The Market Speaks: Procurement practitioner requirements and the tech vendor response — SAP

Spend Matters constantly updates its understanding of the state of the procurement tech market via RFIs for our SolutionMap dataset, vendor interviews, global event attendance and product demos with the aim of keeping tech-selection decision makers ahead of market trends. But we also endeavor to grow our understanding of the wants and needs of the customers using that tech – the practitioners.

In one series of interviews this summer and through to the end of the year, we are talking to vendors about what their customers really want from them and how they are proposing to address those needs. In a second one, we are talking to the end users about their expectations and requirements.

This week we spoke with Baber Farooq, Senior Vice President and Head of Market Strategy for SAP Procurement Solutions.

What are the challenges and asks of your customers?

Over the last few years, life has been an adventure for procurement professionals. With the unprecedented volatility going on in the world, our customers and prospects are facing many issues impacting their businesses. They’ve been focused on ensuring supply continuity and navigating the disruptions as they continue.

Through our conversations with procurement executives, as well as research and market listening, we receive a lot of input on what our customers and prospects want and need — their pain points, where we’re doing well and where we can improve. Here are a few of the top concerns we’re hearing. A recurring request is to reduce risk and contain costs. Risk reduction is especially important in the supply chain, where leaders are focused on supply and supplier transparency to assess vulnerabilities. Strategic sourcing remains critical, especially given our inflationary environment.

Most surprisingly, in recently released research by Economist Impact sponsored by SAP, we have seen a dramatic shift in the market in terms of the need for better spend analysis capability. We have also seen a need for change in category management, which was also ranked among the top drivers of digital transformation in procurement. Additionally, nearly a third view category management as the top technological trend to implement in the coming year.

With an increasing influence on operational and financial performance, tracking and managing ESG goals has become a top priority for companies, too, as they look at ways to incorporate sustainability into all points of the supply chain. The industry is still figuring out the best ways to do this, and we are working closely with customers to help them on this journey. It can be difficult to prioritize some of these initiatives in tough economic conditions, but there is a leadership imperative amongst organizations to do so.

We’re also seeing that suppliers are no longer being viewed simply as vendors, but strategic partners. Therefore, procurement leaders are placing a higher level of importance on supplier relationship management, so they can better differentiate with and nurture those critical relationships. And lastly, we’re hearing that upskilling procurement talent is vital to be more effective, and to meet the growing expectations of business stakeholders.

Are you witnessing a shift in demand towards more ESG and supply chain risk capabilities?

Yes, there has undoubtedly been a shift. The question comes up in every C-level discussion we have with organizations. This is still new territory for the profession, and not every company will have the same metrics and priorities — these will vary by industry.

What we do know is that supply chains often account for more than 90% of a company’s environmental footprint, and SAP can help provide visibility into the data across this value chain. We also know that the C-suite is increasingly looking at procurement leaders to play an essential role in helping companies achieve their ESG goals. They want to partner with suppliers who help them meet their ESG standards across the board — whether those are supplier diversity, high sustainability ratings, low carbon footprint, upholding human rights or meeting government regulations like, for example, Germany’s Supply Chain Act. Organizations need to prepare, as regulation on these matters will only continue to increase.

SAP is active in the conversation with respect to the metrics that procurement teams should consider and adopt to drive impact towards ESG objectives, and we will, of course, continue to build on our technology that can help monitor these metrics and policies.

What is SAP doing to address these customer challenges?

We continuously listen to the market, not only to address the challenges encountered today but to bring the solutions that will help businesses evolve into the future. We continue to invest in our portfolio to ensure we are delivering the solutions our customers need to manage spend end-to-end, from direct materials to indirect materials, services and contingent labor, and travel and expense, and across the full spectrum of the business process lifecycle of spend management, from sourcing to supplier management, contracting, purchasing and payments.

A few examples include SAP Category Management, buying 360 and SAP Central Invoice Management.

We are driving a lot of innovation across SAP’s entire portfolio of procurement solutions with a focus on key priorities, based on customer input, including:

• User Experience — building a modern, fresh and intuitive experience for our customers 
• Data-Driven Intelligence — focusing on how we can unlock insight for our customers 
• Collaboration by Default — allowing seamless, cross-business process collaboration for companies with SAP Business Network
• Compliance — managing risk and enabling compliance with ever-increasing ESG and local regulations and policies

We’ll be featuring more at our flagship event SAP Spend Connect Live in Vienna in October.

Many thanks to SAP. We’ll be talking to more vendors next week – check back in then.

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