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5 Key Procurement Insights from Upwork’s 2017 Freelancing in America Study

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Contingent workforce procurement practitioners are increasingly encountering the idea that freelance/independent workforce is growing in importance. This idea comes from many sources, including business users who are strapped for the skills and talent they need, media and analyst coverage of a new “gig economy” and, last but not least, new workforce solution providers that specialize in the provisioning of skilled freelancers and independent professionals.

For procurement practitioners — who for many years tolerated the use of independent contractors (1099 ICs) as a necessary evil and a last resort in exceptional cases — the idea of increasing use of the independent workforce can be challenging in a number of ways. One of those is figuring out whether this phenomenon is real and important enough to be spending more time on and enabling rather than minimizing. Practitioners might think, “Sure we’re hearing that skills and talent are migrating to an independent workforce. But is that true? Is there data to support this?”

In this article, we turn to fresh data on this subject and try to provide some helpful insights for practitioners grappling with this issue.

Can Google take on Amazon in B2B E-Commerce?

Google recently announced a partnership with Wal-Mart to feature the retailer’s items within the voice-activated Google Assistant. Both firms obviously face a shared enemy with Amazon, and they are looking to emulate the Alexa-based voice ordering of Amazon products.

Wal-Mart already participates within the Google Express marketplace, which is Google’s simplistic version of Amazon.com. But this partnership gives consumers a new way to connect to the marketplace.

So, what’s the big deal here? Not much on the surface. But it signals that Google is going to have to get serious in e-commerce. And it’s about time, because Google actually has huge potential in e-commerce. Unfortunately, Google’s performance in that sector, in terms of its ability to monetize its search in new ways (especially in B2B), has been underwhelming, to put it mildly. To understand why, let's explore the good, the bad and the ugly of Google's move in a broader context.

Groundbreaking Study Analyzes Enterprises’ Platform Sourcing of Online Freelancers

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Today, a new study, “Platform Sourcing: How Fortune 500 Firms Are Adopting Online Freelancing Platforms,” was published by researchers Greetje Corporaal and Vili Lehdonvirta of the Oxford Internet Institute at the University of Oxford. The research project, organized under the Oxford Internet Institute’s iLabour Project, was designed to fill a gap in the practical understanding of how large enterprises go about introducing and expanding the use of online freelancers. The research also provided the basis for recommendations for other enterprises.

Is the Tail Spend Problem Solved with Technology or with Managed Services?

Tail spend is a thorny problem — and an important one.

Tail spend is an amalgam of more granular spending: one time, low dollar, maverick, tactical by design. It doesn't even have a common definition understood by all, and it is generally a mess.

So, how to solve this problem? The design ideal is the concept of guided buying, where you start with the end customers (i.e., employees who need something) at the time of need and then guide them down to get what they need to accomplish their goals (but also within corporate policy). It’s an entryway to all procurement, not just the procure-to-pay (P2P), process, so you need to get it right and make the experience count.

But, who is the guide? Is it a tactical buying group in shared services or outsourced provider? Or is it a technology solution? Let’s discuss.

Procurement Agility is a Pipe Dream Without Intelligent Transformation and Procurement as a Service (PRaaS)

In a previous post, I discussed the three critical focus areas that are foundational to procurement excellence: customer/stakeholder focus, performance and transformation. They seem straightforward, and indeed they are. Unfortunately, it's hard to get them all at the same time, and get them aligned.

It’s like the old adage about buying a bike where you want it strong, light and cheap — but you can only pick two. Here’s an example to make this clearer, using tail spend management.

Take the 80% of purchases that represent 20% of your spend and you will likely find that the requestors want their stuff (or services) delivered quickly and easily. You as a category manager want that too, and don’t want maverick spending, but you’re also focused on big sourcing deals and can’t get bogged down here, nor have the time to transform your thorny tail spend problem. So, you sacrifice transformation and simply work harder within your current processes, systems and metrics.

But if you’re a more advanced firm and have sourced all of your major spend areas a few times, you may have to lower your procurement involvement spend thresholds, wean yourself off of p-cards and figure out a way to improve your stakeholder satisfaction scores when they find you and your complicated systems and policies a barrier to engaging with you more meaningfully.

