On Thursday at the Institute for Supply Management Metrics conference, in Philadelphia, Camille Batiste, vice president of sourcing operations and compliance at Honeywell, gave an engaging talk on procurement measurement and metrics. At Honeywell, her organization, sourcing and procurement, also owns operational excellence, which manages reporting as part of its charter. While much of the talk engaged the audience in an interactive manner, Batiste also shared both historical and current metrics she recommends for using to measure impact of procurement on the organization. Historical metrics include many focused on delivering costs savings. But there are also more valuable metrics procurement can deploy, Batiste argues, that can help tie its success directly to business success.
Category Archives: Industry News
The half-year results for Xchanging released yesterday were intensely disappointing to shareholders, who saw the value of their shares fall by 20% instantly, to a new 3-year low of £0.97. That is still above the bad days when founder David Andrews resigned, in 2011, after major profit warnings, and the shares fell to £0.50, but the current price is close to half what it was as recently as last autumn. We typically view Xchanging as a procurement outsourcing business, yet the results highlight 2 points. First, the procurement outsourcing and software element only accounts for some 6.5% of total revenue – £13 million out of £200 million. Yet it also casts a very long shadow, in that the poor results are being almost totally laid at the door of the procurement business. Before looking at the specific procurement issues, just run through the headlines. Gross revenue was £240.2 million in the half year, down from £282 million compared with a year earlier. Net income was £199 million against £205 last time. Operating profit was £20.4 million against last year’s £20.0 million, but statutory operating profit was down from £24.2 million to a loss of £41 million after the write-offs, discussed below. In terms of the divisions, the business process outsourcing (BPO) arm lifted adjusted operating profit 8.8% to £28.4m, with the technology segment 52% stronger at £4.1m. Procurement, which contributes just 6.5% of net revenue, saw some growth in the software business but a weak performance in the traditional outsourcing business, combined with underperformance in one of the new “tail-end spend management” contracts. “Net revenue was £13.0 million (HY 2014: £15.9 million), and the adjusted operating loss was £6.8 million (HY 2014: £1.7 million loss). This was after allocating central overheads of £1.8 million (HY 2014: £1.9 million),” the company said in its half-year report. “
Ivalua recently announced its mid-year performance results, showing significant growth for the spend management solution provider. During the first 6 months of the year, Ivalua reported 64% year-over-year growth, with renewal rates hitting 98%. New customer acquisition was also higher than in the past. We can’t say we’re surprised by these announcements, and we are looking forward to seeing the new functionalities in Ivalua’s software solution roll out. The provider has focused on bringing somewhat unique innovations to its modular procurement suite in the past 12 months – something we here at Spend Matters have noted.
Will you be attending ISM’s annual Metrics and Analytics Symposium July 30-31 in Philadelphia? If you are, be on the look out for Spend Matters Founder and Managing Director Jason Busch and Chief Research Officer Pierre Mitchell. They will be joining the likes of Honeywell, MasterCard, DuPont, Nationwide and more to discuss the value of supply management in the c-suite. Pierre will also be delivering the results of a recent snap poll he conducted with ISM. What’s the Procurement Value Mix Today? In 3 Years? outlines what it means to be a modernist procurement organization while also addressing the much talked about “value mix.” If you’re a procurement practitioner, please take a moment to fill out the survey.
Verian Update: Release of Version 15.1, Its Relationship With BravoSolution and What’s Next for the Provider
Verian is one of the leading procure-to-pay (P2P) solution providers in the market, with a full-suite offering that includes purchasing, reporting, invoicing, budgeting and analytics functionality. It has now launched version 15.1, adding innovation to its inventory management and asset management modules – key differentiators that allow customers to manage indirect spend, the total lifecycle of all assets in the P2P workflow and facilities management. Verian started as a on-premise platform, but since 2009 it has been converting its customers into its software-as-a-service (SaaS) solution, with all the advantages that the cloud brings. Today the company has 8 conversions in progress and will continue with this effort at a rapid pace. Verian’s SaaS business has grown at a rate of 40%. The goal is to migrate all of its existing on-premise customers to SaaS, including those with multi-tenancy capability. All cloud-based multi-tenant customers will receive upgrades seamlessly and simultaneously. This Spend Matters PRO research brief takes a look at what is included in Verian’s version 15.1 release, its relationship with BravoSolution and what’s next for the provider.
