Author Archives: Pierre Mitchell



About Pierre Mitchell

Pierre leads Spend Matters procurement research activities and has broader solution development responsibilities for intellectual property creation and firm strategy as Managing Director of Azul Partners. This includes spearheading efforts to build new types of interactive and social communities of interest within the procurement profession including overseeing the evolution of spendmattersnet.com, Spend Matters PRO, MetalMiner, and other digital assets within Azul Partner’s umbrella. Pierre has 25 years of procurement and supply chain industry and consulting experience, and is a recognized procurement expert specializing in supply processes, practices, metrics, and enabling tools and services. He is a regular contributor to business publications, a frequent presenter at industry events around the world, and counts himself fortunate to have served and interacted with so many CPOs and future CPOs. Prior to his positions in research and advisory, he led numerous operations and systems transformations at Fortune 500 organizations. Industry positions include manufacturing project manager at The Timberland Company, materials manager at Krupp Companies and engineer at EG&G Torque Systems. He holds an engineering degree from Southern Methodist University and an MBA from the University of Chicago. In the early 2000's, Pierre was the first supply chain practitioner to become a procurement "industry analyst" as the VP of supply management research at AMR Research (now part of the Gartner Group) where he provided trusted counsel to procurement executives, business leadership, IT, and the solution providers who serve them. Most recently, he was the head of procurement research and adjunct business advisor at The Hackett Group, where he helped expand Hackett's procurement benchmarks and research studies while growing the Procurement Executive Advisory Program into a gold standard membership-based procurement advisory service in the market today.


Coupa R20: Incremental Disruption in Action

The Spend Matters analyst team recently spent some time going through a deep dive demo on Coupa R20 and found it to be a solid incremental product release. But in this brief, we wanted to discuss the “revolution through evolution” we saw in addition to the new product details that we cover. Coupa’s product releases are now running about three times per year, and it’s refreshing to see more than 500 clients quickly moving through these releases. Such is the promise of SaaS, right?

R20’s main improvements are focused on services procurement and community-based intelligence, which allows users to extract insights from the B2B data generated within the Coupa buyer and supplier base. The disruptive aspect of R20 is twofold: its attempt to tackle the big nut of services procurement with Services Maestro and its efforts to derive intelligence from its installed base through what it calls "community intelligence."

This last trend is really the most disruptive aspect of what’s happening in digital value chains. It changes the provider value proposition from serving up “empty apps” that process the data of a single customer enterprise to one that provides a collective intelligence derived and captured from mass adoption of cloud-based tools that generate the data used to drive key insights.

There are some potential risks that companies face, however, when platform providers attempt to monetize (directly or indirectly) proprietary commercial information between buyers and sellers. Just as Facebook is not really free to the users who themselves are the “product” sold to advertisers, there’s a similar effect happening with suppliers who can use business networks for free but whose data is aggregated and repackaged in ways they aren’t necessarily aware of.

In this Spend Matters PRO analysis, we explore these topics and more, as well as share our initial thoughts on some of the more interesting features in R20.

Unlocking Deeper Value in the Procurement and Finance Relationship (Part 3): The Top 10 Impact Areas for Procurement’s Involvement in FP&A

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In the second installment of this series, we discussed procurement’s role in helping finance professionals and budget owners use spend data to improve the FP&A process and general business planning. Now in Part 3, we get specific about how to tackle this beast with some specific recommendations that we’ve seen proven out at both advanced firms and at firms that are further back in the bell curve of procurement maturity.

Unlocking Deeper Value in the Procurement and Finance Relationship (Part 2): Spend Planning and Analysis

e-invoicing

In the first installment of this series, we discussed ways to align procurement with the finance function, starting with financial accounting and then moving into cost accounting. Although cost accounting has one foot in the financial accounting world in terms of tracking costs and having them flow to the general ledger (GL), the more important side of cost accounting is its part in managerial accounting and total cost management.

Managerial accounting is about analyzing financials to make good business decisions. It includes analyzing historical costs and spending, but only in the context of improving future spending and reduce total economic costs. One aspect of economic costs is opportunity costs, and procurement must work hard with finance to understand the procurement ROI that comes from strong management of external spending led by the procurement organization. This ROI is measured in triple digits but must be demonstrated with hard numbers.