So, you need to transform your processes, policies and systems to re-engineer this deceptively toxic and disparate amalgam of spending that is in the tail. More problematic, you need to revisit your procurement KPIs and SLAs (if you have them) to reflect this — especially since you also want to free yourself up to do more strategic innovation and SRM/SCM work.

Procurement is within Supply Chain, but is the Supply Chain within Procurement?

Procurement helps a firm feed the supply chain. And it may even call itself “supply chain.” But does it really live the supply chain? In other words, does it embody the principles and practices of supply chain excellence within its own services “business”?

To answer this question, we must define supply chain excellence, which consists of three major elements: Customer focus to understand and shape demand; supply performance that meets customer needs and business needs; and transformation that (re)designs the value chains (and supporting resources) that produce the products and services that satisfy the customer and meet key performance requirements.

Obviously, procurement must support this. If purchasing must become supply management, as Walter Kraljic so famously wrote, then it’s not about just episodic sourcing but rather “supplying” the customer-satisfying value chain holistically. Supply management thus becomes about building the extended supply network that is positioned to fulfill customer needs. In other words, supply management is customer facing.

The Future of Digital Sourcing Channels for Labor and Services: Supply Side or Demand Side Driven?

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Over the past few years, we have been inundated with information and speculation about the future of work, the independent or freelance workforce, the gig economy, online marketplaces and talent clouds. Obviously, amidst all the verbiage, punditry and soothsaying, a lot of significant stuff has actually been happening. But what does it really mean for large organizations?

The Collective Intelligence of Supply (Part 2): The Evolution in 10 Steps

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In Part 1 of this series, I outlined its intent and why procurement and supply chain organizations should understand how the evolution toward a digital “collective intelligence” within supply chains and supply markets will affect them.

If you think about the Star Trek series from the 1980s (not the 1960s), the “Borg” was a collective of cybernetic beings that were part of a “hive mind” that would assimilate humans and other species into their collective digital intelligence. Now, consider the ecosystems being built by companies like Google, Amazon, Facebook, Apple, Microsoft, IBM and others. They are becoming commercial collectives, of sorts, that seek to assimilate you into their walled gardens and extract maximum information from you in order to personalize their services (and those of the suppliers that your information is sold to) for you. You don’t just buy their products — you often are the product.

This trend certainly isn’t a bad thing on the whole in terms of the digital services that consumers now enjoy, but it’s traveling up the supply chain into B2B in a big way. So, the question becomes how can you create your own benevolent Borg that creates a collective intelligence with/about your customers, within your organization (think knowledge management on steroids), and, of course, to your upstream suppliers and supply chain. You want to be a platform, and not just a pipe. We’ve written extensively about platforms on our site, but platform/network effects are just a piece of the puzzle.

In Part 1 of this series, I did a quick general outline of the series and also included 20 domain areas that are key to this evolution. Even so, I didn’t really “tell the story,” and it basically is a story told in 10 discrete evolutionary steps. Once procurement organizations understand these 10 key progressions, they will be able to understand digital evolution in a more straightforward way that ties to business fundamentals while also bringing in newer operating models.

How Stanford University is Bringing the Future of Work into Sharper Focus

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There has been so much discussion for so long about the so-called “future of work” that many of us — after several years — have had to take a deep breath and ask ourselves, “Is it here yet?” But while “the future of work” has become largely a platitude, some organizations (both private companies and public entities) and researchers (both industry analysts and academics) have devoted time and resources to tackle the problem head-on through real-world research and pilot projects (or in the case of crowdsourcing, serious adoption). Stanford University’s Human-Computer Interaction Group is one such example.

The Collective Intelligence of Supply (Part 1): Introduction

As you may have guessed by the title, this blog series is not going to be a tactical how-to guide for implementing low-level procurement techniques or comparing software providers. Rather, I’m writing this as the supply strategist’s guide to digital business.

There is a lot of content out there on digital “disruption,” including for procurement, but I personally find most of it laden with jargon, and not very instructive on what to do about it. This is a shame, because the fundamental transformation and evolution of value chains offers so many opportunities that supply professionals can seize upon if they understand the changes and how to harness them.

