How best-of-breed partnerships can rescue procurement technology

A few years ago, global management consulting firm Kearney confirmed what Procurement organizations have long suspected. In its 2021 article titled “The future of procurement: say no to mediocre technology” Kearney wrote, “Today’s procurement technology is a complete failure.”

Blaming ever-expanding software suites — “lumbering giants clubbing one another at the expense of the individual user’s experience” — for stifling innovation, Kearney said that technology was failing to solve the one job for which it was intended:

“Procurement technology has one job: to provide a … system for transforming needed goods and services into value so that a company can excel at its own business.”

Note that the emphasis is not only on cutting costs or managing spend. It is on helping the company achieve its strategic goals.

But, if bloated suites of mediocre technology are not the answer, what is?

Procurement technology ecosystem

Kearney suggests that the answer can be found in “… a new foundational architecture” based on microservices and interfaces that allow these microservice-based apps to connect seamlessly. The result is a fluid procurement technology ecosystem that allows for very precise employment of best-of-breed technologies.

Why “best-of-breed” applications matter

This new foundational software architecture wouldn’t matter so much if it only represented a new way to connect simple, single-purpose applications, but today, almost no procurement category or process is simple.

Take contingent staffing. Twenty years ago, procurement handled contingent staffing by requisitioning temporary workers from staffing suppliers. Software to support this process was designed primarily to do three things:

Distribute job requisitions to approved vendors
Automate and track the contingent staffing workflow
Provide consolidated billing and reports

From this rudimentary beginning, the software has become vastly more sophisticated to meet Procurement’s exponentially more complex responsibilities. Due in large part to changes in laws and regulations — and the extended workforce’s increased strategic importance in today’s business — contingent management systems are now expected to:

Automate the enforcement of company procurement policies to prevent rogue labor engagement
Provide complete visibility of all contingent workers — contingent staff, consultants, professional service workers and independent contractors
Maximize hard dollar savings by consolidating suppliers and benchmarking rates
Eliminate timecard and invoice errors
Optimize soft dollar savings through workflow improvements and process automation
Analyze how money is spent on contract and project-based labor to inform better staffing decisions
Ensure regulatory compliance and mitigate exposure to co-employment and tenure litigation
Track and measure the performance of suppliers and non-employee workers
Automate the procurement cycle, reducing the time to fill positions
Ensure the privacy and security of company and personal data

These basic objectives can often be achieved with a full-featured vendor management system (VMS). But new challenges are constantly arising — ranging from diversity and inclusion standards to geographical wage rate comparisons, to fraudulent online interview tactics — challenges that can best be addressed by specialist applications.

So, just as Kearney recommends an overall ecosystem approach for procurement technology, the same approach is equally valid to manage specific procurement categories like contingent talent.

Why be constrained by a mediocre, monolithic software solution or a suite that is only as good as its weakest link? An ecosystem that is constantly expanding while each of its individual nodes continually innovate and improve is much more apt to meet your specific needs — not only today but tomorrow.

Co-innovation partners

One of the biggest advantages a well-ordered technology ecosystem can offer is the power and creativity of “co-innovation.” In a report published February 7, 2022, technology consultant Gartner notes that co-innovation ecosystems are “one of the 10 highlighted trends” in its Top trends for tech providers in 2022.

Gartner notes that “a co-innovation ecosystem approach can be applied across technology sectors. This process can help achieve greater innovation through increased speed and buy-in by leveraging ecosystems for development — not just execution.”

For procurement customers, co-innovation by ecosystem partners can unlock value that is not available from individual software solutions or suite providers. Co-innovation accelerates the development of customer solutions, spreads risk and cost and drives adoption. By leveraging the core competencies and capabilities of a diverse set of ecosystem partners, it can overcome the internal resource and capability constraints that plague single solution or suite providers.

For contingent workforce program owners, co-innovation is one reason why Beeline’s partner ecosystem is greater than the sum of its parts. For example, we’re currently working with one of our MSP partners to incorporate our personality assessment partner, Traitify, into its candidate screening process. Traitify is already integrated into Beeline and, by leveraging its assessment, the MSP can screen candidates better and faster than they could otherwise. The hiring client fills requisitions faster with higher-quality candidates and everybody wins.

Make every buyer as good as your best buyer

Another example of co-innovation within Beeline’s partner network is SmartBuyer, co-developed by Beeline and Brightfield Strategies. The world’s first AI-enabled embedded solution to improve buying decisions, SmartBuyer creates profiles based on more than 2,000 unique buying behaviors. Then, it tailors the VMS user experience based on successful sourcing outcomes. By providing contextual guidance during the sourcing and contracting process, it helps buyers with all levels of experience make better contingent workforce buying decisions.

