Earlier today, we captured some of the key developments and focus areas of procurement as a business functional area during the 1980s and 1990s, thanks to a quick history lesson on the topic by Oracle’s Tom Anthony at Oracle OpenWorld. We’ll conclude this write-up by sharing Tom’s perspective on the current day (and in comparison with the past), before examining what might be coming down the pike as Oracle aligns its own procurement products to evolving market demand and customer expectation in our follow-up coverage later this week.
In looking at the current procurement environment, Tom observed a period marked by the rise of a range of programs and initiatives, including outsourcing (of all types), online negotiations, global spend visibility, and web-enabled communication that bring organizations and their suppliers together. Tom also noted that the role of many procurement organizations is transitioning from tactical sourcing to driving advanced negotiations & strategies. In addition, procurement is now tasked with enforcing savings and enabling a dedicated spend analytics/visibility program. This is part of the functional evolution, moving from negotiated savings to being measured and on actual savings, as Tom suggested.
In exploring procurement’s recent past, Tom summarized his perspective that the function was historically focused on tactical cost reduction even when engaged in strategic category management initiatives. And while procurement did often have a process mandate in the past to drive compliance and automate (and validate) various processes and interactions, these efforts were often put against highly specific programs (e.g., strategic sourcing, eProcurement to drive spend capture, etc.)
Now contrast this with the world of procurement today and where things are headed. Tom observed that procurement is about enabling diverse [emphasis added] financial contributions to the business, increasing internal customer satisfaction, and capitalizing on talent, ideas, and information – not to mention truly attempting for the first time to align what procurement does with the overall business strategy.
How do these changes align with what Oracle is up to with its procurement solutions? Given the hundreds of procurement modules and tools that the provider sells, it’s a rather complicated question. But there is a narrative to what Tom and the rest of the Oracle team are putting together from all the Oracle technology and product assets that actually dovetail well with this astute little history lesson and perspective. Hint: Oracle Endeca and Oracle Procurement and Spend Analytics (a name that does not do justice to the solutions it contains) form a large part of updating the Oracle suite of procurement solutions to meet emerging needs in a nimbler manner than in the past.