As the old business adage goes, “what gets measured gets done.” This is certainly true in procurement. If you want to do the right things for yourself and your stakeholders, you need to measure the right things and do it efficiently. You also need to ensure that you are measuring what your stakeholders want and what you are in fact delivering. It’s a foundational competency. In fact, in the most recent Hackett Group procurement key issues study, “value contribution visibility” ranked third in terms of procurement key capabilities that were viewed to be major or critical. This is the last post in a three-part series providing a 21-question “health check” for your procurement scorecard, this time covering questions 16-21.
For many industries and regions, corporate social responsibility (CSR) and sustainability are de rigueur. In several cases, there is also legislation to back them up, and there are no signs the resulting regulations are going away anytime soon.
Despite this, may companies pay CSR little more than lip service. There are numerous reasons for this. For one, CSR often has a hard time competing for budget and investments relative to other “hot” projects focused on short-term cost savings. This is a shame, because when CSR is extended to the supply base, it can actually be used to demonstrate not just regulatory/customer compliance but also to tap supplier innovation, lower costs, reduce supply risk and increase brand leverage.
The bigger tactical issue, however, is that extending CSR out to suppliers is simply hard to do cost effectively — especially if you want to do it properly. Getting hundreds (or thousands) of suppliers to adhere to basic contract terms and a vague supplier code of conduct document is one thing, but getting them to comply with more impactful and enforceable clauses for CSR/sustainability is even more challenging. If you’re a buying organization that’s truly concerned with de-risking your supply chain and looking beyond “check the box” compliance, you need to have a way to engage your suppliers in a more compelling way. Suppliers have many demands on their time and investments, too, so offering them something more than an edict is necessary.
But perhaps the most vexing question begins with measuring success. When you get down to it, how do you even define sustainability and responsibility? How do you measure it? And how do you know whether your performance against those measurements is good or bad for your industry or overall, especially when core requirements for CSR and sustainability differ across dozens of industries and hundreds of categories?
It takes expertise, and not just software. EcoVadis knows this, and that's why it has more than 150 CSR experts on staff to evaluate supplier profiles, documents and third-party audits to objectively gauge the corporate social responsibility of a company against a benchmarked numeric scale. It integrates this expertise into a unique combination of automated supplier surveys, certifications (gathering, analysis, validation, and publishing), benchmarking and training across 21 major CSR factors (with potentially hundreds of atomic level questions) derived from a combination of major global CSR standards — and augmented by best practice. It’s pretty cool when you see it in action.
In this Spend Matters PRO analysis, we’ll dive into EcoVadis’ company background, its solution offering and some recommendations on how the firm is best used to maximize value. Part 2 of this analysis will focus on strengths, weaknesses and production selection guidance. Part 3 will then wrap up with SWOT Analysis, competitive analysis, shortlist guidance and final commentary and recommendations.
What is Your Invoice-to-Pay Persona? Understand Your Requirements and Mass Customize Your Vendor Shortlist
No two accounts payable, finance or shared services organizations are alike (or procurement departments, for that matter). Each has its own persona that reflects not only its own value proposition and engagement approach but also the stakeholders it serves — and its supply base. The same principle holds true of procure-to-pay (P2P) application providers. Each has a persona that reflects its value proposition, solution strategy and targeted customer segments. Therefore, finance and procurement organizations should seek providers whose personas best align to theirs. In other words, there is no “magic” solution provider, and finding the right fit is critical, because a P2P application represents the main interface for most of procurement’s internal customers.
To that end, we are excited to preview our approach to Spend Matters SolutionMapTM, a comparative analytical framework for practitioners to evaluate relevant solutions to meet their accounts payable, working capital and procurement needs. Our SolutionMap initiative depicts vendor rankings based on specific buyer personas to reflect the unique value proposition, solution strategy and customer segments served by a vendor. Participating vendors are scored both on their solution as well as on customer value, based on in-depth tech reviews (including live demos) by the Spend Matters analyst team and aggregated direct customer input from surveys. Each SolutionMap is updated quarterly rather than in 12-month (or longer) cycles, to accurately reflect the pace of market developments.
As part of our Spend Matters SolutionMap vendor comparison ranking for invoice-to-pay and procure-to-pay solutions (publishing next week, with subsequent quarterly updates), the Spend Matters analyst team has dedicated considerable time to developing the unique organizational “personas” that we’ve most often seen in our decades of experience working with procurement organizations. We have used these personas to weight the requirements that we used in solution scoring, which includes customer satisfaction scoring by solution customers. Having collected feedback from hundreds of invoice-to-pay users, vendors and consultants in recent months as part of our SolutionMap research, we see these personas as useful starting points for procurement organizations to classify themselves before looking at solution rankings of providers in the market.
This Spend Matters PRO analysis shares six of the most common customer personas in invoice-to-pay buying needs. Aimed at practitioners as well as vendors and the consultants advising them, this research brief will be helpful to drive the type of “mass customization” of procure-to-pay solutions needed to meet specific organizational needs.
