Why Platforms are Needed to Accelerate Procurement Agility

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The digitization of our everyday lives through cloud-based services served up over the internet is arguably the single greatest consumer trend of the modern era. This digitization trend has also worked its way upstream into B2B value chains, where cloud-based digital assets are increasingly wrapping themselves around physical and human assets to create new cloud-based services of all forms.

Businesses don’t want to be “digitally disrupted” by others, so they are searching for new supplier capabilities they can serve up as new customer-facing services. This then becomes a defining moment for procurement and IT, professionals who need to keep up with their internal stakeholders to bring value into the business — and do so with the same or less budget!

The problem, however, is that legacy operating models and infrastructure are slowing them down. Technology, in particular, is creating a major drag on procurement agility. Much B2B technology looks mind-numbingly complex and unintuitive when compared to what’s seen in B2C.

It’s tempting to apply lessons learned from cloud-based B2C technology to B2B, but B2B does have its nuances, especially when the context is about buying rather than being sold to. For example, an Amazon-like ease of use is important, but that’s not all CPOs want. They want both “guided buying” to optimize user experience and compliance to preferred supplier pricing and P2P processes.

So, how to provide this? The idea is take the best technologies from various platforms that offer procurement organizations the most flexibility and speed to value. Taken together, there is no single provider that offers every needed capability, but identifying these them is crucial to moving beyond the current generation of multitenant cloud application suites and identifying the next generation of solutions.

Platform-Based Apps

Apple’s IoS and Google’s Android are not only run-time mobile operating systems but also development platforms served up as a service (PaaS). In the B2B environment, Salesforce’s force.com PaaS environment allows third-party developers to write “apps” that can seamlessly bolt onto Salesforce’s CRM application suite and be distributed similar to Apple’s App Store.

The next logical question then is, “Why can’t this happen in the SRM world?” The answer is that it can and we expect that it will, especially since corporate users are going mobile and want this same simplicity. Imagine a solution provider that, rather than offering a big SRM app suite with a few mega modules, offered up a platform that was built on lower-level building blocks like workflow, master data management and document management; used a harmonized data model with open APIs; and allowed spend-category focused applications to be built on top of these lower-level tools and expanded data models so that category apps could simply be turned on as needed.

What’s interesting is that many of these components are being sold as standalone products: Slack for messaging, Asana for project collaboration, Docusign for digital signatures and so on. These types of solutions are highly adopted within their individual domains and are prototypical of components that we expect to see within broader digital platforms over time. As this happens, procurement organizations will be able to quickly turn on such functionality itself or use the platform provider to develop a new solution from the lower-level building blocks.

Bringing Procurement Platforms to Life

It may be easy to get lost in the technical details of this broader trend toward digital platforms, but perhaps the biggest driver in platform adoption is a community of like-minded participants who have a shared interest in making the platform successful. What we’re seeing with procurement solution providers and even broader digital platform providers is a strong focus on using the customer install base as a community to not just guide features and functions in software but also capture knowledge that transcend “empty apps.”

It’s still early in the journey of digital platforms, and it can be very confusing. Relying on your incumbent providers and your IT department to develop your digital procurement and supply chain strategy may seem tempting, but you should never outsource strategy. By understanding how new digital platforms will shape more flexible procurement services solutions, you can better select and engage all service providers in this everything as a service (XaaS) world. The only way to help improve your odds as a procurement organization is to become more agile — and the key strategy for doing that is to use new platform thinking and digital platform concepts.

The post originally appeared on Spend Matters Plus+.

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