The Strategic Sourcing Category

What is Your Strategic Procurement Technology (Suite) Persona? Understand Your Requirements to Find the Best Technology Provider [PRO]

tech

No two procurement or supply chain organizations are alike. Each has its own persona that reflects not only its own unique requirements but also the stakeholders it serves when providing timely and accurate spend, procurement, supply and broader analytics.

The same principle holds true when analyzing strategic procurement technology suites. Each provider has a persona — or set of personas — 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 “magic” solution provider, and finding the right fit is essential, because supplier management applications are critical for not only identifying savings opportunities but also the effective management of the procurement function.  

SolutionMap 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 capability 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 strategic procurement technology suites, 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 used in solution scoring, which includes customer satisfaction scoring by solution customers. Having collected feedback from hundreds of procurement organizations 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 five of the most common customer personas for strategic procurement technology suites buying requirements. 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 strategic procurement technology solutions needed to meet specific organizational needs.

Below, we present our five personas for strategic procurement technology suites. For each, we include full definitions, typical organizational priorities (based on each persona), modular component weightings (and links to other PRO reports for detailed Solution and Customer value weightings) and recommended selection processes.

What To Expect from Best-in-Class Sourcing Optimization Technology and User Design (Part 1) [PRO]

There’s a reason Coupa spent a healthy chunk of its IPO proceeds to purchase Trade Extensions: sourcing optimization technology is heady, complex and requires significant mathematical, technical and domain expertise to build. But more important than the barriers to entry in bringing it to market, the value sourcing optimization can bring to customers is materially greater than what standard e-sourcing and reverse auction technology can deliver. So if you’re pitching “savings” or “value” as a service for procurement, you’d be hard pressed to prioritize any other area over strategic sourcing optimization and related supply network design capabilities — even if it’s still somewhat a novelty in terms of adoption outside of logistics and transportation spend.

While we have explored and defined sourcing optimization technology in the past (including specifically what makes Trade Extensions great and why Coupa bought it from a customer perspective), we have not yet defined what the optimal (no pun intended) components and user design elements of a sourcing optimization solution look like more generically. This Spend Matters PRO series aims to do just this, breaking new ground in spelling out for procurement and supply chain professionals, consultants and technologists what they should look for (or strive to build) when considering sourcing optimization capability. It is meant as a companion to the other PRO articles in this series thus far covering what best-in-class technology and user design look like for e-sourcing (see: here and here) and reverse auction (see: here and here) technologies .

So what does best-in-class sourcing optimization look like and how does form follow function from a design perspective in supporting it? In this first installment in our series, we cover the concepts of powerful constraint support (and what’s required to support it), solid mathematical foundations and advanced cost modeling.

Tell the CEO: Strategic Sourcing and Procurement’s Role in Business Success

According to a new report from Harvard Business Review Analytic Services, the role procurement and sourcing play in defending organizational cybersecurity is but one sign that the function has ceased to be simply a back-office operation. And yet, a previous HBR Analytic Services survey of 376 senior executives found that companies are not much inclined to devote advanced technological resources to non-customer-facing functions, including procurement and sourcing.

Wednesday, May 31. Downtown Chicago. Sourcing, AI and Optimization.

I rarely pimp things I'm participating in, but I'm really excited to go back to my FreeMarkets roots tomorrow (May 31) at this breakfast and morning session in Chicago on the future of strategic sourcing and e-sourcing. The event is free, and it’s open to procurement practitioners and consultants.

Keelvar is hosting the event and the topic is about the massive transformation (thanks to artificial intelligence [AI], robotics, optimization and more) starting to take shape in strategic sourcing and e-sourcing. Alan Holland (Keelvar) and Josh Brogan (A.T. Kearney) are speaking as well.

Getting the Most from Sourcing Optimization (Part 1): Lessons From Leaders [PRO]

Global Risk Management Solutions (GRMS)

The combination of Trade Extensions and Coupa may seem a curious one for those unfamiliar with either organization, and may even raise questions for those who know both. As Trade Extensions’ recent customer event showed (see our live coverage here, here and here), the sourcing optimization specialist and its customers continue to push the limits of what is possible with e-sourcing. In contrast, procurement organizations that gravitate to Coupa — even highly sophisticated ones — tend to do so because they want to avoid complexity for their users and make the transactional buying process as simple as possible, all the while guiding users to make the best decisions for the business.

This two-part PRO research note provides additional perspective from Trade Extensions’ customer event on how this spectrum of complexity and simplicity may not be incongruous in the future; rather, sourcing optimization could serve as a better mousetrap to identify complexity, deconstruct it and ultimately redefine procurement’s role in the business by changing how the function is conceived. But before that can happen, there’s a more important topic address: the fact that most firms using Trade Extensions (and other sourcing optimization technologies) have only begun to scratch the surface of embracing complexity — let alone containing, controlling, distilling and simplifying it.

