Scanmarket CEO Betina Nygaard: ‘The e-sourcing process will change completely’

Many procurement technology firms have a short history before flaming out or being acquired, but one stalwart firm has hit a rare milestone — and has secured a strong future for itself.

Scanmarket, the Denmark-based provider of strategic sourcing software, turned 20 this year — and made sure that the family business that was built by a brother, sister and their parents will carry on with the same mission. In January, the business was sold to Verdane to raise capital, but the family is still at the helm and plans to invest in growth and product development.

“My brother and I are still here, and our mother as well,” said Scanmarket CEO Betina Nygaard, mentioning that her dad just retired at 77. “It’s the same set of values driving this.”

To learn more about what it takes to run a long-standing best-of-breed sourcing business, we talked to Nygaard for her insights about the past and the future of e-sourcing.

Q&A

Spend Matters: In the last 20 years, how has the market changed, and how has Scanmarket changed?

CEO Betina Nygaard: A lot has happened in 20 years. The market today is used to working online. It wasn’t like that 20 years ago. In the beginning we used to visit our prospects with a flip-over board. That puts it all into perspective.

Today, the internet is the norm and we all feel confident it’s here to stay. It’s funny to think of all the skepticism and distrust toward the internet 20 years ago.

The same goes for e-sourcing. Most professional buyers in organizations today, with revenue above $1 billion, know what e-sourcing is. Back then, we had to explain, educate and convince — it was pretty hard selling cloud solutions. Now, everything must be cloud-based, and that makes a huge difference for a company like Scanmarket, which was “born in the cloud.”

Another big difference from 20 years ago is the change in software complexity. User friendliness was not a real virtue then — it is now!

What about e-sourcing itself? What did that mean then versus what it means now?

Well, back then, e-sourcing was synonymous with e-auctions, and e-auctions sometimes had an unfortunate reputation because some users weren’t behaving in an ethical manner. It was perceived as a stick needed to beat suppliers into lowering the prices. Luckily, e-auction tools are much more sophisticated today.

Back in the day, there was a lot of unethical behavior with buyers inviting themselves as suppliers in order to drive prices down and create fake competition, and simply award the business to the incumbent supplier — even though there were new suppliers who put in real effort to win the business.

That kind of foul play was actually common. Since then the industry, with Scanmarket playing an instrumental part, has done a great job of educating about good ethics to overcome this bad reputation. Today, e-sourcing is much more common. We see it as online method of sourcing used for pre-qualifying suppliers, streamlining sourcing process, maintaining contracts and projects etc. So, e-sourcing has evolved far beyond being synonymous with “just” e-auctions.

Do today’s online features promote strategic sourcing where maybe they couldn’t before?
Absolutely, we see a range of differences in how a business conducts its everyday life from 20 years ago till now. The sourcing and procurement industry have realized that time spent on a project is simply spent smarter with the use of e-sourcing.

With e-sourcing you can reach out globally at the click of a button, whereas 20 years ago that would require endless traveling, phone calls and verbal negotiation without even reaching the same level of new opportunities as we see today. The process has become a lot more efficient.
You asked me before: How has Scanmarket changed with the market? It’s funny, one thing that hasn’t changed is Scanmarket’s perception of what is important. We started out as a cloud solution, and we focused on user friendliness. That is exactly what we also focus on now. Of course, the size of our organization has increased and the geographies we operate in have expanded. Most importantly, our suite has become deeper and broader with 20 years of experience.

This is something our users really appreciate — the change hasn’t happened rapidly within the last three years. Our system has gradually developed based on a deep pool of experience from interacting with and learning from our customers’ needs.

You just mentioned ease of use. Making technology easy to use has long been part of your mission. What’s left to do in that area, and how much easier can you make the user experience?

This is a journey that never really ends. There is always room for improvement, and we strive to keep an open mind toward innovation and development of features, functionality and user interface.

We see that the buyer’s everyday life continuously changes. It’s important we change together with the rapid development in today’s world. And to make sure that the buyer’s worklife is always as easy as possible. That’s our job.

Is mobile part of that, and artificial intelligence?

Mobile is part of every new development we do. Everything is tested on mobile devices before release. That’s very important. We also see that the usage of mobile devices is increasing. A focus on mobile is something we must have in order to help the users.

Currently, we are also working on how to best apply smart AI as part of our tool — but it’s vital this work is done together with our users, to assure we develop something that will actually be used and not just developed based on buzzwords. There is a lot of buzz around “AI,” but it has to work for the user to make sense.

Scanmarket has been a family business for 20 years. Who started it, and which family members are still involved?

In 1999, Scanmarket was founded by my brother, Ole Nielsen. Three months later my dad, Vagn, joined. I joined in 2001 — later our mother, Ingelise, also joined.

Our father retired just recently, at 77 years old. He deserves to enjoy his retirement. The rest of us are still here, and even though the ownership changed, it is still business as usual.

We still share the love for Scanmarket, and our new ownership supports us 100%. They share our vision and goals for the future. We’re now able to act on and reach those goals much faster — and with “bigger muscles,” of course.

Is that because of the sale? How has the capital infusion from the sale affected your plans for growth and product development?

With the investment, we are now able to accelerate our roadmap significantly. We recently released, what we call, our new generation Supply Base Management and Contract Management. And, areas such as AI and robotics are now within reach for us. One of our strengths has always been thinking outside the box. With the extra muscles, we are now able to make real changes to the traditional way of e-sourcing.

We are really looking forward to what the future holds for Scanmarket. It’s going to be pretty exciting.

Where do you plan to expand to next year?

We still see a huge potential for growth in our home market in the U.S. — after 15 years in the U.S. we see that as a home market. The same goes for Europe. We have strengthened our organization in the UK and in the Benelux region. The German-speaking countries are also on our radar for further expansion. We have been present in those markets for many, many years, with many great customers, but we haven’t exhausted the potential yet. So, it makes good sense for us to further build these markets.

Who do you see as your main competitors in these markets?

Inertia is our biggest competitor. But of course, the big full-suite vendors are our main competitors. In the past, we saw a tendency that the largest organizations required full-suite solutions — both upstream and downstream systems from one provider.

Today, the trend is leaning toward a best-of-breed approach, and we expect to see more of this in the future. This is, of course, good news for us, as we have invested heavily in building API integrations. I’m glad to see this strategy has proven to be right for us.

Looking ahead, what do you think e-sourcing will look like in another 20 years?

I think the e-sourcing process will change completely. Today, the sourcing process is mainly initiated by the buyer. I believe the system will become much more proactive and take over big parts of the manual work we see today.

E-sourcing tools will make the buyers life even easier compared to today. More automation, a lot of proactivity, asking the buyer to approve, rather than instigate, initiatives that are automatically analyzed and recommended, etc. This will eliminate a lot of the buyer’s work outside of the system.

E-sourcing 20 years from now will be proactive, automated and offer predictive analysis, allowing many exciting new opportunities for both the buyer and supplier communities.