More importantly, however, procurement’s ability to partner with finance to better influence future spending is the most practical way to influence financial and business results. This comes from procurement aligning well with finance within the financial planning and analysis (FP&A) processes that occur in finance. Hopefully, FP&A is more than just basic budgeting at your organization. Done well, it provides the critical linkage to not only financial planning but also strategic and operational planning that drive success for budget owners, broader stakeholders and shareholders.

Given the importance of FP&A, we’re going to focus on this collaboration area and how to apply it to spend management, which you can think of as “spend planning and analysis” before the spend actually occurs, as opposed to traditional “spent analysis” of spend that already happened. This focus upstream is fundamentally about transformation and changing procurement’s role in the planning and budgeting process. Luckily, this area creates much higher quality of spend influence, which drives proven levels of spend savings.

E-Procurement 2018 Trends and Forecast (Part 3: Provider Analysis and Market Sizing)

AnyData Solutions

So far in this Spend Matters PRO series exploring 2018 e-procurement trends, we have covered both procurement organization (demand) and technology provider (supply) trends we are seeing in the market. Today we kick off the third and final installment of this series by examining three additional provider trends: the new, resurgent role of B2B e-marketplaces such as Amazon Business; new and varying approaches to chasing tail spend, including e-marketplace models; and the early rise of embedded artificial intelligence (AI) in an e-procurement context. Finally, we conclude this three-part brief with our 2018 market sizing for e-procurement and a list of trends we see driving demand in the market. Don’t forget to read Part 1 (2018 customer e-procurement trends) and Part 2 (2018 provider trends — M&A and B2B/P2P intersections), as well.

The 12 Supply Risk Management Disconnects that Destroy Value (Part 1)

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“Risk” and “risk management” are terms that are like the ultimate Rorschach test in business: they mean many different things to many people. The same applies to the term “value” — and don’t even bring up “supply management.” Even a specific term like “supply risk” has many interpretations (e.g., it’s much more than supplier risk). The problem with this is that if people within a company define various terms differently, then how well will they be collectively managing those areas? Likely not well at all.

Risk management is a strange animal. On one hand, it focuses on “things gone wrong” and hones in on defining and mitigating various external risks that create adverse events in a value chain. On the other hand, those adverse events affect stakeholder-relevant performance (i.e., measurable value). Such performance and value delivery is focused on “things gone right” and reward rather than risk.

The key, therefore, is to realize that risk and reward are inextricably linked. If ensuring delivered value (and improving it over time) from the supply chain and from suppliers is what supply management is all about, then that supply value should not only be expected (i.e., expected value like discussed above) but also protected (i.e., protected value ensured through supply risk management). As a side note, have you ever considered that the concept of “expected value” uses the term “value” even though it is applied heavily to the world of risk management (i.e., calculating the expected probabilities and impacts of various risks)?

Anyway, the imperative becomes ensuring that the most important performance metrics (i.e., KPIs) are protected from risk. Yet these individual KPIs are rarely individually and systematically managed for risk, and the lack of risk-adjusted performance management means that you’re going to be exposed and it will catch up with you eventually. The problem isn’t just bouncing around and applying risk management technique X via tool Y to address risk type Z. There are a dozen fundamental disconnects in most firms that prevent risk management being properly resourced, aligned, managed and improved. Only by unpacking them and addressing them through focused practical interventions can you really get to the root cause issues that are likely keeping your supply risk management efforts suboptimized.

In this Spend Matter PRO series, we will explore 12 critical supply risk management disconnects. This brief, Part 1, focuses on the following four areas:

  1. Risk Scope and Stakeholders
  2. Performance vs. Risk
  3. Risk Type vs. Impact
  4. Risk vs. Cost (e.g., “cost of risk”)
If you’re a practitioner, you should be able to see which disconnects are the biggest issues for you and make yourself more resilient (i.e., ability to mitigate and recover from risks) and predictably high performing. If you’re a consulting organization, you’ll probably find some pointers to improve any methodologies that you have here. And if you’re solution provider, whether in the supply risk management area, or more broadly, you’ll hopefully get some ideas on how to address more strategic pain points.

