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2020 Digital Procurement Series: Predicaments and Predictions, an Introduction

01/08/2020 By

2020 is finally here and there’ve been many “2020 Visions” (get it?) published as various analyst firms and consultancies have published their predictions for the coming year. As you may know, we are generally not big fans of the typical predictions pieces because their insights are too obvious, like these:

  • AI hype will die down, but artificial intelligence will find pragmatic use cases in the areas of focused value.
  • The trend toward cloud-based application suites will continue, but sophisticated organizations will wisely buy or build best-of-breed applications using service-based architectures and self-service analytic tools.
  • Digital disruption will continue as Amazon eyes new areas of growth.
  • M&A will continue as private equity-funded firms seek exits from larger firms rather than pursue IPOs.
  • Yada yada yada

Don’t get me wrong — there’s nothing wrong with summarizing the trends that are happening right now and then extrapolating those forward with some prediction based on high likelihood scenarios. This is Category Management 101: Understand customers/demand, and then work backward to analyze upstream supply markets and suppliers/vendors — and then put supply and demand together creatively and strategically via this type of scenario planning that then informs your strategies and actions.

This is what we did in our recent two-part series (here and here) where we looked back at 2019, and then looked at what CPOs were planning for 2020 (and the challenges they’re facing) based primarily on Deloitte’s latest Global CPO Survey that we helped with last year. Predictions should be grounded by real-life customer problems that will be addressed by the market in some form or fashion. The trick is finding new forms rather than fickle fashions or tried-and-true solution approaches.

If you overly focus on existing players in existing markets using traditional approaches, you may very well miss emerging threats and opportunities, both as a practitioner and as a solution/service provider. So, next week, Spend Matters’ analyst team will be publishing a series of 2020 predictions within their respective areas based on:

  • The largest digital procurement capability/vendor gaps that are plaguing practitioners.
  • Vetting these areas to make sure they’re addressable technically and also commercially — e.g., total cost modeling and management is a foundational capability that has huge gaps and organizational disconnect (between procurement and finance) and an area that we geek out on, but will not likely see much movement as a breakout category even though a few interesting big data/AI start-ups are nobly charging at this windmill.
  • Some higher probability scenarios, but also some scenarios where we’ll go out on a limb, considering supply-side questions like:
    • Will Google make its move in B2B where it’s been provider non grata?
    • Will open source get real or be relegated to penniless hobbyists?
    • Will Salesforce cross the CRM-to-SRM chasm? There are SO many scenarios here!
    • Will SAP pursue a moonshot and bite the bullet by rewriting all its spend management applications into SAP S/4HANA? And will an AI application finally emerge since the Leonardo vision was painted three years ago?
    • Will No Code platforms become the new application-platform-as-a-service that will deliver mass configurability (beyond a few small vendors actually making it happen)?
    • Will any supply chain vendors actually get serious about direct procurement?

There’s a lot of ground to cover because there are a lot of predicaments and pain points that we’ll address regarding digital procurement:

  • Real category-specific functionality baked into broader suites/platforms rather than the massively fragmented market out there with category-specific solutions.
  • Direct procurement support where the applications actually understand a supply network data model rather than just nibbling at the edges. Spend management applications can’t do supply management without supply network models.
  • Services procurement support beyond rate cards and simple MSA/SOW use cases.
  • Tail spend that is a mess of various strategies, tools and vendors.
  • The master data management problem, especially related to suppliers and contracts. Master data fragmentation and poor integration is the real killer that squelches the ability to have easily mixed-and-matched best-of-breed apps.
  • Terrible support for the price discovery/benchmarking that is commonplace in B2C.
  • The lack of support for category management strategy work and its link to e-sourcing.
  • Supply/supplier risk management — without spending a fortune.
  • Contract management that is relegated to legalese document management rather than deeply modeling commercial value.
  • Supplier discovery beyond Google and supplier market intelligence beyond content/community subscriptions.
  • Dealing with your legacy ERP vendor(s), especially as they try to move to the cloud and keep their own products integrated as they transition their platforms (especially if they acquired their way into the space).
  • Vendor portal infrastructure that provides a common entry point for your suppliers to integrate to any buy-side application — without captivity in the walled gardens.
  • Poor payments functionality in P2P beyond p-card, ACH and even paper checks.
  • An ability to easily extend/tailor procurement applications to industry/category use cases beyond current technologies of “smart” forms, flex fields, data dictionaries, APIs, etc.

OK, you get the idea. There are still a lot of digital procurement problems to solve that are slowing digital procurement transformations. And the issues above are not even dealing with organizational issues and methodologies that also are fair game for some predictions. If we missed some pain points, please feel free to reply in the comments section below.

We hope you’ll enjoy this series next week!