know, what “should be” and what “is” are often two very different situations! And no amount of wishing shall make the two meet. (Only hard work can do that!)

If you want to dive deep, the first 2025 prediction/trend articles that the doctor found are the following eight:

And the predictions they deliver fall into the following 10 categories:

  • AI
  • Category Management
  • Cost vs. Value
  • Data
  • Risk & Compliance
  • Strategic Value
  • Sustainability
  • Supplier Management
  • Talent
  • Technology & Digital Transformation

And if you simply replace “AI” with “Analytics”, you can go and dig up some classic articles on 2015 Procurement Predictions and Trends and realize what you read 10 years ago isn’t that much different than what is being pushed today. After all, it’s likely that the newer Procurement generation didn’t read any of it (and didn’t get any of it in training because there are no training budgets anymore) and it will all be new to them and, if you just change the buzzwords, it all sounds new, right? Right?

However, we’ll save you the trouble. We’ll summarize what the major predictions are, how accurate they are, and what will really happen in 2025. Remember, we’ve been around this space for 25 years and we know that the more they proclaim things will change …

One of these things is not like the other — it’s the right choice!

This originally published March 6 (2024).  It is being reposted due to the criticality of the subject matter (and the fact that One Trillion was wasted on services last year).

Note the Sourcing Innovation Editorial Disclaimers and note this is a very opinionated rant!  Your mileage will vary!  (And not about any firm in particular.)

Three bids for that spend analytics project from the three leading Big X firms come in at 1 Million. One bid for that spend analytics project from a specialized niche consultancy you pulled out of the hat for bid diversity comes in at 250 Thousand. Which one is right?

Those of you who only partially paid attention to the education Sesame Street was trying to impart upon you when you were growing up will simply remember the “one of these things is not like the other” song and think that any of the bids from the Big X firm is right and the niche consultancy is wrong because it’s different, and therefore must be thrown out because it’s too low when, in fact, it’s just as likely that the three bids from the Big X firms that are wrong and the bid from the niche consultancy that was right.

Those of us who paid attention knew that Sesame Street was trying to show us how to detect underlying similarities so we could properly cluster objects for further analysis. What we should have learned is that the Big X bids were all the same, built on the same assumption, and can be compared equally. And that the outlier bid needed further investigation — a further investigation that can only be undertaken against an appropriately sized set of sample set of bids from other specialized niche consultancies to compare against. And without that sample set of bids, you can’t properly evaluate the lower bid, which, the doctor can tell you, is just as likely to be closer to correct than what could be wildly overpriced Big X bids.  (Newer firms often have newer tech and methods — and if these are the right methods and tech for your problem … )

As per our recent post, if you want to get analytics and AI right, most of these guys don’t have the breadth and depth of expertise they claim to have (as most don’t have the educational background to know just how broad, deep, and advanced AI and analytics can get, especially when you dig deep into the math and computer science and all of the variable models and strengths and weaknesses, and instead are trained on what is essentially marketing content from AI and analytics providers). In the group that sells you, there will be a leader who is a true expert (and worth his or her weight in platinum), a few handpicked lieutenants who are above average and run the projects, and a rafter of juniors straight out of private college with more training in how to dress, talk, and follow orders than training in actual analytics … and no guarantee they even have any real university level mathematics beyond basic analysis in operational research (and thus a knowledge of what analytics is and isn’t and can and can’t do).  And unless you know what you need, and why, you can’t judge the response.  (Furthermore, you can’t expect them to figure out your problem and goals with only partial information!)

While there was a time big analytics projects were (multi) million dollar projects, that was twenty years ago when Spend Analysis 1.0 was still hitting the market; when there were limited tools for data integration, mapping, cleansing, and enrichment; and when there weren’t a lot of statistics on average savings opportunities across internal and external spend categories. Now we have mature Spend Analysis 3.0 technologies (some taking steps towards spend analysis 4.0 technologies); advanced technologies for automatic data integration, mapping, cleansing, and even enrichment; deep databases on projects and results by vertical and industry size; extensive libraries for out-of-the-box analytics across categories and potential opportunities; and a whole toolkit for spend analysis that didn’t exist two decades ago. This new toolkit, built by best of breed vendors used, and sometimes [co-]owned by these best of breed niche consultancies (that don’t try to do everything, and definitely don’t pretend they can), allows modern spend analysis projects to be done ten times as efficiently and effectively, in the hands of a master — a master that isn’t necessarily on your project if you hire a Big X or Mid-Sized Consultancy without doing your homework, vetting the proposal, and vetting the people. [See when should you be using Big X.]