Below, we present our six personas for invoice-to-pay. For each, we include: full definitions, typical organizational priorities (based on each persona), functional/solution and customer value emphasis and recommended selection processes. Comparative vendor rankings will be published for each persona next week on Spend Matters (and updated quarterly).
As the old business adage goes, “what gets measured gets done.” This is certainly true in procurement. If you want to do the right things for yourself and your stakeholders, you need to measure the right things and do it efficiently. You also need to ensure that you are measuring what your stakeholders want and what you are in fact delivering. It’s a foundational competency. In fact, in the most recent Hackett Group procurement key issues study, “value contribution visibility” ranked third in terms of procurement key capabilities that were viewed to be major or critical. This is the second in a three-part series providing a 21-question “health check” for your procurement scorecard, this time covering questions 6-15.
In our previous installment of this series, we discussed how an industrialized procurement as a service (PRaaS) model is critical to not just running procurement more efficiently and effectively but also buying and embedding cloud services better, as well as tie procurement into broader digital business strategy efforts. The notion of procurement as a “prosumer” (producer and consumer) of procurement services is both the DNA of modern procurement itself and of global business services.
Procter & Gamble is a great example. P&G was one of the pioneers of the global business services (GBS) model, and its current capabilities here are impressive. What’s also interesting about P&G was when its CEO drove the “connect and develop” program of open innovation to tap supply markets for product innovation and looking beyond internal R&D.
So, if R&D can do that for itself, shouldn't procurement be able to do the same? And isn't it even more important for procurement to do so when considering that nearly all supply market innovation tied to supplier spending is in play? Wouldn't it be important for procurement to lead by example in aggressively adopting such third-party services and also to share best practices around how other internal stakeholders in various spend categories are doing the same? You bet. This makes procurement an innovation gate opener rather than a policy gatekeeper.
In Part 1 of the series, we delved into why procurement should run itself as a services business, and in Part 2, we shared how procurement can learn from other types of professional services businesses to bring more rigor and value to its internal customers and even external customers. On this last point, organizations such as GE, IBM and others have been masterful at industrializing various services internally, and then using themselves as success stories to externalize those services to new customers. In doing this, they are trying to establish themselves as digital platforms that will be the underlying architecture of emerging digital value chains.
So, what does this have to do with procurement? Many things:
- As we discussed in Part 2, procurement and other stakeholders must understand how supply markets are fundamentally shifting as this digital transformation occurs. Such disruption is not just the “Amazoning” or “Ubering” of the supply chain, but services, too. For example, consider the mind-blowing transformation that Infosys is embarking on with its Mana platform and its Zero Distance approach to innovating service delivery.
- Procurement can use this trend to its advantage to bring some leverage to relationships with large incumbent providers that may be threatened. This is also a great time to be a “customer of choice” and use strategic supplier management to capture innovation from your incumbent suppliers while also testing out emerging digital services providers.
- It’s also critical to understand the implications of signing up on someone else's platform and what that means to switching costs down the road, as well as to what extend today’s suppliers don’t become tomorrow’s competitors.
- Finally, if your company is going through a digital transformation to execute a new digital business strategy where your firm may also be positioning as a “platform,” then it’s important to understand platform-based business models and also cloud-based architectures (i.e., an XaaS model that lets you deliver these services scalably over the web) to more easily plug and play supplier XaaS services (see IBM cloud reference architecture as an example) into your procurement services.
The IBM architecture diagram can be a little overwhelming, so, let me show you a slightly simpler procurement version of this “aaS” architecture and give some examples of some innovative services. Actually, it’s not simple either, but it’s as simple as it can be while explaining the fundamental design of the PRaaS model in one diagram.
This SolutionMap analyzes a select group of e-procurement solution providers. It is part of our Q2 2017 SolutionMap report series, also featuring Invoice-to-Pay solution providers and Procure-to-Pay suites. Spend Matters tracks over 50 procure-to-pay solution providers. This analysis features many of the largest e-procurement providers, including BuyerQuest, Claritum, Coupa, Determine, GEP, IBX, Ivalua, Nimbi, Pool4Tool, SAP Ariba, Vroozi and Zycus. It also features industry specialists BirchStreet (hospitality) and Prodigo (healthcare), which were analyzed with respect to their vertical sector focus. SolutionMap ratings provide comparative rankings and insight into how each provider scored from a solution and customer value perspective. It provides a breakdown of solution scoring for each vendor on the category level (e.g. catalog management, shopping/requisitioning, ordering/order management, receiving, supplier network, configurability, technology/architecture and services). It also provides insight into how customers scored each e-procurement vendor (e.g. likelihood of recommending the provider, level of value perceived, business value, ability to meet expectations, deployment speed, ROI, TCO and innovation). Solution scoring is based on analysis of individual vendor capability, including in-depth tech reviews, a highly detailed Spend Matters RFI and live demonstrations and Q&A by the Spend Matters team. The Customer Value score stems from aggregated direct customer input (survey-based). While Spend Matters does not recommend that existing and potential customers of providers use technology and customer scoring alone to shortlist and/or evaluate technology providers, the insight, along with SolutionMap persona-based ratings, provides a point-in-time perspective which may be useful as either a starting point in an evaluation or a contributing factor to a formal software selection process. In this Spend Matters PRO research report, we provide an analysis of how all 14 participants in our Q2 2017 e-procurement SolutionMap scored on a comparative basis against solution/technology and customer value criteria.
