Indirect Spend Challenge No. 2: Technology is Not Optimized for the Actual Customer

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Earlier in the week, I wrote an article on the notion that procurement doesn’t manage indirect spend – our suppliers and stakeholders do. This is really the first major challenge we face in bringing chaos to indirect spend today (outside of perhaps our largest categories). The second major indirect spend challenge we see is that technology is often optimized for procurement (the buyer) rather than the actual consumer or the end user in the business. Earlier versions of SAP SRM highlight this point exactly – procurement may be able to configure n-tier approval processes and workflows (especially with a third-party search, shopping and catalog management tool layer on top), but good luck to the end user who must place over 10 clicks to buy.

One could argue these earlier versions of e-procurement tools actually encouraged maverick spending rather than controlled it. Another major technology challenge is that tools often drive only limited spend penetration (through both limited supplier/catalog onboarding and management constraints as well as supporting only limited categories) and can make it challenging to scale programs.

Anyone who has implemented indirect procurement technology is also aware that solutions often present their own hurdles to adoption. While the better ones can be clever to a point and may not require training for the actual buyer, the way many organizations have configured them is that they end up having company-created hurdles (e.g., onerous approval requirements, a lack of guided support for buying related groups of items together, etc.)

Beyond these areas, we also observe a frequent lack of integration across different areas of indirect spending. T&E solutions are purchased separately from e-procurement (catalog) and services procurement – and rarely do the 3 connect or share a front-end buying portal. And even when they do, most companies have not set up their technology and approach to address the long-tail of vendors. Rather, they focus on the 80/20 rule that ends up getting us to only a fraction of the supply base.

And finally, a myth we need to shatter is that a clean front-end to indirect buying solves the underlying chaos beneath it (e.g., poorly negotiated contracts, dated information on suppliers, parts and services, missed rebate and other creative structures, etc.) Ironically, the beauty of the “Amazon buying experience” is not made possible through a clever UI alone – rather it is the underlying service oriented architecture (SOA) and infrastructure that enables Amazon to fulfill on the search and ultimately fulfillment requests of shoppers.

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