In contrast, a dedicated niche consultancy should have all these tools, and only have masters on the project who do these projects day in and day out. Compared to the bigger consultancies who don’t specialize in these projects, which will have a team of juniors using the manual playbook from the early 2000s, and one lieutenant to guide them. That’s often why sometimes their project bids are five times as much — and why you should be inviting multiple niche best-of-breed consultancies to bid on your project as well as multiple Big X consultancies (including those that are truly focusing on analytics and AI, and you can identify some of these by their recent acquisitions in the area) and be focusing in just as much on the six figure bids for the one that provides the best value, not just the seven figure Big X bids.  (And, FYI, if you invite enough Big X, you might find some come in at six figures and not seven because they have acquired the newer tech, took the time to understand your request, and figured out how they could get you the same value for less cost, leaving you funds for the follow on project where you should consider the Big X!)

(This is also the case for implementations. The Big X always have a rafter on the bench to assign to any project you give them, but there’s no guarantee any of them have ever implemented the system you chose before, or if they did, no guarantee they’ve ever connected it to the systems you need to connect to. You need specialists if you want a new system implemented as cost effectively as possible, especially if its a narrow focused specialist application and not a big enterprise application the Big X always implements. At the end of the day, even if you’re paying those specialists 500 or more an hour because getting a system up in 2 months at 40K is considerably better than a small team of juniors taking 4 months at 200 an hour and a total cost of 80K.  But again, mileage will vary — if the solution you select is a Big X partner, then the Big X will be best.  If it’s a solution they never heard of, you will need to evaluate multiple bids from multiple parties. )

Remember, where any group of vendors on the same page are concerned, All of us is as dumb as One of us!

Don’t fall for the Collectivism MindF6ck! that if multiple parties agree on something, that’s the right answer!  the doctor does NOT want to do say it again, but since a month still is not going by where he’s hearing about niche consultancies being thrown out for “being too cheap” or “obviously not understanding the problem” (which means the enterprise throwing them out is too uninformed and not recognizing that the Big X bids could just as likely the outliers because they aren’t inviting enough expert consultancies to the table), apparently he has to keep writing (and screaming) this truth. (the doctor isn’t saying that you can’t get a million dollars of value from some of these consultancies, just that you won’t by giving them a project they are not suited for;  again, see when should you use big X to identify when that million dollar project will generate a five million ROI — it’s people doing these projects at the end of the day, and where are those people?)

Remember, most of these firms got big in management, or accounting and tax, or marketing and sales consulting, not technology consulting. The only reason these big consultancies started offering these services is because of the amount of money flowing into technology, money which they want, but while the best of the best of the best in more traditional accounting, management, and marketing fields flocked to them, the best of the best in technology flocked to startups and c00l big tech firms  Now, some of these firms double downed, went and recruited those people, built small teams, learned, bought tech companies to expand the team, and now have great offerings in a number of areas.  But we have tens of thousands of tech companies for a reason, not everyone can build every type of technology, and not everyone can be an expert in every type of technology.  So while they will have expertise in some areas, they just can’t have expertise in all areas.  No one can.  Find the best provider for you.  Sometimes it will be Big X.  Sometimes Mid-Market.  Sometimes Niche.  It all depends on your problem at hand.)

And yes, sometimes the niche vendor will be wrong and woefully undersize the project or your needs.  But as per the above, if you don’t do give them a chance, and deep dive into their bid, how will you know?

 

Did you ever try eating a mitten? the doctor bets some of those clients did! (He feels you’re not all there if you think glorified reporting projects should still cost One Million Dollars by default and might actually try to eat your mittens! [Joking, but you get the point.]  Deep analytics projects that require the most advanced tech, especially AI tech, will cost a lot, but standard spend analysis, sales analysis, etc. where we have been iterating and improving on the technology for two decades should not.)

DEAR ENTERPRISE PROCUREMENT SOFTWARE BUYER: THERE ARE NO FREE RFPs!

This originally published June 29 (2024) and is being reprinted due to how important it is to remember as you enter a new budgetary year and seek out new technology.

