Part 5: Reflections on Spend Management's Decade

I got a couple of emails from people last week asking why my take on Spend Management's first decade showed a bit of cynicism rather than unbridled excitement or cheerleading. To everyone, I would say that I have no cynicism when it comes to the power of Spend Management to transform large and small companies alike. Rather, my beef with the decade is what could have been versus what it became if the hundreds of vendors, integrators, and consultants in the early going had made better decisions in building products, solutions and services to help their customers rather that wasting countless cycles on hype, infighting, and capital raising.

Now, don't think I'm going to let customers off the hook entirely for the delayed progress either. Many procurement organizations and finance executives are equally to blame. The hubris of GM and others when it came to launching exchanges like Covisint potentially cost them years of progress in developing better supplier strategies rather than simply piecing together extraneous pieces of technology -- and keeping Accenture fat and happy -- in hopes of cashing in on the capital markets hype. Imagine what might have been if GM had spent their time and money emulating Toyota's supply strategies and buying out their own union contracts -- which still prevent them to this day from deploying optimal sourcing strategies such as buying assemblies rather than piece parts -- rather than pissing away hundreds of millions on the festering Covisint corpse. One wonders if they had not wasted so much money and time on Covisint, if the Big 3 -- and the Detroit economy -- might be far better off today.

Fortunately, I think we're past this now. Virtually all of the surviving vendors and service providers have become invaluable in helping customers, building technology and other capabilities that transcend anything available even a few years ago. And customers are now focusing on tangible value creation rather than dreaming about IPOing shared services exchanges formed with their competitors.

Let's just take one example that examines the progress that has been made. Consider how the current eProcurement capabilities available on the market -- and the supporting supplier network and on-boarding solutions -- can finally help companies finaly automate (from an end-to-end perspective) a majority of their MRO, indirect and services purchases. And add to this the tremendous power of EIPP to better integrate the finance and procurement functions through transforming A/P -- not to mention the ability to capture additional basis points through linked-in supply chain finance capabilities -- and you've got a recipe for tremendous customer returns. Now contrast this with what was available in the late nineties -- back then, you were luck to get a majority of your paperclip purchases automated within a single site or division.

This sort of progress in a matter of years is nothing short of remarkable and speaks to the value of doing more with less, and listening to specific customer needs rather than superfluous wants. As we entire Spend Management's second decade, I'm more bullish than ever on the potential of the topic of this blog to transform procurement, finance, and operations in entirely new ways. Believe me, the best is ahead. But at the same time, we should never forget the mistakes of the past, lest they slow us down as we continue to take the boardroom by storm.

Jason Busch

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