East Coast Shipping Surge May Become the Norm – Companies Increasingly Turning to Atlantic and Gulf Ports
After experiencing months of slowdowns at West Coast ports due to ongoing labor negotiations in the last year, a number of companies have officially switched shipping routes and turned to the East Coast to deliver and unload their products. East Coast port traffic has increased 15% so far this year, and West Coast ports have lost 4% of traffic, according to a recent report from US import and export data company Zepol. The changes are due to a “hefty chunk” of businesses switching to Atlantic and Gulf ports in 2015, even before the expansion of the Panama Canal is fully complete, the research firm reported.
From a luxury penthouse in Tokyo to a modern loft in Amsterdam – bike included – the number of places for business travelers to stay during corporate trips continues to grow. And, Airbnb is making it easier for corporate travelers to avoid stuffy hotel rooms and opt for alternative spaces like these while traveling for work. This week, the hospitality company announced the global expansion of its Business Travel program, adding a number of tools to the suite to increase visibility into employees' travel plans and spending. Since Airbnb’s Business Travel program launched in July 2014, it has seen 700% growth and now has more than 250 companies as customers, including big names like Google and Facebook. Currently about 10% of all rentals on Airbnb are used by business customers. Other data show business travelers enjoy Airbnb rentals more than hotel rooms and tend to stay longer in the rentals compared with hotels. Read on to find out what we think makes Airbnb so attractive to business travelers.
On July 20, the iconoclastic solutions provider Coupa announced it is acquiring TripScanner for an undisclosed amount. Like Coupa, TripScanner is built on an open network principle, except it is focused on business travel. Owing to its small size, TripScanner has not had any prior coverage on Spend Matters. But from what I have read about the company, its business concept appears similar to that of the travel portion of industry-leading travel and expense management provider Concur. Now part of SAP’s cloud portfolio, Concur’s approach lets travelers – in a user-friendly fashion – address their travel needs first and sort out policy consequences afterward. It’s a “spend-visibility-above-all” approach that aligns well with Coupa’s procure-to-pay (P2P) philosophy. Read on to find out how else TripScanner will bring value the Coupa's suite.
The clock is winding down to the Institute for Supply Management's Metrics and Analytics Symposium, which begins this Thursday in Philadelphia. (Register here.) Jason will be helping with a panel and I will probably be heading down as well. If you can, you should definitely try to make it. Craig Reed, who is an ISM board member and heavy hitter practitioner, will be leading it. I know Craig, and I can tell you he knows his stuff! Other executives from Honeywell and DuPont will also be at the event, as well as the non-manufacturing side, represented by Nationwide. You may wonder why there’s a conference on both metrics and analytics. Aren’t these 2 different topics? The former seems very organizational and the latter seems very technical. But the 2 are highly connected.
The good news: chief procurement officers are making more than before – nearly $500,000 per year on average, without factoring into account equity-based compensation. The bad news: CPOs have a much greater, increasing list of responsibilities associated with the role for compensation that is nearing the rate of inflation. That’s according to an updated CPO compensation study by the Center for Advanced Purchasing Studies and Korn Ferry. The findings suggest that average compensation – salary plus bonus – for CPOs has increased to $467,153 in 2014 from $369,556 in 2006, a more than 26% increase. But the total number of resources reporting to the CPO increased by an average of 50%, to 490 from 247, during the same timeframe.
The uncertainty in Greece remains, but the country’s financial markets have impacted the supply chain and procurement industry as well as trading. In the last week, the Spend Matters Network has reported on these impacts, bringing you the latest news on what the current situation in Greece means for US industries and abroad. We have rounded up our Greece coverage in the last week. Check out the articles to learn about the global implications of the Greek dilemma.
The financial crisis in Greece has taken a hit on the country’s shipping industry. Shippers are stuck at bay, unable to purchase fuel. Producers are finding it harder to fulfill purchase orders and to even access the cash needed to continue operating. Spend Matters has rounded up the latest news on the shipping industry and how the debt crisis has already taken its toll on the supply chain. And be sure to stay tuned to the Spend Matters Network for continued coverage on how the Greek debt crisis is impacting the larger industry.