This shouldn’t have to be said (again), but apparently it does since Zip has relaunched the FREE RFP madness in Source-to-Pay (that began in 2006 when Procuri first aggressively launched the Sourcing, Supplier Management, Contract Management, and Spend Analysis RFPs) with an RFP that is intake heavy, orchestrate light, process deficient, and, like many RFPs before, completely misses some of the key points when going to market for a technology solution. (Especially since there isn’t a single FREE RFP template from a vendor that isn’t intrinsically weighted towards the vendor’s solution, as it’s always written from the viewpoint of what the vendor believes is important.)

the doctor has extensively written about RFPs and the RFP process here on SI in the past, but, at a high level, a good RFP specifies:

  • your current state,
    it does NOT leave this out leaving the vendor to guess your technical and process maturity
  • what you need the solution to do
    NOT just a list of feature/functions
  • what ecosystem you need the solution to work in
    NOT just a list of protocols or APIs that must be supported
  • where the data will live
    and, if in the solution, how you will access it (for free) for exports and off-(vendor-)site backups, do NOT leave this out
  • what support you need from the vendor
    NOT just whether the vendor offers integration / implementation services and their hourly / project rate
  • any specific services you would like from the vendor
    NOT a list of all services you might want to buy someday
  • what the precise scope of the RFP is if it is part of a larger project
    NOT a blanket request for the vendor to “address what they can”
  • what regulations and laws you are subject to that the vendor must support
    NOT just an extensive list of every standard and protocol you can think of
  • what languages and geographies and time zones you need supported
  • any additional requirements the vendor will need to adhere to based on the regulations you or the vendor would be subject to and additional requirements your organization puts in place
    NOT endless forms of every question you can think of that might never be relevant
  • your goal state,
    it does NOT leave the vendor to guess what you are looking for (note that “goal” defines what you want to achieve, it is up to the vendor to define how they will help you achieve it)
  • what (management) processes you use to work with vendors — and —
  • what collaboration tools you make available to vendors and what your expectations are of them

And it is only created after a current state assessment, goal state specification, and key use-case identification so that it is relatively clear on organization needs and vendors have no excuse to provide a poor response.

Furthermore, a good RFP does NOT contain:

  • requests for features/functions you don’t currently need (but you can ask for a roadmap)
  • specific requests for a certain type of AI/ML/Analytics/Optimization/etc. when you don’t even know what that tech actually does — let the vendor tell you, and then show you, how their tech solves their problem
    (after all, there are almost NO valid uses for Gen-AI in S2P)
  • specific requests on the technology stack, when it doesn’t matter if they use Java or Ruby, host on AWS or Azure, etc.
  • requests for audits (tech, environmental, social welfare, etc.) when you haven’t selected the vendor for an award, pending a successful negotiation
  • requests for service professional resumes when you haven’t selected the vendor for an award that includes professional service, pending a successful negotiation
  • requests for financials, when you haven’t selected the vendor for an award pending a successful negotiation
    (because these last three [3] will scare some vendors off and possibly prevent the best vendor for you from even acknowledging your RFP exists)

And, a good RFP, goes to the right providers! This means that you need to select providers with the right type of solution you need before you issue the RFP, and then only issue to providers that you know offer that type of solution. (You can use analyst reports here if you like to identify potential vendors, but remember these maps cannot be used for solution selection! You will then need to do some basic research to make sure the vendor appears to fit the criteria.)

And if there are a lot of potential providers, you may need to do a RFI — Request for Interest / Intent (to Bid) — where you specify at a high level what the RFP you intend to issue is for, and if you get a lot of positive responses, do an initial call with the providers to confirm not only interest but the solution offered is relevant to your organization. (After all, at the end of the day, as The Revelator is quick to point out, it’s as much about the people behind the technology as the technology itself if you expect to be served by the provider.)

And even if you don’t need to an RFI before the RFP, you should still reach out to the vendors you want to respond, let them know the RFP is coming, and let them know you’ve done your research, believe they are one of the top 5 vendors, and are looking forward to their response. (Otherwise, you might find you don’t get as many responses as you’d hope for as vendors prioritize RFPs that they believe they have a good shot at winning vs. random unexpected RFP requests from unknown companies.)