This series will be written as a series of short essays that will (hopefully) help readers understand these detailed drivers behind this digital evolution and what that means from a supply chain and supply management standpoint. Most important, I’ll try to give some practical insights and recommendations on how to best tap these innovations as we all evolve toward higher levels of machine intelligence.

Before we dive in, it’s important to realize that the “collective intelligence” story isn’t about artificial intelligence (AI) per se but really about a convergence of methodologies, strategies, techniques and technologies that are converging.

Read on to see this series’ outline on the successful supply professional’s journey to this collective intelligence that’s being built in the supply chain and how to begin preparing for it.

The Impending Slow Death of “Empty Apps” in Procurement (Part 2)

In Part 1 of this series, I discussed how “empty” applications (i.e., data models and application logic served up via forms and workflow) that need to be spun up from scratch by each customer, and offer no scale across customers, are not going to be competitive in a few years.

For example, most buying organizations pursuing automated supplier qualification workflows in supplier management end up creating mega qualification forms that represent the sum of the regulatory requirements and internal requirements that are in force rather than the supplier questionnaires getting automatically tailored based on the spend requirements that in turn link to the appropriate questions based on appropriate internal/external policies and regulations.

But this is starting to change. New applications and application suites that offer mass personalized functionality in terms of flexible data models, metadata, machine learning and “composite applications” (that embed relevant microservices) will offer huge advantages over traditional software models that basically treat the applications like machine tools (even though the tools are deployed over the web).

I will give a few more examples of embedded services and then turn your attention to some other approaches that applications providers are pursuing to move away from feature function wars and move towards building a collective intelligence on behalf of their procurement customers. This changes the game to build new capabilities beyond automation and to deliver outcomes beyond savings.

In the last installment, I talked about DaaS (data as a service) and embedding microservices into the applications so that “micro best of breed” app services can be embedded into the core processes of large application suites. In fact, it’s already happening. I mentioned digital signatures for contracts and APIs for supplier risk queries, but there are other opportunities! In this installment, I call out providers like SAP Ariba, Amazon Business, Okta, Tradeshift, Slack, Microsoft and Aquiire, but the lessons are what is important. OK, let’s get on with it with our list of services to augment the empty apps.

The Impending Slow Death of “Empty Apps” in Procurement (Part 1)

The cloud computing inflection point has arrived for business applications. Of course, there have been other inflection points, from mainframes to PCs to clients/servers. But, multi-tenant cloud applications now allow for scalable solutions delivered via flexible deployment models across multiple devices.

So, is this the last major inflection point other than some machine learning capabilities embedded into the products? Will success now simply hinge upon functionality, adoption and customer counts using increasingly commoditized application products? For procurement apps, is it now the battle of cloud-based Source to Pay (S2P) suites?

Answer: Not so much.

Let me explain. Think of business application suites as software versions of a machine-tool. Contract manufacturers can use those tools to sell the manufacturing from those tools as a service, but the tool is still basically the same. For procurement applications, this is a problem. First of all, the massively diverse requirements for various spend categories are simply not well supported in the data models of existing procurement applications. There simply is no single procurement application on the market today that meets the needs of all spending such as direct materials, contingent labor, complex assets and complex services.

Now add in the multi-tier supply chain requirements (see here for more on this) and industry-specific requirements, and it gets even worse. Now consider the fact that even basic master data modeling is inadequate. For example, it is folly to think that a single spend taxonomy hierarchy will meet the needs of modern category management (i.e., categories are highly multidimensional, a topic you can read more about here). So, it becomes clear that we’re still pretty early in the “supply tech” market. (I think procurement needs a cool moniker like “Fin Tech” or “Reg Tech” — what do you think?)

Yet, this is not the main subject of this discussion. The main point that I want to make is that when you buy applications, you are buying empty apps. In other words, you are buying a data model and some application logic, but you’re not really buying a solution that more holistically helps procurement organizations deliver outcomes. You know the old adage: “Technology is just an enabler — it's just a tool!” But in the age of digital and “cognitive,” can’t we expect more?

The answer is yes, but it requires some new approaches and mindsets from both buyers and technology providers. Let me give some examples, and I’ll mention firms such as SAP Ariba, Coupa, Salesforce, Tradeshift, Dell Boomi and Rapid Ratings.