2018 in Review: Top Strategic Procurement Technology Posts of the Year

As 2018 draws to a close, Spend Matters is looking back on the top stories of the year: leaps forward in technology, consequential acquisitions and more.

As the main source of procurement solution intelligence for the market, we have our finger on the pulse on strategic procurement technology (SPT), which includes sourcing, supplier management, analytics and contract lifecycle management (CLM).

Here are the biggest stories, according to reader interest, about strategic procurement tech in 2018, which demonstrate several trends about the state of the industry.

Making the Case

As more organizations realize the value in using strategic procurement tech, the challenge of building a business case is front and center. In part one of this two part series on building the business case for supplier relationship management (SRM) investment, LUPR co-founder and CEO Sean Harley explores how to make the case by laying out the business problems addressed by SRM platforms. He shows how to develop quantifiable metrics supporting your business strategy.

This lays the groundwork for part 2 of the series, in which Harley focuses on improving procurement efficiency, which can dramatically reduce non-value add (NVA) activities performed by procurement.

SRM software eliminates many resource-draining manual tasks such as scorecard compilation, promoting efficiency and enabling reallocation of scarce procurement resources. For those with a modern SRM platform, supplier reports and dashboards are just a click away.

Ensuring a Smooth Adoption

It seems many procurement teams are meeting the challenge of building a business case, as a Hackett study from earlier this year reports mainstream adoption of advanced procurement tools is expected to triple by 2021. Focusing on analytics tools, research has found that analytics-driven organizations are twice as likely to be top financial performers and five times as likely to make faster and better decisions. That seems to be all the motivation necessary for procurement executives, who are racing to analyze and quantify their procurement operational risks.

The race toward tech adoption is justified by data that shows early adopters of new technologies outperform their peers. A 2018 web survey by Adelante SCM and BluJay Solutions polled retailers, manufacturers, logistics service providers (LSGs) and various companies across the globe, finding that over 80% of companies that identified themselves as “innovators” or “early adopters” of new technologies (13.6% of all respondents) also ranked their organization’s performance as slightly or significantly above average.

The Digitization of Sourcing

The integration of disruptive tech in sourcing continues, resulting in increasingly efficient involvement of features like artificial intelligence (AI). Spend Matters Chief of Research Pierre Mitchell laid out how AI supports analysis within the strategic sourcing process in a step by step breakdown:

  • Descriptive analytics to turn data into information
  • Diagnostic analytics to turn information into backward-looking insights
  • Predictive analytics to turn information into forward-looking insights
  • Prescriptive analytics to turn insights into action
  • Cognitive analytics that learn to interpret and reason why the predicting and prescribing is working or not — and then develop new models to increase demonstrated intelligence

AI capabilities let the software do the analytics legwork, so humans can pursue other problems.

Indeed, an article from Keelvar postulates that e-sourcing is dead, and intelligent sourcing systems are the new normal. It is effectively the automation of best practices:

“Self-detection of categories, bid mechanism recommender systems, automated category reporting and controls all deliver on optimized sourcing events automatically.”

Intelligent sourcing is no longer just for the biggest and best; tools are being designed with the average user in mind.

Configurability Is Key

If procurement tech solutions are to be available to companies of all profiles, the most important characteristic is flexibility.

Spend Matters highlighted an example of this in Ivalua’s workflow engine, the connective tissue of a standout source-to-pay capability. The system efficiently allows users to add controls for a designated process within a module.

Paul Noel, chief customer officer at Ivalua, explained: “Every company has different hoops they have to jump through. Some of them have to do with checking budget. Some of them have to do with asking for a subject-matter expert to weigh in on something. Every company modifies that path depending on their situation and the category or other aspect of the request itself.”

Ivalua’s workflow capability is unique insofar as it opens the gate to other functionality within its suite.

Catching Up on CLM

The CLM story that generated the most interest stemmed from an acquisition: Apttus Acquired by Thoma Bravo: Can a One-Time Sell-Side ‘Unicorn’ Become a Viable Pony for Buy-Side CLM?

In the PRO article, Spend Matters’ Mitchell examines Apttus’ saga of going from a one-time IPO candidate to being picked up by a venture capital firm.

“You may have been asking, ‘What does Apttus have to do with procurement?’ Well, here’s the deal: We’ve been advising CLM buyers in procurement where Apttus has been coming up, almost exclusively as part of larger enterprise CLM selections. In other words, the CIO and general counsel ask the CPO if the CLM application that they might get with their sell-side CPQ solution (with CLM potentially bundled in) would meet procurement’s needs. What also muddies the water here is that Forrester Research has ranked Apttus very highly in not just sell-side CLM but also in buy-side CLM. And based on our analysis and market intelligence, we think this is a mistake, because of the importance of the real-world buy-side CLM needs of procurement organizations and the providers that matter in supporting them. ...

“Don’t get us wrong: Apttus does have CLM capabilities, and the CLM solution actually seems decent. It has all of the major elements in terms of clause libraries, templates, playbooks/wizards, redlining, MS-Word integration, “intelligent” clause search and so on. But its CLM product almost seems to play a supporting role in Apttus’ core focus on the sell-side CPQ suite. Based on our discussions with the stakeholders mentioned above, the product is sound, but it’s not quite on par with high end players like Icertis and Exari. And it doesn’t feature broader process functionality found in source-to-pay suites, some of whom actually have CLM modules that can be used for sell-side contracts, too. …

“Apttus’ CLM product seems to have enough product horsepower on its own to be split off and run as not just its own business unit but as a proper enterprise CLM company in its own right. (CLM is red hot right now!) But that’s for the new owners to decide.”

In another popular CLM article, we catch up on one of the big players mentioned above: Icertis Finally Releases AI-Based Contract Analytics: Is The CLM Death Star Now Complete?

“AI is one of the few critical differentiators within the CLM space, and there’s not a hotter CLM pure-play provider than Icertis. …

“The DiscoverAI product allows metadata/clause extraction within the core CLM workflow, and the DigitizeAI product serves up this capability in batch to apply to legacy contracts getting loaded into the contract repository. …

“While it’s certainly not likely to match the power and customer reference strength of a data/analytics pure play like Seal Software, these capabilities will certainly increase Icertis’ Solution score leadership position within our CLM SolutionMap rankings.

“Still, the market is moving fast. Exari was the first CLM platform (not just analytics) with AI — albeit acquired — and it’s certainly not sitting still.”

In 2019, we will undoubtedly see deeper challenges and significant advancements in procurement technology. Be sure to turn to Spend Matters for the latest in industry trends, news and research.

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