At the end of the day, if you don’t know:

  • what the main categories of S2P+ solutions are
  • what the typical capabilities of a solution type are, what’s below, average or above
  • who the vendors are
  • how to determine your current state of process maturity (and how that compares to the industry, market, and best-in-class) and what a solution could do for you
  • how to evaluate a vendor’s solution
  • how to evaluate a vendor overall
  • how to write a good RFP that balances core business, tech, and solution requirements to maximize your chances of finding a good vendor for you

and the reality is that you most likely don’t (as less than 10% of Procurement departments are world class, as per Hackett research going back to the 2000s where they also determined the typical journey for an organization to become best-in-class in Procurement was 8 years, and that’s the minimum requirement to write a world-class technology RFP), then you should engage help from an expert to help you craft that RFP, be it an independent consultant or firm that specializes in Procurement transformation.

It is also critically important that the firm you select to help you needs to be neutral (not aligned with one solution provider who refers implementations to them in return for potential customer referrals) and that the firm does not rely on analyst maps either!

If you want help, the doctor has relationships with leading, neutral, firms on both sides of the pond who can help you, and who he will work with to make sure the technology / solution component is precisely what you need to get the right responses from vendors. Simply contact the doctor (at) sourcinginnovation [dot] com if you would like help getting it right.

Simply put, getting help with your technology RFP is the best insurance money you can spend. When you considering that, all in, these solutions will cost seven (7) or eight (8) figures over just a few years, you should be willing to spend 5% to 10% of the initial contract value to make sure you get it right. (Especially when there isn’t a single Private Equity Firm that wouldn’t invest in a technology player without doing a six [6], if not seven [7] figure due diligence first … and sometimes the firm will do this and then walk away! At least in your case, when you work with someone who can identify multiple potential vendors, you’re certain to find one at the end of the day.)

One Supply Chain Misconception That Should Be Cleared Up Now

This originally posted May 14 (2024).  It’s being reposted because this definitely needs to be cleared up before the new year (due to the constant proliferation of AI, which is, when all is said and done, just another technology).

Not that long ago, Inbound Logistics ran a similarly titled article that quoted a large number of CXOs that made some really good observations on common misconceptions that included, and are not necessarily limited to (and you should check out the article in full as a number of the respondents made some very good points on the observations):

The misconceptions included statements that supply chains should:

  • reduce cost and/or track the most important metric of cost savings
  • accept negotiations as a zero-sum game
  • model supply chains as linear (progression from raw materials to finished goods)
  • … and made up of planning, buying, transportation, and warehousing silos
  • … and each step is independent of the one that proceeds and follows
  • accept they will continue to be male dominated
  • become more resilient by shifting production out of countries to friendly countries
  • expect major delays in transportation
  • … even though traditional networks are the best, even for last-mile delivery
  • accept truck driver shortage as a systemic issue
  • accept the blame when anything in them goes wrong
  • only involve supply chain experts
  • run on complex / resource intensive processes
  • … and only be optimal in big companies
  • … which can be optimized one aspect at a time
  • press pause on innovation or redesign or growth in a down market
  • be unique to a company and pose unique challenges only to that company
  • not be sustainable as that is still cost-prohibitive
  • see disruption as an aberration
  • return to (the new) normal
  • use technology to fix everything
  • digitalize as people will become less important with increasing automation and AI in the supply chain

And these are all very good points, as these are all common misconceptions that the doctor hears too much (and if you go through enough of the Sourcing Innovation archives, it should become clear as to why), but not the biggest, although the last one gets pretty close.

 

THE BIGGEST SUPPLY CHAIN MISCONCEPTION

We Can Use Technology to Do That!

the doctor DOES NOT care what “THAT” is, you cannot use technology to do “THAT” 100% of the time in a completely automated way. Never, ever, ever. This is regardless of what the technology is. No technology is perfect and every technology invented to date is governed by a set of parameters that define a state it can operate effectively in. When that state is invalidated, because one or more assumptions or requirements cannot be met, it fails. And a HUMAN has to take over.

Even though really advanced EDI/XML/e-Doc/PDF invoice processing can automate processing of the more-or-less 85% of invoices that come in complete and error free, and automate the completion and correction of the next 10% to 13%, the last 2% to 5% will have to be human corrected (and sometimes even human negotiated) with the supplier. And this is technology we’ve been working on for over three decades! So you can just imagine the typical automation rates you can expect from newer technology that hasn’t had as much development. Especially when you consider the next biggest misconception.