E-Procurement 2018 Trends and Forecast (Part 2: Provider Analysis)

The pace of change in the e-procurement market is moving faster than a speeding cXML document flying across the internet. Software vendors are innovating more quickly than ever before; solutions are no longer are just “software” but come preloaded with a dizzying array of additional items that are difficult to compare on an apples-to-apples basis; and customers are coming in smarter both in “new” and “replacement” deals, with greater expectations from provider solutions than ever before, especially the rate at which they’ll begin to realize benefits.

Today we publish the second installment of our 2108 procurement technology trend and forecast series, focusing on solution provider trends and priorities within e-procurement market. Part 2 of this series provides an analysis and exploration of two provider trend areas: continued M&A consolidation expectations in the e-procurement market (fasten your seat belt on this one) and rising procure-to-pay (P2P) and business-to-business (B2B) intersections, including a quantitative look at the rise, definition and size of B2B e-commerce today. Following today’s analysis, the final installment in this series will feature three additional trends and conclude with our 2018 e-procurement market forecast.

So without further adieu, let’s introduce some controversy, data, practitioner recommendations and (hopefully) insight on the first and arguably the most important near-term provider trends Spend Matters is already seeing evidence of early in 2018.

Sourcing Head-to-Head Technology Evaluation and Comparison: Coupa and Jaggaer (BravoSolution)

When it comes to functional capability, BravoSolution (now Jaggaer) and Coupa are the two providers to beat.

Jaggaer’s sourcing strengths should come as no surprise to those familiar with its history. Coupa’s rapid e-sourcing ascent, however, will surprise many. It went from laggard to leader in the sourcing technology sector when the ink dried on its agreement to acquire Trade Extensions. Regardless, both providers excel on a functional basis and lead in many of the buying personas for our Q4 2017 SolutionMap.

But are they the right fit for your organization?

Join us as we put on the gloves and pit Coupa and Jaggaer “head-to-head” in the Spend Matters evaluation ring. We’ll start by providing a technology summary comparative rating of each provider and then explore business requirements and scenarios, calling out the winner in each match up. If you’re considering either vendor or other sourcing competitors, look no further for an evaluation and comparison you can’t get anywhere else. This is the first in a series of “head-to-head” evaluations based on our SolutionMap data, and more matchups will follow as additional providers step into the ring and seats to these SolutionMap subscriber-specific events become available (in addition to our usual vendor deep dives on Spend Matters PRO, of course). Stay tuned!

E-Procurement 2018 Trends and Forecast (Part 1: Customers Adoption and Priorities)

e-procurement market outlook

You know what they say about predictions? They’re about as common as opinions: everyone has one. This Spend Matters PRO series walks through the trends we are seeing unfold in the market today based on our technology analysis and practitioner research and engagement. So let’s not predict; let’s share and analyze.

Today, we start our 2018 procurement technology trend and forecast series, beginning with customer adoption trends and priorities within the e-procurement market. We’ll explore what customers are valuing most from a selection and deployment perspective in 2018, as well as early trends that are sprouting.

In the second installment of this series, we’ll offer insight into e-procurement technology provider trends and strategies of note, and ask whether these are a good thing for customers (and if not, our recommendations for customers to mitigate risks). We’ll also share our comparative market growth (and sizing) estimates for 2018 compared with last year.

Program Management: The Missing Link in Procurement Technology Modules and Suites (Part 2 — Functional Building Blocks)

Program management is an integral component of source-to-pay (S2P) activities that is no longer optional for high-performing procurement organizations. In short, program management is a set of processes that manage specific projects and broader project portfolios that focus on higher-level processes and composite processes that cross the traditional linear flow of sourcing, contracting, purchasing and payments. These programs can be ancillary to core processes (e.g., M&A-related activities or globalization efforts) or transformational in nature to implement enterprise-level programs (e.g., working capital programs, risk programs, sustainability programs, digital programs, ERP upgrade programs, Lean/Six Sigma programs).

The problem is that, generally, program management is poorly automated and stovepiped within functions or subfunctions. Within procurement, there may be savings tracking for strategic sourcing processes displayed in a "CPO dashboard” but not much visibility and collaboration beyond that. This is a problem because as procurement is collaborating with stakeholders on ever broader processes and reaching deeper into stakeholder processes, supplier processes and external customer processes, there needs to be a cross-functional management capability. The emergence of collaboration tools like Slack and others have shown the enterprise desire to manage fast-paced mobile communication on the ground that is tied back to strategic objectives.

