Tungsten Analytics – Future Implications for Procurement

We wrote here about Tungsten’s analytics offering, which is a new service that runs on the back of their core e-invoicing platform. It provides what is an almost real-time analysis of the invoices coming into an organisation, allowing buyers to see if prices align with what they have previously paid for that time, from that supplier.

With opportunities for immediate cost reduction of between 0.9% – 4% of the addressable spend, according to Tungsten, it can form another useful – more than useful – addition to the benefits side of the e-invoicing business case. (And of course, Tungsten are now offering supply chain finance as well, which brings another benefits stream to the user organisation.)

It is however worth understanding what Tungsten can’t do currently with the analytics offering – full category analysis, spend with SMEs, cross-user comparisons and other capabilities. So there are obvious further steps for Tungsten, such as the ability to compare pricing across different suppliers for the same item, which would bring a new wave of potential savings into play. Then we might even see pricing compared across buyers. And there’s no reason t think the firm won’t find ways of gradually developing these areas in time.

The whole principle of picking up data to feed into spend analytics at the earliest possible point in the procurement cycle must be intuitively the right direction. Indeed, might we assume that eventually that analysis will be carried out at point of requisitioning or ordering, so we can instantly look at the price we are about to commit to and review against comparators? (Is there a patent I should be taking out on that? No, Surely someone must have thought of it already...) This matters because of course carrying out this analysis as early as possible then allows action also to be taken in (almost) real time – not months after the event.

"This invoice is incorrect - we're not paying it" is an easier conversation to have than "give us our money back that we spent six months ago."

At the moment, therefore, Tungsten is already a competitive threat perhaps mainly to the spend recovery firms (such as PRGX), who look at inconsistencies in past spend via invoice analysis, because it does pick up on discrepancies, just as the recovery firms do. But in time, if they continue down the development track, Tungsten could well also be a threat to the core analytics firms such as Zycus, Iasta, Bravo, and others. But a fair bit of work is needed to get to that point.

However, there is still a question of whether spend classification will always require some skilled “human intervention” – or whether you can automate that out of the process. So it’s interesting that Tungsten has been working with cloudBuy, who have been pioneers in looking at how artificial intelligence might play a greater role in spend analytics.

At the moment, we don’t see the analytics capability driving much in the way of standalone sales for Tungsten, but we do expect some of their current e-invoicing clients to start adopting it, and it will be a value-adding extra when the firm is in competitive situations for new e-invoicing / supply chain finance wins.  But although that market is growing fast, don’t under-estimate the competition to Tungsten, including everyone from the established players such as Basware and SAP/Ariba, to upstarts such as Taulia, Tradeshift and Crossflow.

A final philosophical point. Ultimately, as this sort of analytics approach gains traction, as it surely will, does this drive much more transparent “perfect” markets (in a classical economics definition), where prices are transparent and everyone has perfect information? Maybe it is only for goods initially, but it could include some services eventually. But there might be some interesting issues of competitive advantage and confidentiality then to consider - do I want everyone to know what prices I pay? Something for us to ponder for the future anyway.

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