We continue to be surprised at some of the funding rounds and public company valuations in the sectors of procurement and trade financing (receivables and payables financing). However, Taulia is one of the few vendors that I’d bet my own money on to grow into what is a curiously high valuation based on historical – even historical tech – norms. It’s my estimate that the recent Taulia valuation round was done on a valuation multiple roughly around 15 times trailing top line numbers. I base this multiple on a napkin sketch of Taulia’s current accounts and business activities (including program adoption) and a WSJ blog pegging the overall valuation at $200 million.more ▸
Trojan Rabbits and Project Portfolios: Procurement Market’s Freemium Applications and Services (Part 1)
The old Trojan horse trick has its place in the procurement market. This Spend Matters Plus research brief, by Chief Research Officer Pierre Mitchell, covers the good, bad, and ugly of “freemium” technology for different types of procurement solution providers across the solution spectrum, from technology providers to membership-based advisory firms. Pierre then makes some recommendations for not just solutions providers, but also practitioners who themselves are providers in their own right. If you are not yet a Plus subscriber and are interested in this topic, contact us to inquire about a free trial.more ▸
We’re launching the first round of an ongoing “benchmark” survey that gauges procurement provider satisfaction scores for six different procurement process areas. In each, we measure importance, level of automation, currently selected vendors (as well as current/planned technology approaches), and of course the satisfaction score used to generated a promoter score. Depending on the answers to the questions, we also ask a few follow-on questions (e.g., what were the biggest reasons for low promoter scores) and finish off with some questions on major gaps with existing provider offerings (in addition to emerging technology areas). The first 100 qualified practitioners to participate get their choice of three incentives!more ▸
Earlier in the month, we had a client ask us if we could offer specific guidelines or methodologies for creating a spend category taxonomy within the automotive and industrial markets. The question resulted in a discussion among a number of us with industry experience. And since we didn’t have any research already published on the topic, we thought we’d invest the time to document our findings. In this second installment of a two-part Spend Matters PRO research series, Chief Research Officer Pierre Mitchell explores how granular procurement should go in creating a spend taxonomy and concludes with practical tips for implementing a program.more ▸
We had a question from a client of ours about whether there were any guidelines or an overall methodology to coming up with a spend category taxonomy. It’s a simple question, but there isn’t a simple answer. So, we thought we’d offer some insights to help guide your efforts. But before we say what to do, there’s a quick recommendation on what not to do. In this first of a two-part Spend Matters PRO research series, Chief Research Officer Pierre Mitchell explores how to think about creating a spend category taxonomy, pitfalls of incorrect approaches, and how to embrace an approach that cuts across categories and spend types.more ▸
Purchase Price Variance (PPV) in Procurement and Savings Strategy: Limitations and One Potential Use
There are many reasons why purchase price variance (PPV) is not the best metric to track procurement performance. In last week’s Spend Matters PRO research brief, Why Purchase Price Variance (PPV) Should Be Banished From Procurement Measurements and KPIs, Jason Busch (Managing Director) and Pierre Mitchell (Chief Research Officer) gave 10 reasons why PPV can be misleading and how smart procurement organizations in the market have long since moved past it. These reasons include the fact that declining and rising cost variables outside of a buyer’s control can have a significant effect on individual part costs not reflected in the actual performance of a procurement manager and the fact that PPV fails to measure true lifecycle costs. In today’s Spend Matters PRO research brief, Jason and Pierre start by providing a summary of the first analysis and then explore a scenario where PPV may actually be a useful means of measurement, courtesy of Tungsten’s new network analytics capability.more ▸
After a second hiatus, we're back to covering providers who made our 50/50 list this year! Now, on to Corporate United, a provider to know. Some providers in the procurement services market can be very complex and difficult to understand – and then there are group purchasing organizations (GPOs) like Corporate United. Buying consortia have been around for hundreds of years (think agricultural co-operatives), and the core value proposition remains unchanged: there is buying power in numbers.more ▸
One of the biggest challenges to overall program impact and improvement in all but the most advanced procurement organizations are the raw elements that many procurement organizations measure themselves against: key performance indicators or KPIs. One of these, purchase price variance or PPV as it is often known, is particularly obnoxious in all but certain cases. PPV measures the difference in price paid for across a range of purchases for a similar SKU, part, or service.
There are many reasons why PPV can be such a misleading figure.
In this first of a two-part Spend Matters PRO research series, Managing Director Jason Busch and Chief Research Officer Pierre Mitchell explain why precisely PPV is a KPI that procurement organizations should stop measuring internal and individual performance against. Part 2 will present the one case in which it might be helpful to police suppliers more accurately (courtesy of a new, real-time network approach to gathering spending data from Tungsten based on actual line-level invoice information that we believe will eventually become standard across many supplier networks).more ▸
Gamification is a topic that has garnered some interest over the last few years, and I thought it would be a good topic to explore a little more deeply in terms of its application to enterprise procurement and supply chain. This is an interesting technology area that a few enterprises have sought to transplant from the mobile B2C world over to enterprise processes to help improve relationships with customers and with internal employees. For example, some progressive HR organizations are setting up wellness programs that reward employees to exercise and use mobile game apps to help motivate them. Similarly, some sales organizations have used it to create contests that let sales reps compete with each other for additional bonuses and recognition. In this Spend Matters Plus research brief, Chief Research Officer Pierre Mitchell looks at how gamification can be used in procurement, as well as where the benefits stop.more ▸
BPM stands for Business Process Management. If the business process is procurement (i.e., a collection of processes), then the concept is about managing procurement processes – including process design/definition, performance management (e.g., process outputs/KPIs, monitoring), and resource management. Of course, in the IT world, BPM has its own body of knowledge regarding the topic, focused mostly on “process workflow/integration on steroids.” This is the “system of process/interaction/engagement” that may sit on top of multiple systems of record (e.g., ERP, source-to-pay suites). But how can you approach this topic without your eyes glazing over? In this Spend Matters PRO research brief, Chief Research Officer Pierre Mitchell and Managing Director Jason Busch define BPM components and offer up practical ways to apply BPM to procurement, keeping the topic on a business level and issuing both warnings and best practice tips for companies deploying or considering BPM technology adoption within the function.more ▸
Nearly all progressive organizations have some sort of Procurement CoE (Center of Excellence). A Procurement CoE is an internal entity that performs internally facing knowledge-based services on a one-to-many basis to procurement (and to broader stakeholders) in order to drive scale, repeatability, and best practice. What we’re talking about is the industrialization of the Procurement portfolio of services. In this Spend Matters PRO article, we will investigate 14 procurement competencies that are being enabled and improved in a Procurement CoE. We will evaluate the relative priorities across these based on some recent research and provides insight on how a Procurement CoE can not only make procurement processes more effective, but also align with broader enterprise services delivered in a “Global Business Services (GBS)” environment.more ▸
I recently saw a pretty funny tweet from Tim Minahan after SAP Sapphire (see Related Articles for our coverage). It was a link citing an "industry analyst" who was writing up his experiences at Sapphire (note the marketing campaign text in the URL). In his write-up, this analyst refers to another piece of research titled “SAPs [sic] Acquisition of Ariba Visibly on Track.” As you might expect, it is “spreading the good news” of SAP’s strategy with the Ariba Business Network. The “analyst” writes: “With Ariba… SAP will now be able to take a small slice of all transactions (or in the case of eBay, share PayPal transactional fees) – and one can quickly grasp the enormity of the revenue upside potential that lies ahead of SAP / Ariba. We can only imagine that the cash registers must be ringing in the minds of senior SAP leadership behind its Networked Economy go-to-market strategy.”more ▸