As the old business adage goes, “what gets measured gets done.” This is certainly true in procurement. If you want to do the right things for yourself and your stakeholders, you need to measure the right things and do it efficiently. You also need to ensure that you are measuring what your stakeholders want and what you are in fact delivering. It’s a foundational competency. For example, in a past Hackett Group procurement key issues study, “value contribution visibility” ranked third (after sourcing and category management) in terms of procurement key capabilities that were viewed to be major or critical, with 76% of firms having picked this. It even outperformed “SRM programs,” which got the fourth slot. In other words, the competency for value contribution measurement was higher than an area of actual value creation! (In the 2017 version of this report, "measuring value beyond savings" is a big part of Priority #1 — improving the stakeholder experience.) In this research brief, I’ll discuss how you can assess the quality of your procurement scorecard and how to improve it. To do so, I’ll assume that you have some type of procurement scorecard already, and that maybe you’ve even already adopted some smart principles to it. But, I’m going to go deep on this one and ask you a set of 21 questions about your scorecard. This first installment covers the first five.
In Part 1 and Part 2 of this research series, we discussed some of the drivers in how procurement services are increasingly consumed in the market. In this next installment, we will evaluate the market itself and the spectrum of service types/sectors within it. Defining a market is not a one-dimensional activity. Markets are segmented along multiple variables, which we discussed in the previously mentioned research, but there are a few key dimensions worth exploring. We will not look at the traditional dimensions such as spend magnitude, market complexity, business impact, level of market fragmentation, etc. We assume that the practitioner has a fairly good understanding of major segments of management like consulting, outsourcing, contingent labor, etc.
As value chains go digital, many enterprises have been trying to take a strategic approach in formulating digital business strategies rather than just translating existing business strategies into IT projects. Organizationally, many have appointed chief digital officers to manage this digital transformation. But digitization is only one megatrend. Its twin sibling is externalization, which is not just traditional outsourcing but the ability to similarly drive transformation by bringing the (increasingly digital) power of supply markets into the enterprise. You could then ask who would be best suited within the organization to perform the function of chief externalization officer (“CEO”).
In Part 1 of this series, we laid out the challenges that practitioners face in getting more value from a complex procurement services market. To address these problems, it’s important that practitioners:
- Evaluate the spectrum of procurement services holistically to see how the sectors and the players are evolving individually and also collectively. SaaS providers are increasingly baking industry/category content into their products while consulting and BPO providers are similarly productizing reusable knowledge into lighter footprint service offerings.
- Have a market map to help evaluate the provider types and emerging trends. Doing so can help you actively participate in shaping the provider market rather than just accepting the current ‘menu choices’ of traditional service offerings.
- Know themselves in terms of not just their current budgets, but also their current capabilities and what is truly important to them as internal service providers. Are you looking for results on-demand, or are you looking to build your own bench capabilities?
- Develop an internal operating model that makes it easier to consume these services and also get a better ROI from them so they deliver value over the long-term and not just the duration of a project. World class procurement organizations do not spend money needlessly on program du jour services that don’t “stick” and get baked into their internal processes.
What is Your E-Procurement Persona? Understand Your Requirements and Mass Customize Your Vendor Shortlist
No two procurement organizations are alike. Each has its own persona that reflects not only its own value proposition and engagement approach but also the stakeholders it serves.
The same principle holds true of procure-to-pay (P2P) application providers. Each has a persona (or more than one persona) that reflects its value proposition, solution strategy and targeted customer segments. Therefore, procurement organizations should seek providers whose personas best align to theirs. In other words, there is no generic “magic” solution provider, and finding the right fit is critical, because a P2P application represents the main interface for most of procurement’s internal customers.
A modern procurement organization with a streamlined and tailored approach to influencing stakeholders is poorly served by buying a complex, one-size-fits-all application that puts off those stakeholders. Not enough procurement organizations look at an e-procurement application as their main business-facing interface — but it is.
The face a procurement organization presents to the business through an e-procurement application may vary. For the frontline business user, some e-procurement systems are extremely easy to use and may even suggest a lack of policy by procurement based on how they’re configured and put into the field. Others are more directive and prescriptive. Many e-procurement solutions serve as a portal to more than just transactional buying — for example, serving as a hub for all employee engagement related to supplier spending.
To that end, this multipart Spend Matters PRO analysis shares six of the most common customer personas in e-procurement and invoice-to-pay (the two segments that comprise the P2P market), starting first with a look at e-procurement. For each, we include: full definitions, typical organizational priorities (based on each persona), functional/solution and customer value emphasis and recommended selection processes.