This Spend Matters PRO series defines what effective program management capabilities are from a design, platform and functional perspective that puts the user first. We explore both what represents best-in-class program management components today, what users should expect tomorrow and what we hope technology providers have on their roadmaps to build. We also explore some solution building blocks for effective program management, including best-of-breed project management, goal management, program auditing/audit trails and prepackaged initiative enablement. (Don’t forget to read Part 1 of this series to first understand the design principles on which effective program management technology is based.)

Unlocking Deeper Value in the Procurement and Finance Relationship (Part 1)

finance

Much has been written about the need for procurement and finance organizations to better align with each other, in particular how the two functions can best integrate purchasing and payables into an end-to-end purchase-to-pay (P2P) process. The opportunity for aligning these two functions, however, is much greater than simply improving transaction efficiency. Unfortunately, the various sources of misalignment that plague procurement and finance prevent many businesses from identifying these opportunities in the first place.

The sad part of this story is that the two functions share many common traits. Both seek to:

  • Elevate their value propositions as enabling business partners by providing compelling service offerings — and overcome their perception as bureaucratic corporate overlords
  • Maximize enterprise value and profitable growth through disciplined spend management
  • Spend not just less but better in terms of process efficiency and process effectiveness
  • Use new techniques and technologies to help the business make better decisions that support the above goals
Additionally, these functions should in theory strive to serve each other as internal customers while also enabling the other to deliver higher value to their own internal (and external) customers. Unfortunately, theory has rarely translated into reality, and the result is that each function is leaving money (and risk) on the table.

Procurement can certainly help finance get more value from its suppliers, but it can also help finance improve service delivery in areas such as FP&A, treasury, tax, financial accounting, risk and compliance, commodity management and even accounts payable.

On the flipside, finance can help procurement in multiple ways, namely to help procurement on value-adding activities — including helping finance. This is a classic “help me, help you” moment. If procurement can help finance help procurement (and help finance help itself), then procurement’s value potential can be truly unlocked.

Program Management: The Missing Link in Procurement Technology Modules and Suites (Part 1 — Design Building Blocks)

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This Spend Matters PRO series provides insight into what constitutes effective program management capabilities from design, platform and functional perspectives. We explore both what represents best-in-class program management components today and what users should expect tomorrow, including what we hope technology providers have on their roadmaps to build.

Part 1 of this series provides insight into the platform-level building blocks of effective program management capability, exploring user design as a central consideration of an effective system. User experience is critical to the acceptance and adoption of any source-to-pay (S2P) module and suite. Why? Without adoption and acceptance, there are no benefits, and the promised ROI will never materialize if the solution is not adopted by those that need to use it for the platform to work.

But maximizing user adoption is easier said than done. Users want a good experience when interacting with procurement technology. They expect not only the intuitiveness and ease of use of modern web-based platforms that they use to research products and buy in their everyday lives but also an ease of use that actually makes their job easier and more efficient. This is not what one typically achieved from an S2P platform designed in the ERP era, where green-screen workflows were often adapted as is to the GUI interface that came native with the advent of the world wide web.

This is one reason effective program management was rarely adopted, even when featured, in earlier-generation procurement technology solutions. And it’s why we’re going to tackle this subject first as our series begins.

20 Questions to Ask Stakeholders Before Implementing Your New Procurement System

Implementing new procurement technology is like implementing anything. There is a ton of change management involved, and if you don't get stakeholder input upfront, you are asking for trouble. This is especially true with modern procurement systems that can enable new practices on process redesigns that may be disruptive to the status quo. So, you need to get input from a myriad of stakeholders:

  • C-level versus lowest-level end users
  • Procurement users versus internal stakeholders and supplier stakeholders
  • Functional partners such as IT and finance who are “special” stakeholders because they are both spend owners and have a key role in the overall implementation
  • Visionary stakeholders looking to drive change versus stakeholders just wanting to keep their jobs and keeping efforts to a minimum
But what questions should you ask your stakeholders? Fear not. We have written a list of 20 key questions for you to consider.

You may be in procurement. Or you may be in IT. Or you can be a technology provider or consultant. Regardless, these 20 questions will help you tease out key requirements, intelligence and downstream barriers that you want to identify as early as possible. Just as spend influence is best done as early as possible, spend management transformation is also best informed as early as possible.