10 Theories on Procurement Technology Venture Stage Investment (Thesis 5: ‘Push’ Savings)

A while back, my frugal teenager introduced me to Honey, a browser plug-in that automatically tries savings codes to find discounts for online shopping. While I’m sure there are other services like it, Honey has become ubiquitous in our house for pushing savings to us that we would otherwise never find.

The concept of “push” savings — those that come to you without even consciously thinking about it — got me thinking: What if there was a “Honey” of procurement savings? In fact, there are a number of incumbent business models that do precisely this. And the next generation of some of these is just starting to come online.

In a series of columns that stem from investing ideas that excite me, I’ll share 10 theories that I believe will drive investments in earlier-stage (angel/seed and Series A/B) start-ups in the procurement technology market. For perspective, Thesis 1 looked at automation and vendors in that space. Thesis 2 looked at providers of marketplace solutions. Thesis 3 looked at UI/UX technology and adoption in the start-up stage. Thesis 4 dug deeper into bridge solutions. Today, let’s dig deeper into push savings.

I’ve come up with a working list of three types of push-savings providers. These include:

  • Leveraged purchasing/GPO providers (ideally tech enabled)
  • Rebate/recovery vendors (e.g., AP auditing)
  • Compliance (price) monitoring services

So who is doing this today?

Providers in the recovery audit sector certainly count, although I would classify them as more “tech enabled” managed services vs. SaaS, at least for their core services. In support of these more complex recovery auditing approaches, however, Apex Analyix, Cotiviti, FlexTecs and PRGX all come to mind. I am not aware of any start-ups that are fully tech-enabled here (outside of AP automation and invoice-to-pay solutions that tie line-level invoices back to POs, contracts, catalog pricing, etc.).

From a GPO perspective, both CoreTrust and Omnia Partners spring to mind in the private sector (although Omnia is also highly focused on the public sector). Both really don’t deliver technology as a core component of their offerings — rather it is a reporting/analytical means to a savings end.

But what about providers that would fall into the venture stage realm and are, ideally, technology-centric?

A few push-savings providers come to mind (although the list is sparser than I would like!):

EqualLevel — Run by one of the quietest co-founders of the entire procurement technology market (ask him!), EqualLevel is a punchout-based buying application with real-time price checks and look-ups, in addition to more foundational contract compliance elements. While I have not yet seen its “EqualLevel Savings Advisor” — aka “Elsa” — word is starting to get around about what EqualLevel is up to, at least among procurement tech geeks like myself.

InsightAnalytics — Part of SpendHQ, an independent spend analytics provider, and parent company, Insight Sourcing Group, a consultancy, InsightAnalytics is a category-specific analytics solution focused on ensuring that savings are captured. It also ensures negotiated sourcing and contracting savings are met. There’s a demand management component too. Delivered as a managed service, there’s both SaaS tech and sourcing/contracting brains behind it.

Supply Dynamics — Supply Dynamics does not deliver a simple solution. Nor is it solving a simple problem. As we have noted in our PRO analyst coverage (Supply Dynamics’ solution overview, strengths/weaknesses and competitive analysis), “Supply Dynamics provides customers with validated visibility into their total materials spend and suppliers (direct and multi-tier), including third-party spending and supplier selection (make/buy) activities carried out by sub-tier suppliers.” While the solution has different use cases, one is creating multi-tier rebate structures and programs for commodity spending in which all participants receive rebate consideration from suppliers for directed spend. Addressable categories include metals, resin and electronic components.

Una — Una is an upstart GPO that we’ve begun to track at Spend Matters. While tech factors into its value proposition for reporting and related areas, like its GPO peers, we would best describe it as “tech enabled” rather than “tech-centric.” The only SaaS-based provider that offers its own GPO-type offering (really leveraged contracts) that we are aware of is Coupa, which also offers some clever integrations with Amazon Business and other pre-integrated suppliers to compare live pricing. But Coupa isn’t exactly a start-up anymore!

What do you think about the push savings concept?

I’m sure there are many providers that come to mind that I’ve missed. Granted, I could have included a bunch of others that I previously mentioned in this series more broadly on automation, including BidOps, Fairmarket and Pactum, but I’m sure there are dozens more too.

Please chime in! I’ll continue to add to this list of push-savings providers in 2021!

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