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Selecting an S2P partner in the era of COVID: Advice for mid-market procurement leaders

Middle-market companies are a critical part of the U.S. economy that, according to the Street, comprise a third of the nation’s gross receipts and the majority of the nation’s jobs. But interestingly, when the strength of the economy is gauged, the middle market tends to get overlooked. For example, when talking about the stock market, many people tend to look at the most recognizable indices like the Dow Jones (top 30 U.S. companies) or the Nasdaq 100 to test positive or negative sentiments, but they ignore variants of broader indices where medium-size businesses reside within the S&P 500 or Russell 3000.

This same bias toward the larger organizations is also used as a gauge to understand technology and business trends by pundits.

But before diving too deep, let us also be clear on defining the mid-market. While this definition can differ by industry and vary widely in Europe, organizations that typically range from $500 million to $1 billion in top-line revenue in the U.S. are generally considered in the “mid-market” zone, with some deviation on either end of the spectrum. Regardless of how you fine tune the definition, understanding how mid-market companies adjust may be a better precursor to knowing how well the wider economy will fare as we look to define the new normal amid the COVID-19 crisis.

Today, out of sheer necessity, digitizing core essential operational functions in procurement and accounts payable (AP) has become ever more critical, not only to support business needs for those workers who return to “work,” but also to support the growing permanence of a remote workforce. Therefore, even though e-sourcing, e-procurement and e-payable technologies have been around for almost two decades, the past several months of the COVID lockdown have taught new lessons that demonstrate the digital essentials for business continuity and why mid-market firms need to catch up.

While disruption due to lack of digital transformation may turn the tide to justify investment based on their volume of spend, lack of initial digital process transformation has also increased enterprise risk. Interest in source-to-pay (S2P) technology as result of these conditions is on the rise in areas like spend analysis, contract management and supplier risk management, but also in procure-to-pay (P2P), particularly around digital payments.

For mid-market companies looking to select a solution, the task may be a daunting one of where to start.

One reason for this is based on how S2P technologies are assessed and ranked by leading market analyst firms today. While great at providing some definition around a solution marketplace size and definition, analyst reports may pose a challenge to understanding specific dimensions required by mid-size vendors.

For instance, based on my many interactions with market analyst firms, making a short-list (quadrant, wave, etc.) is often based on a combination of features, including functionality, minimum thresholds on customer revenue/size, global partner landscapes and implemented use cases of cutting-edge trends in areas like AI. However, areas like in-house advisory and professional and managed service programs tend to be underscored or not even considered in the context of the wider solution provider; something that a mid-market organization may be looking for in a provider to even get started.

At the risk of fawning over Spend Matters, I will acknowledge a lot of progress has been made to help S2P providers demonstrate their value. For one, the persona approach in Spend Matters’ SolutionMap vendor rankings looks to add another dimension of technology based on key stakeholder personas that can help mid-market companies understand which technology and providers they should consider for their specific needs. Furthermore, the decoupling of reviews to wider S2P solution maps, not just upstream (sourcing, CLM, supplier management) and downstream (procure-to-pay) per se, helps demonstrate the number of potential providers available in a solution landscape — something that has truly exploded over the past decade.

SolutionMap is based on analyst scores and customer scores. However, increased interest in consumer-based ratings has also leveled the playing field to get what I like to call the Yelp or Rotten Tomatoes view of enterprise solutions through an evolving world of review platforms. Acknowledging the analysts as the “critics,” providers like G2 Crowd, Gartner Peer Reviews and Capterra (now part of Gartner) are helping change the selection game for mid-market providers by providing a “voice of the customer” understanding of software selection criteria.

Laying out demographics like industry and company size incorporates a customer view in addition to the analyst view, providing a more holistic picture of selecting a technology partner. Whether this is being added to a list or ranking, tools like these can help organizations acknowledge why they are listed and the criteria for that listing.

From our perspective at Corcentric, one lesson learned is that mid-size organizations may want to work with a single partner to help them expand but they often do not know where to start.

Engaging in the digital transformation conversation with mid-market is not just about strategy, but due to financial constraints, is more about evidence-based problem solving. This is very different than larger enterprises that are looking to execute digital transformation by going to an S2P technology provider for a solution that then puts up the wider solution implementation and consulting to bid to their third-party partners.

Given that mid-market organizations are apt to seek out specific functionality initially, we often see a desire to start in one place, like spend analysis, contract management or invoice automation — then expand from there. For instance, common considerations can start with category-specific spend analysis first that identifies key problem areas that can expand into tail spend management, supplier consolidation or the adoption of GPO programs. A kind of “evolve as you go” or “evolve as you are ready” plan becomes a more prudent way to expand into new digital capabilities, recognizing the areas that need the most attention first.

Overall, given the limitations in resources within mid-market organizations, understanding who to partner with can be a complex process, especially in the new world of an increased remote workforce and limited travel.

How mid-market organizations decide when to leverage one solution or the other will always require a deeper look at the history of the procurement organization and then understanding its current maturity to take on the complexity of digital projects. But during the era of COVID-19, it also now requires a deeper look at selection criteria of a solution provider beyond the traditional means that have favored larger enterprises in the past.

Constantine Limberakis is Corcentric’s Senior Director of Product Marketing / Analyst Relations.

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