Part 1 of this series explores how an organization can get the most from sourcing optimization once it has signed up for it, which is easier said than done. We explore three areas: selecting the right users and training them effectively to use optimization, leveraging a center of excellence (CoE) to scale efforts and thinking big (i.e., beyond category-driven events alone). Spend Matters would like to thank all of the conference attendees and Trade Extensions for sharing these ideas.

Trade Extensions Dispatch: Templates on Sourcing Steroids or Just An “App” By Another Name?

Trade Extensions co-founder Dr. Arne Andersson just previewed the next release of the Trade Extensions platform (TESS 6.0) this afternoon at the Trade Extensions U.S. customer event in Atlanta. TESS 6.0 (coming this spring or early summer) marks a giant step forward. The entire user experience is transformed. More on this from us later, but one aspect of the new release is “apps.” These are essentially templates on steroids. Yet they’re simple and powerful at the same time.

Trade Extensions Dispatch: Is The Supply Chain Ready to Be Defined by Sourcing?

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Trade Extensions sells the most advanced sourcing optimization technology that Spend Matters has encountered on the market today (read our research, linked below, if you want to understand why). It’s capable of tackling extremely complex multitier sourcing challenges. This is one of the reasons Coupa is buying it. Yet today, most customers are just scratching the surface of what the tool can enable in the majority of their sourcing events (if not all).

Trade Extensions: Redefining E-Sourcing (Coupa and Beyond)

There are only a few events left that focus primarily on strategic sourcing over broader procurement topics. And there are fewer still at which you can learn something new in every presentation. Trade Extensions customer events have always done just that. The Spend Matters team has attended half a dozen or more of these events over the years. Earlier today I continued the tradition, touching down in Atlanta to attend “Redefining E-Sourcing,” Trade Extensions’ U.S. customer event, which so far has lived up to its name, albeit with a current chapter in the history of the provider's story coming to an end with its acquisition by Coupa -- and a new one about to begin.

Trade Extensions and Coupa Acquisition Analysis: Customer and Partner Recommendations [PRO]

Tradeshift Baiwang

This Spend Matters PRO brief, part of a series analyzing Coupa’s acquisition of Trade Extensions (see also here and here), provides recommendations for Trade Extensions and Coupa customers and partners surrounding the acquisition. 

Spend Matters has spoken or met with many of Trade Extensions’ largest customers in recent years (most of which prefer to remain unnamed) and the most advanced organizations view it as the tool that affords the highest degrees of competitive advantage across the procurement technology spectrum relative to peers in as much as how it is used than what it has the potential to do. This is key. In fact, there are material levels of diversity among Trade Extensions users even in the same industry. Many customers expose some parts of Trade Extensions’ potential yet could get away with another optimization solution for at least some of their events, if not all. Yet best-in-class procurement organizations unleash its full potential to drive competitive sourcing and supply chain advantage.

Whether you view Trade Extensions and sourcing optimization at this level or more tactically, this Spend Matters PRO brief provides insight and recommendations into the combination of the two providers. It is divided into three sections: Trade Extensions customer recommendations, Coupa customer recommendations and partner recommendations.

Coupa to Acquire Trade Extensions: Solution and Market Analysis [PRO]

data analytics

This Spend Matters PRO brief provides a solution and market analysis of Coupa’s announced acquisition of Trade Extensions. Based on subscriber feedback, we’ve already been asked to go into details about what makes Trade Extensions’ optimization capability different from Jaggaer ASO (formerly CombineNet), BravoSolution, Keelvar, Determine/Iasta and Emptoris (IBM).

In addition, this brief offers a broader market-based analysis of the acquisition. As always, we invite Spend Matters PRO advisory customers to reach out to us for more insight behind our thinking and also to discuss if Trade Extensions is right for them (as well as alternatives). We will publish a separate customer and partner analysis PRO research brief later this week.

Given our knowledge and background in this market, we tried to think of an analogy to describe the combination of Coupa and Trade Extensions’ strategic sourcing capability. We think we’ve got a good one. However, we’ll share this analogy at the end of this research brief. First, to focus on what really matters, we’ll delve into some of the less superficial solution, customer and market analysis.

Coupa Enters an Agreement to Buy Trade Extensions: A Game Changing Move For Strategic Sourcing

After market close on Friday, Coupa announced it had entered into an agreement to purchase Trade Extensions, a specialist e-sourcing and strategic sourcing optimization vendor.

Coupa will pay $45 million for Trade Extensions when the transaction closes — $41 million will be paid in cash and $4 million in stock (which will be issued, it appears, to employees). Spend Matters estimates the valuation range for Trade Extensions (as a multiple of revenue) is in line with other typical SaaS companies, and that Coupa did not pay a premium for Trade Extensions, especially considering how unique the asset is in the market.

Why Every CPO is a “CEO” — But Not the CEO You’re Thinking Of

Global Risk Management Solutions (GRMS)

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”).