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Selecting Market Intelligence Providers: A Roadmap for Procurement

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To make the best purchasing decisions possible, procurement organizations need current and accurate data about the categories they manage. But limited time, resources and accessible market data have hindered procurement’s ability to meet this standard on its own. This is why third-party supply market intelligence has become an invaluable tool for businesses as of late, with a majority of companies now using at least one or more external SMI resource.

Yet while market intelligence’s relevance to procurement may now be clear, knowing how exactly to select a third-party SMI provider may be less so. To help practitioners in their decision process, this second article in our series on market intelligence outlines three steps to define a procurement organization’s needs for an SMI provider, as well as explains how various types of providers meet different needs.

Defining the Need

The first step to determine the best data providers is to define how procurement plans to use market intelligence to meet its overall goals. This process begins by asking several questions about how the organization approaches purchasing.

First, take stock of the size of the company and the industry in which it operates. How big or small is the procurement team and the company overall? How the organization is structured (e.g., centralized or decentralized procurement)? Does the business use a center of excellence (CoE) or shared services organization to facilitate transactional buying, or is procurement responsible for all purchasing decisions?

Company size, industry and operational structure will also inform how procurement approaches a key barrier to market intelligence adoption: budget. Even though companies are increasingly acknowledging the importance of using market intelligence, finding the necessary funds to support such an initiative can often be a challenge. Thus, it is important to consider which departments will ultimately be asked to pay for external market intelligence, how much the company can afford and what the expected ROI on a new program could look like.

All of these factors will influence what kinds are market intelligence will be relevant for a business, as well as which sources it can effectively use.

Next comes a secondary — yet more important — layer of questioning: defining what type of intelligence, and at what level of detail, is needed. These intelligence types can include:

  • Category price/cost intelligence, such as benchmarking and forecasting
  • Broader market intelligence on sub-segments, trends, competitive dynamics, demand and supply drivers and so on
  • Supplier intelligence, in forms such as SWOT analysis, recent trends, negotiation opportunities and pricing, which is interconnected with category price/cost intelligence above

Finally, organizations must determine who needs this level of detail and when. Here, ask if the market intelligence provided is:

  1. Cross-category general SMI that is served up as a broad resource for tactical sourcing of tail spend by an internal buying desk?
  2. Supply chain intelligence from an offshore provider to serve up to a “virtual center of excellence (CoE) that category managers can tap into based on stakeholder needs?
  3. A one-off requirement for a high-impact sourcing project, where the organization needs the latest and deepest insights from recent deals in the market by subject matter experts?

This is an important step, as these differing market intelligence needs are not usually met by a single provider.

Taken together, the above “pre-work” approach helps organizations better understand their exact needs. By gathering these types of requirements, engaging appropriate stakeholders in the process, and forming an initial assessment with this collective data, procurement can ensure greater ROI down the line.

Gaining the Most Relevant, Reliable and Specific SMI

Any method or level of gathering supply market intelligence can contribute to a strategic sourcing operation’s success. Yet the holy grail is using relevant, reliable and specific intelligence that fits the buyer’s sourcing context, customizing that intelligence to work for the business.

In that vein, while generic category intelligence is widely available for (mostly) free online, adopting more formal approaches — in other words, using specialized third-party providers to gather targeted SMI — makes the most sense, particularly in the following scenarios.

When it comes to category insights, market intelligence providers such as Beroe offer a variety of standard or customized market reports, including intelligence on more than 260 categories, as well as access to supplier ratings and procurement thought leadership. Many of these intelligence providers combine multiple products and services on a software platform, with the ability to create personalized dashboards and integrate with other providers’ tools.

For supplier-specific intelligence, procurement organizations are likely familiar with all the big content players: D&B, IHS and RELX Group, to name a few. For supply risk intelligence, companies such as RapidRatings specialize in giving users specific insights into the financial health of their suppliers.

Of course, there are industry-specific and category-specific players in all forms, including content, advisory, consulting and community-based groups. Caucus Net, an association that specializes in IT procurement, is one example.

Ultimately, sticking with just one approach or provider may not offer the best solution. Rather, an organization will likely want to select a few to sources to best fit its short-, medium- and long-term objectives.

Tying It All Together

By first understanding its goals and those of the broader company, procurement organizations can clearly define their needs, helping them evaluate the various buckets of supply market intelligence. In doing so, they will become much better prepared to explore the most relevant third-party intelligence offerings. This will ultimately help them make an effective business case to the CPO, arming them with the information they need overcome budgetary hurdles and prove the considerable ROI a new market intelligence program can offer — both topics we will explore in the third and final post in this series.

This article was written on behalf of Beroe by the Spend Matters Brand Studio team and not by the Spend Matters editorial or analyst teams.

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