The Spend Management Category

Designing a Spend Category Taxonomy Properly is Harder Than You Think (Part 2: Go Deep) [Plus+]

category management

We recently 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 Plus 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.

Designing a Spend Category Taxonomy Properly is Harder Than You Think (Part 1: Do This, Not That) [Plus+]

category management

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 Plus 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.

Mega Spend Aggregation: 10 Ways to Supersize your Market Basket (Part 2) [Plus+]

category management

In Part 1 of our coverage on this topic, we started our discussion of various techniques to “supersize” your market basket, with an eye toward indirect spend. In this second half, we will now turn our attention to the supply chain for the remainder of the techniques.

Mega Spend Aggregation: 10 Ways to Supersize your Market Basket (Part 1) [Plus+]

category management

Most procurement organizations complain about diminishing savings on re-sourced categories – and rightly so. But rather than beating the same horse, why not hitch up more than one, and in new ways that you may not have considered? In this Plus piece, we’ll outline five of them, with the first one being "expand the 'lots' in your current market basket."

Deploying S2P Procurement Software Yields Big Savings: Case Study Results

category management

Join Spend Matters, MetalMiner, Ivalua and the University of Chicago Medicine for our upcoming webinar that will outline the results of a case study on UChicagoMed's successful deployment of a cloud-contract management technology platform. Spoiler alert: It yielded major savings. Xavier Olivera of Spend Matters Mexico-Latin America will frame the discussion with the evolution of procurement software in the S2P software landscape, spend management trends in healthcare and more.

Emerging Procurement Platform Trends and Technologies: Webinar Tomorrow

Is your procurement function using a platform-inspired approach to transcend savings from simply spend management? If not, then now might be the time. Join Pierre Mitchell and Julien Nadaud, chief product officer at Determine, tomorrow at 10 a.m. CST for Designing the Procurement Virtual Factory — Reinventing Procurement Through a Platform. Pierre and Julien will focus on the digital requirements to support new procurement and spend approaches, as well as how technology firms are trying to cope in a brave new world.

Rethinking and Reclaiming “Tail Spend”: 6 Key Variables to Consider [Plus+]

AnyData Solutions

The idea of “tail spend” doesn’t seem very complicated at first.

Run a Pareto analysis on your spend categories and suppliers to make a cutoff at, say, the 80% that represent only 20% of your spend. Your numbers will, of course, vary, but the idea is to find a way to better manage such “nuisance” low-dollar spend that doesn’t detract from your efficiency, or worse yet, from spending time managing the truly strategic spend categories more deeply.

You might think of this as the spend in the lower-left quadrant of the famous Kraljic 2x2 matrix, which describes a strategy of “purchasing management” to manage non-critical, abundant supply that can be sourced locally in a de-centralized manner for maximum efficiency. And, maybe, if you manage this nuisance spend properly, you can even extract some value from it (e.g., a “quick source” process to gain some speedy spend savings).

Sounds straightforward, right?

Well, it’s not, and I have purposefully led you astray to prove a point.

The problem is that I never really defined tail spend in the first place – and if you can’t define it or see/measure it, you can’t manage it. And herein lies the rub (and the opportunity):

Tail spend could better be described as “nuisance spend” or “tactical spend,” and is comprised of many sub-segments — not just one or two.

Let’s return to our examples above. Segmenting on a spend-per-supplier basis, like in our Pareto diagram, is by no means perfect. What about low-spend, sole-source suppliers tied to large revenue or profit? OK, well, you might then refer to the Krajlic matrix as the solution. It’s better, because it helps profile the categories into complexity vs. impact (or risk vs. reward if you view it as such), but again, these are only two variables, and do not factor in any others.

Which ones? Let’s list six of them and ask whether you’d consider the resulting spend segments as ‘tail spend,’ or at least ‘nuisance spend.'

Coupa Release 17 Analysis — And a General “How To” Lesson for Upgrading Products [PRO]

On Jan. 27, Spend Matters published a quick post on first update of the year, Release 17. It offers a new application called “Perfect Fit Insights” for cross-customer B2B insights and more than 50 features across the platform, including new collaboration mechanisms to work with suppliers (SMS messaging and extended sourcing communication windows), additional e-invoicing compliance templates, and additional system configurations options such as extended customer branding. Recently, Donna Wilczek (VP of Strategy and Product Marketing at Coupa) and Gabe Perez (General Manager of Power Applications at Coupa) gave us a demonstration of Release 17 and talked to us about their innovation process and other analyses they do to continually improve the user experience, usability and value of their platform.

Coupa has a long history of out-innovating the competition, and this is not an accident. The company uses a rigorous process to identify, prioritize and implement ideas — putting the customer front and center in helping drive innovations that have the highest probability of actually being adopted.

