This is the first part of a three- or four-part interview series with Avner Schneur. Schneur is the founder, as well as President and CEO of Emptoris, a leading vendor in the supply management arena. I've known Avner since Emptoris was called AvinaMart, which was quite some time ago! Certainly, a lot has changed since our initial introduction.
Spend Matters: In your view, what's the role of Spend Management in organizations today? What's changed in recent years?
Schneur: First, we are not calling it Spend Management. We think that it is the wrong term to call the sector -- it sounds too much like old purchasing. Our philosophy is to view it as supply management because it is different from supply chain, and it is more than just expense management (what we think of as spend management). The term supply management is broader and more strategic, in our opinion.
To answer your question, the way we see it is that a few years ago, the market was initially focused on purchasing and eProcurement -- it was were very tactical and operationally oriented. But quickly, organizations saw the impact they could have through improving their procurement and sourcing functions. There was a transition that happened in the enterprise. This occurred when supply management moved beyond just technology and transactions and was marked by the creation and elevation of the Chief Purchasing Officer (CPO) role.
For executives, this was a new word in the vocabulary. In 2000, CPO might have meant the chief population officer. But with the term, came the elevation of the function and we saw the overall market move into a different phrase which you can measure and see for yourself. If you go to Google and type in "Chief Purchasing Officer" you'll find a hundred thousand plus references -- and this increases on an almost a daily basis. If you did it 3 years ago, it was 1,000 hits. What this tells you that there is an attention span to this thing and that people recognize it. In our research, we’ve also found that the growth of CPO is higher, for example, than the growth of the chief marketing officer. This is further proof that this sector is increasing in importance to senior executives.
Spend Matters: What other progress are you seeing? What is contributing to your success?
Schneur: We really see the procurement organization becoming more professional. For example, the emphasis of the procurement teams we deal with is broadening from transactional to strategic, and the skill sets of procurement teams now include financial management and analysis. In fact, some leaders we see have come into procurement from such diverse backgrounds as finance, business management and management consulting. For us, the beauty in this transition is that the procurement teams better understand the strategic impact they can make on the business, they can better communicate that to the executive board and they understand how technology can be a multiplier on their effectiveness. This is impacting the space and the overall approach we take, and has been a major contributor to our success. And advanced organizations have elevated the function to involve financial executives. In some of our customers, the CFO is very involved. If we look at one of our major customers in the building products sector, the CFO is one of the most active users of our system.
In addition, the footprint of the sector has changed. In 1999 it was all about negotiations and category management -- the reverse auction was the iPod of the day. Now, the footprint is extended and includes spend analysis, sourcing, optimization, supplier performance, supplier management, supplier development, contract management, and analysis. When we receive RFPs today, we see that all of these components are tightly integrated which has definitely changed and plays to our strengths. The fact is that we are leading the market and the gap is increasing. We have 300 direct employees and are in a strong financial position. We pride ourselves on providing innovative solutions.