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The State of Procurement (Part 2): The Process of Selling into Procurement

02/20/2018 By

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“How did you like selling to procurement?”

Another dimension to this question, which I discussed in Part 1 of this series, is related to the unique situation that the end customer is also the anointed steward of the best practice for purchasing technology.

Don’t get me wrong: all the traditional sales and relationship development approaches and strategies still matter. Have you built trust? Do you understand their decision criteria? Have you mapped the competitive, stakeholder and points of influence?

Despite all of those points of insight, however, more often than not you will end up on a scored, side-by-side evaluation matrix that removes emotion, influence and trust from the equation.

And that’s just fine. Selling to procurement is often a long journey, but it’s well worth the trip.

The State of the Process

A 12-month or longer end-to-end process is not a surprise in any way. Give three or four months to identify needs, maybe three more months to define requirements, another four to six months to select a vendor and then rush through implementations in another three to four months depending upon scope, level of integration, change management and migration.

But there are also several trends that are changing the process:

  • Selecting a provider is taking even longer. The process can now include sandboxes, try-and-buy, proof of concepts and multi-site user workshops, typically using real data, real users, real suppliers and real events.
  • Buyers are involving more people. The process has expanded stakeholder involvement to include a wide range of personas beyond procurement, including operations, finance, R&D, logistics, support/services and, in some cases, the suppliers themselves.
  • An increasing percentage of the decision-making process doesn’t even directly involve the vendor. Leveraging resources like Spend Matters, blogs, research papers and an increasingly amount of high-quality vendor-authored content, from IT/industry news and strategy, to best practices and how-to guides and checklists, to online, self-driven demos and trials —all used before procurement even enters a formal demonstration process, which typically leads a self-use diagnostic or assessment step prior to selection.

In total, the process is increasingly standalone, hands-on and quantitative in approach.

What’s Driving Buyers to Change

Where are buyers taking even longer to make a selection? The short answer is fear. Fear of project failure. Fear of making a wrong choice. Fear of wasted time, training and investment.

The general term for SaaS subscriptions can be anywhere from two to five years. The retention rates for value-providing solutions is usually above 95%, and that’s across all clients that renew. That figure will be north of 99% for first-time renewals, which means the overall solution commitment is typically no less than five years and generally closer to eight or 10.

So again, the question: Why does it take so long to find the right path when there is so much evidence of success and capability in the market? The short answer is that many buyers haven’t spent enough time defining what it is they want.

They have plenty of criteria, such as RFP lists, functional requirements, process specifications, workflows and blueprints and usability surveys. But suspiciously lacking from many processes is a precise definition around desired outcomes — at least one that buyers are willing to share.

What is the desired result from the adoption of the technology? What will be the measure of success in terms of efficiency gained, effectiveness improved? Without these ambitions clearly defined, tied to the business case and used as the key litmus test of the right partner, the selection process becomes a battle of solution features.

Using a car buying analogy, it’s akin to evaluating all of the thousands of function points on the vehicle — door locks, windows, mirror de-icer, miles per gallon, seating capacity, engine horsepower, look and feel — without taking the time to define if a key outcome for the vehicle. Is it to cover a daily commute of two hours total at the lowest total cost at the maximum duration of reliability, or is it to haul on average a half-ton of materials to and from a worksite at the maximum possible payload per trip?

The Vendor Reaction

So, how are vendors changing their strategies to help keep their vision and value proposition relevant in the new decision-making process? There are two key ways:

  • They are filling the content demand with strong positions on general industry topics and trends, but prioritized for the target customer:
    • They are authoring or promoting expert content, either self-authored or sponsored, which directly points the use of products
    • They are publishing specific case studies and branded content to drive consideration and selection of their company
  • They are trying to change the time spent on specific stages of the buying process. Historically buyers spend roughly two times the effort on the “who or vendor” stage of the process as they do on needs or specs, which is the “what” stage. The downside of this is buyers end up spending twice the effort on managing the solution post-implementation. Vendors with a strong position on partnership and customer success will try to skew time back toward the solution needs and problem statement of the “what” stage and away from the “who” stage. This can be seen in the RFP explosion phenomenon, where every requirement ever experienced or written about is expressed in the RFP stage without balance toward what is needed given the problem statement, but then drives an elongated evaluation cycle, as all have to be proven, scored, and compared — regardless of need.

The Opportunity for Vendors

Here’s the good news about the changing process. In contrast with some industries and technology applications, a large number of procurement technology implementations are successful. They often achieve a positive ROI and usually renew beyond the initial term. That means the process generated a good recommendation.

The process also presents an opportunity for vendors Compared with some industries and technology applications. we spend far too much time talking about features instead of discussing outcomes and adoption, even though the ROI is positive, the full potential may not be realized for the value that procurement could generate because of a dangerous trend of increasing the firewall between the buyer and vendors during the early phases of the buying process, where good vendors that partner could be helping to pin down “the what” in the form of key outcomes and success criteria that will speed evaluation, implementation and realization of sustained value.

Stay tuned for Part 3 of this series, in which we discuss the state of the technology and how it is evolving with and one-step ahead of ‘the what’ procurement needs.

Jim Wetekamp is the former CEO of BravoSolution.