How the “network effect” increases ecosystem value

Disruptive innovation is just one example of the “network effect” created by an ecosystem of best-of-breed software solutions. In 1980, Robert Metcalfe, co-inventor of the Ethernet, proposed that a network’s impact is the square of the number of nodes on the network. The larger the network, the exponentially greater value it provides.

In accordance with Metcalfe’s Law, mutually reinforcing value propositions increase value for all participants, and their customers. The ecosystem grows, best-of-breed providers get better and their innovations reinforce the strategic value of the ecosystem overall.

The digital marketplace is evolving to meet the diverse demand created by digital transformation. Networks and ecosystems are forming to serve ever more targeted markets and customers that demand value that only many vendors working together can deliver. While Kearney’s procurement technology ecosystem indicates the direction procurement’s new foundational architecture should follow, it vastly over-simplifies the ecosystem’s potential.

Each node on Kearney’s ecosystem model is now being expanded exponentially to serve the real needs of procurement clients. Where its model shows Beeline as the node for “Temp Labor,” a more accurate representation would replace the Beeline logo with the Beeline extended workforce ecosystem below.

Beeline’s extended workforce ecosystem

This illustration shows Beeline Extended Workforce Platform at the center of an ecosystem of carefully selected best-of-breed partners whose capabilities can be leveraged to support every category of contingent labor from temporary staff to consultants and professional service providers — and from freelancers and independent contractors — to high-volume, shift-based workers.

No procurement team will take advantage of every capability this extensive ecosystem offers, but it is reassuring to know that all are available. And all are readily accessible through Beeline’s software platform.

Why every CPO should become procurement’s CTO

Kearney makes clear, procurement technology to date has failed to achieve its primary goal. While it may have automated many of procurement’s transactional processes, technology has done little to address procurement’s strategic challenge: turning goods and services into value by making it easier for the business to respond competitively to market challenges and opportunities.

One reason for this strategic failure has been procurement’s tendency to leave technology decisions to IT professionals who see procurement as only one internal customer among many. Tasked with supporting the entire company’s technology needs, it is not surprising that CTOs and their IT teams make compromises in trying to optimize technology resources.

Too often, these compromises involve the adoption of less-than-optimal technologies, such as large, multi-functional software suites. They cite the “one-throat-to-choke” theory that it is easier to manage one large software vendor than many individual software providers, and large software technology vendors encourage this perception. However, as Kearney points out, this reasoning is false:

“Enterprises have paid, and continue to pay, for multimillion-dollar contracts and multiyear implementations for systems they hope will be ‘one and done’. If procurement later buys a new tool that isn’t embedded in the suite, whatever innovation it promised goes by the wayside. Big suites end up woefully underused, based on old architecture, and functionally inadequate.”

But, as Kearney points out, IT and tech vendors alone are not to blame:

“Don’t blame the tech vendors entirely, however, because the collective procurement industry has turned a blind eye to the phenomenon.”

For CPOs with their eyes open, there are several ways to overcome the inadequacies of existing software, ranging from like-for-like replacement with newer technology to full adoption of the new, best-of-breed technology architecture. Whichever path Procurement chooses, CPOs must take an active role in technology decisions or technology decisions will be forced upon them.

Kearney notes that this will take “a certain type of CPO with unique leadership skills, one who is in it for the long haul.” But it notes:

“When it comes to technology, procurement can decide its own future – and it would be wise to do so. Otherwise, the future will decide what it wants, and there will be no returns or guarantees.”

Best-of-breed tech to the rescue

Fortunately, there has never been a better time to pull procurement out of a technological nose-dive and set it on a path to strategic relevance. Within virtually every procurement category, there are new software applications designed to address specific problems. In the extended workforce category, Beeline is establishing and curating an entire ecosystem of best-of-breed solution specialists. And many, like Beeline, have built the necessary technology platform and interfaces to make these best-of-breed solutions immediately available to corporate procurement teams.

Beeline’s partner network is constantly growing and improving. We regularly think about who we should partner with, investigate new partners and add more integration capabilities. We do this based on changing market conditions, requests from customers and MSP partners, our development roadmap and even, from time to time, potential partners themselves. This approach ensures that our extended workforce ecosystem evolves and continues to meet our clients’ changing needs.

We would love to go into more detail on the drivers behind the different categories of organizations we partner with and our co-innovation activities. To learn more about our extended workforce ecosystem, visit www.beeline.com.