In this Spend Matters PRO analysis, we’ll share what we’ve learned about Release 17 including expanding more on its new features and our key takeaways from them. We’ll also discuss Coupa’s general release planning, development and roll-out methodology to capture ideas that drive practical (and usable!) innovation for customers.

These are critical lessons that should not be lost on organizations evaluating Coupa in comparison to other vendors (which generally innovate more slowly), let alone any other provider developing technology to bring to market.

Where is Procurement Going? 3 Key Insights from ProcureCon’s 2017 CPO Study


Worldwide Business Research and ProcureCon released their Annual CPO Study Wednesday, a survey of chief procurement officers and what they see as their challenges or priorities for this year. The report, titled “Exploring the Role of Technology in Procurement’s Strategic Transformation,” tackled topics ranging from the structure of the procurement department to the potential of automation to innovative sourcing techniques. In addition to data, the report includes excerpts from interviews with several senior procurement officers. Let’s take a look at some of the interesting findings.

Coupa: Solution Review & Analysis [Plus+]

There are many perspectives on Coupa. These range from those who believe that the vendor has single-handedly transformed the world of spend management by atoning for the over-customization, product and user interface sins of those that came before, to those who think that Coupa has expanded too quickly and is doomed to repeat the past mistakes of others.

Our vendor snapshot series on Coupa is not about perspectives. It aims to be the first to review Coupa’s technology and modules in the context of what they actually do today and how they are differentiated — or not — from others. Please note: Our Vendor Snapshot series was written before Coupa's acquisition of Spend360.

We have comparatively analyzed Coupa and its competitors for a range of constituents including procurement and finance organizations, for suppliers participating in supplier network ecosystems, and for consultants and systems integrators. This Spend Matters Plus analysis provides an introduction to Coupa for procurement organizations looking to understand whether they should consider adding the provider to their shortlists for consideration and competitive alternatives.

Coupa: Vendor Snapshot (Part 3) — Commentary and Summary Analysis [PRO]

At its current rate of expansion, Coupa will cross the 500-customer threshold in the first half of 2017. There are numerous areas to which to credit its continued ascent, including a spend under management growth rate that is nearly mirroring revenue growth — a metric that shows the rapid manner in which customers are implementing and scaling Coupa implementations relative to first generation procure-to-pay (P2P) solutions. Coupa’s metrics-centric approach to measurable business value is an extension of its own culture, including an emphasis on rapid solution development based on listening to customers and creating accountability for results.

While Coupa is not an ideal fit for all procurement technology requirements, it has become the new benchmark by which other e-procurement and spend management technology suite vendors must measure themselves, or at least in comparison and differentiation. In many ways, Coupa’s recent initial public offering (IPO) represents the first of a new generation of providers assuming a leadership position in the market. From a competitive perspective, this suggests Coupa has moved from the hunter to the hunted, although its competition remains fragmented, with the exception of SAP Ariba, which it encounters most in shortlist and evaluation considerations.

This third and final installment of this Spend Matters Vendor Snapshot covering Coupa provides an objective SWOT analysis of Coupa and offers a competitive segmentation analysis and comparison. It also includes recommended shortlist candidates as alternative vendors to Coupa and offers provider selection guidance. Finally, it provides summary analysis and recommendations for companies considering Coupa. Part 1 provided an in-depth look at Coupa as a firm and its specific solutions, and Part 2 gave a detailed analysis of solution strengths and weaknesses and a review of the product’s user experience.

Coupa: Vendor Snapshot (Part 2) — Product Strengths and Weaknesses [PRO]

Coupa is gaining traction among spend management technology suite customers who want a streamlined deployment effort, a simplified user experience and the ability to capture, manage and influence indirect spend as a primary consideration as well as those businesses looking to augment purchasing with additional capabilities (e.g., invoicing) that are easy for end users. Compared with peers, intercepting users when they need to purchase something and processing spend of all types is where Coupa excels as a buying front-end for companies, which is different than just offering an e-procurement application — a key point we explore in this vendor snapshot series.

P2P is still very much a part of the Coupa experience. When it comes to corporate purchasing, Coupa focuses on delivering an “Amazon-like” experience for users. (Spend Matters would actually suggest that it delivers a better corporate buying experience than Amazon as a buying front-end, at least Amazon Business.) But as with other e-procurement providers, it brings a hidden back office component that provides procurement and finance organizations with significant compliance controls, oversight and related capabilities to manage and even guide buyers down specific paths (e.g., procuring a given item from a preferred supplier, and within budget) while making the overall buying experience almost as painless as shopping on a consumer site.

This Spend Matters PRO Vendor Snapshot explores Coupa’s product strengths and weaknesses, providing facts and expert analysis to help procurement organizations decide if they should shortlist the vendor. It also offers a critique (pros/cons) of the user interface. Later in this multi-part series we will offer a SWOT analysis, user selection guide, competitive alternatives and additional evaluation and selection considerations.