What is a Procurement Platform Anyway? (Part 1: Software Platforms)

procurement platform

Have you noticed that more procurement solution providers lay claim to being “platform” providers these days? What is the difference between an app provider and a platform provider? And does it even matter to procurement or others in general? We think it does, and we’ll tell you why. In subsequent briefs, Spend Matters will continue to clarify and elaborate on the platform concept/model and its importance for procurement.

“Platform”: A Buzzword, but an Important Concept

If you have sat through any software demonstration recently, you probably have noticed that the marketing and PR team has thoroughly worked this “platform” word over and incorporated it into the sales pitch. Much like “cloud” and “big data,” the term "platform" is becoming just another buzzword. Before it dissolves into pointlessness, let’s see what it should mean and why that’s important. As always, our point of view includes a technology perspective (reference the definition above), but also focused on the business value it delivers.

First, let’s consider this clearly general definition of software platform (we’ll move beyond software later):

The overall software, operating system or database where smaller application programs can run.

Using the loosest interpretation, just about any kind of substantial procurement solution can be called a platform. This could include software-as-a-service (SaaS) applications, not just on-premises solutions. Let’s refer to this as the limited, traditional IT concept of a platform.

However, if we start to be a little broader, but still within the IT purview, we would say that platforms include software development environments that use standard “building blocks” to build applications (namely cloud-based solutions). This is the most common definition of an application platform as a service (aPaaS). If the environment lets you build hosted integration tools to connect the applications, then we’re talking about integration platform as a service (iPaaS).

Now, if a SaaS provider uses a PaaS to develop its cloud software such that end users and complementary providers can also build on top of the platform by using the same common lower-level tools (which are hopefully industry standard tools) as the SaaS provider, that offers value to both the installed base and to the provider. It not only “opens up the kimono” of the provider but also lets customers tailor the kimono to fit their needs and use complementary providers to accessorize it.

The State of the Procurement Platform

How have solution providers dealt with the PaaS issue? For example, Oracle and SAP have finally wisely declared their intent to do this (e.g., see more here on Oracle’s efforts), although their PaaS solutions have only been used to develop a minimal portion of the current code base being sold to customers. They, along with many others such as IBM, Amazon, Google, Apple, Salesforce and Microsoft want to win in the platform arena to help drive success in the applications business (with mobile being front and center of course). In terms of providers of note:

  • SalesForce is the most developed platform provider with its Salesforce1 platform and its supporting AppExchange marketplace, but given its CRM focus, it relies on SaaS providers like Apttus to focus on the buy-side.
  • Amazon in particular would like to position itself as a platform since it currently is a B2C retailer, B2B supplier, B2B marketplace, crowdsourcer (Mechanical Turk), and infrastructure-as-a-service (IaaS) player moving more into PaaS.  
  • SAP, for its part, is using the Ariba Network (a combination of an e-marketplace for indirect spend and an increasing set of cloud-based application services) to try to appear like a platform, but B2B networks shouldn’t just be rebadged as B2B platforms, as we’ve written about here. The real platform at SAP lies in a combination of its Hana cloud PaaS solution and also the platform that it picked up with its acquisition of Concur. It’s unclear how SAP and Concur will unify these over time, but we’ll be discussing Concur in the context of procurement platforms in an upcoming Spend Matters PRO analysis.

But, there are so many other examples: ex-marketplaces like Elemica, P2P application providers like Tradeshift and even the “ERP graveyard” provider turned into potential B2B powerhouse Infor (don’t laugh). Speaking of resurrection, the platform concept could even help firms like IBM and OpenText – and have a powerful multiplier effect on a provider like an Intuit or NetSuite. It’s also been a critical competency for product lifecycle management (PLM) vendor PTC and its ThingWorx IOT (Internet of Things) platform.

Looking Forward

In subsequent analyses, we’ll dive deeper into the specific components of an application platform in a procurement context and highlight real-life examples of where these capabilities can add value to practitioners. In other words, smaller providers can still deliver platform-like capabilities without having to establish an ecosystem like the mega players. Remember: A platform is an environment where stuff gets built more modularly and scalably than in closed infrastructures. Note the bolded words from Merriam Webster’s dictionary definition of platform: “a usually raised structure that has a flat surface where people or machines do work.”  

We will discuss in more detail these “structures” (e.g., open standards, communities of interest, "freemium" commercial models) and we’ll also investigate more business process-oriented platforms that are looking beyond marketplaces and other matchmaking scenarios (i.e., renting out assets of various sorts that often go under the “sharing economy” moniker).

For example, Uber is courting developers to build on its platform and to focus increasingly on the B2B market. Another example is the massive opportunity for a platform to emerge in managing non-employee labor. More than 300 “gig” marketplaces can help serve up various types of freelancers, and the opportunity to build a work intermediation platform (WIP) is not lost on the various managed services providers (MSPs), vendor management system (VMS) providers and “freelancer management system” (FMS) providers who’d like to be “platforms.” But how will they all work together like a practitioner would want? Isn’t this going to be like the lack of interoperability with disparate business networks? Yes. And this is why a true platform provider needs to be different, even if it’s for a very narrow segment of the problem.  

Stay tuned for more in this continuing series on the buy-side aspects of B2B platforms.

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